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Tourism-fueled demand is making Buenos Aires unaffordable for residents

Housing stock in the Argentine capital is being converted into short-term rentals as landlords look to dollar-spending tourists and the city government takes a back seat to private-led urban development.

BUENOS AIRES, Argentina (CN) — The strong recovery of tourism in Argentina, aided by a weakening local currency, is leading to a rise in temporary rentals and unaffordable rents, exacerbating the housing crisis in the capital.

“Last year’s numbers marked a greater recovery than we expected,” said Lucas Delfino, referring to tourism in the Argentine capital. The president of the city government tourism board said that 1.45 million foreign tourists visited Buenos Aires in 2022.

Although this remains below pre-pandemic figures (3 million visited in 2019), the average occupancy rate of hotels hit historic records of 60% – with peaks of 90%. Delfino added that the average length of stay has extended to historic numbers, with the average number of nights tourists spend in Buenos Aires stretching from five to between eight and nine.

Landlords are capitalizing on the returning influx of foreign tourists. Many are pulling their properties out of the long-term rental market, which is paid in pesos and subject to regulations, and opting for the less regulated short-term rental market with access to U.S. dollars.

Owners are doing this by listing their properties on online booking platforms such as Airbnb, Booking.com and Argenprop where they can fetch higher profits in foreign currencies in a country that is experiencing 108.8% annual inflation. 

Apartments listed on Airbnb are rented out for an average price of $91 per night. This amount of dollars was worth just over 43,000 pesos on the black market in May, representing half of the minimum wage for that month.

The average price for a one-bedroom apartment in the capital was 92,500 pesos in May, according to the Center for Economic and Social Studies Scalabrini Ortiz. That’s unaffordable for workers on minimum wage. In the last 12 months, rent has increased 115.1% for one-bedroom apartments, 140% for two-bedroom apartments, and 109.2% for three-bedroom apartments – faster than the rate of overall yearly inflation.

It is making it more difficult for city residents to find apartments. When they do, they are often unaffordable, which is displacing former tenants from the city and into the suburbs of Greater Buenos Aires.

Sociologists have called this phenomena “Airbnbification”, which has exacerbated the scale of gentrification in multiple major cities around the world, including New York, London, Paris and Barcelona. 

Mariano Garcia Malbran, the president of the Chamber of Real Estate Services Companies in Argentina, puts the number of traditional long-term rentals available in Buenos Aires at 1,500. In comparison, the number of short-term rentals in the city are calculated to be around 70,000, according to Gervasio Muñoz, the president of the National Federation of Tenants.

Landlords are also renting out properties to locals on short-term contracts, which provide less protection to tenants than what is set out in the Rental Law. Established during the pandemic in 2020, it mandates that rental contracts have a minimum duration of three years, with annual adjustments to account for inflation. With triple-digit inflation, this has meant rent freezes for 12 months before tenants start paying double the amount of rent for the following year.

Short-term contracts can be adjusted at a faster rate than contracts that adhere to the Rental Law, yielding a higher income for landlords.

The increasing cost of living in Buenos Aires has provoked resistance among social organizations and discussions around the right to housing and the right to the city.

The Observatory of the Right to the City is a social organization that monitors urban policies and its effects on housing and the environment. “The right to housing is a human right,” said Magalí Zirulnikoff, a member of the organization, in a radio interview with Realpolitik. “We have it in Article 14 [of the national constitution] as the right to decent housing,” which places responsibility on the state to ensure it for its citizens.

“In the United States, the state had to intervene to regulate the rental market. What they did was subsidize,” Zirulnikoff added, “but not the construction industry or financial sector, which is what Argentina is doing. In Argentina, we think about access to housing as a European economic regime with an economic reality of a Latin American developing country. In Berlin the local government set a limit to the amount of housing to allow the public sector to provide a share of it. But here we let the market rule."

The government of Buenos Aires’ approach to urban development is for the private sector to lead. It has resulted in an overdevelopment of luxury high-rises in the wealthier north of the city, with little development of affordable housing in the poorer south.

With an eye on returning international tourists, the center-right government of Horacio Larreta is expected to offer further incentives for the construction of new hotels and spaces for business tourism.

For many Argentines, access to decent housing remains a luxury rather than a right – despite it being enshrined in their constitution. 

The Observatory of the Right to the City and other social organizations have proposed a new Urban Agreement. It sets out a pathway to “democratize the city, decommodify urban policies and defend the public sphere with access to housing and public services.”

Following 16 years of center-right administrations, the document highlights the need to “break the pact between political power and financial real estate power, the only way to recover the city for those who live in it.”

With almost two decades of city government prioritizing a private sector-led urban policy, citizens and social organizations will have to continue to struggle to reverse these trends.

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Categories / Economy, International

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