Special issue article: Transnational gentrification

Urban Studies 1–21 Ó Urban Studies Journal Limited 2020 Platform-mediated short-term Article reuse guidelines: sagepub.com/journals-permissions rentals and gentrification in DOI: 10.1177/0042098020918154 journals.sagepub.com/home/usj

Alvaro Ardura Urquiaga Politecnica de Madrid,

In˜igo Lorente-Riverola Universidad Politecnica de Madrid, Spain

Javier Ruiz Sanchez Universidad Politecnica de Madrid, Spain

Abstract Gentrification demands updated frameworks to assess the impact of some major global trends on the local populations’ access to housing. Short-term accommodation using digital platforms in previously gentrified central urban areas is playing a significant role in outlining a new wave of ‘transnational gentrification’ in a number of global cities. Having undergone classical patterns of gentrification over the last two decades, the central district of Madrid and its surroundings are showing patterns of a new wave of gentrification in a context of economic crisis, planetary rent gaps, increasing global tourism and an increase in rental prices in central areas that may be related to the emergence of short-term rentals – making Madrid a relevant case for depicting transna- tional gentrification in the Southern European capitals. Based on empirical data, this work explores the holiday rental supply in Madrid over three years (2015–2018), verifying a strong association between the growth in tourist arrivals, the settlement of new residents from wealthy economic backgrounds and increasing rental prices. Since this process is accompanied by deregu- lation of local rental contracts and the growth of transnational Real Estate Investment Trusts (REITs), even in some of the most vulnerable areas located beyond the M-30 ring road, this wave of gentrification has the potential to produce displacement and substitution of residents.

Keywords gentrification, holiday rentals, Madrid, touristification, urban segregation

Corresponding author: Alvaro Ardura Urquiaga, Departamento de Urbanı´stica y Ordenacio´n del Territorio, Universidad Politecnica de Madrid, Avenida Juan de Herrera 4, Madrid 28040, Spain. Emails: [email protected]; [email protected] 2 Urban Studies 00(0)

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Received September 2018; accepted March 2020

Introduction administrative quarters have changed signifi- ‘Classical gentrification’ (Lees et al., 2008: cantly – especially after the 2008 financial 10) can be understood as a substitution of crisis (Table 1). In particular, the transna- the resident population in some areas of cit- tional residential relocations from higher- ies by higher-income classes following peri- income countries – both in the longer and ods of social and economic decline. Its most shorter term – to the city have drastically relevant characteristic is the rise in the cost changed the gentrification landscape of of living according to the newcomers’ stan- Madrid. Its urban amenities and cultural col- dards, which eventually may force lower- lections (acquired over a long history of income residents to find new areas in which transcontinental empire), coupled with its to live. In recent years, the middle class’s lower housing costs (relative to Northern growing access to tourism, the globalisation Europe) and easy accessibility for short-stay of real estate operations that take advantage tourists, have contributed to an influx of of planetary rent gaps and the emergence of new, mobile workers and visitors, who have new platforms providing access to short- partially displaced lower-income populations term accommodation in private residences from the city’s centre, including those of are broadening the spectrum of locations lower-status mobile workers from the Global and circumstances under which gentrifica- South. Madrid is an illustrative case of these tion can take place. Madrid is an example new processes of transnational gentrification and an appropriate case study for this because of its semi-peripheral status, where, phenomenon. like Lisbon (Sequera and Nofre, 2019) and For the last 40 years, the district Barcelona (Arias Sans and Quaglieri, 2016; of Madrid has undergone significant trans- Cocola-Gant and Lo´ pez-Gay, 2020, this formations that have evinced classical gen- issue), housing stock has been transformed trification. After a period of decline (Leal, from longer-term stock to short-term tourist 2004), the reputation, activity, demography uses. From a visitor’s perspective, short-term and household size of some of its six residential accommodation can provide a ruaUqig tal. et Urquiaga Ardura Table 1. Variations of population, number of households, and listing price for homes from 2006 to 2008, from 2009 to 2012, and from 2013 to 2017 in the Centro district and the city of Madrid.

2006–2008 2009–2012 2013–2017

D Population D Households D Household D Rental price D Population / % D Households D Household D Rental price D Population D Households D Household D Rental price /% /% size (ppl.) / % (e/m2)/% /% size (ppl.) / % (e/m2)/% /% /% size (ppl.) / % (e/m2)/%

Palacio 21088 / 210 / 20.09 / – 2721 / 2109 / 20.05 / – 2398 / + 224/ 20.07 / + 4.80 / 24.39 % 20.09% 22.04% 23.04% 20.04% 21.18% 21.75% 2.04% 21.72% 37.80% 21934 / + 95 / 20.1 / – 21.719 / + 145 / 20.1 / – 22.840 / + 44 / 20.13 / + 6.00 / (Lavapie´s) 23.75 % 0.44% 22.12% 23.42% 2.36% 22.19 25.98% 0.20% 23.07% 47.24% 2713 / 27/ 20.14 / – 2108 / + 40 / 20.04 / – 2367 / + 143 / 20.1 / + 6.10 / 26.15% 20.14% 23.21% 20.98% 1.43% 20.95% 23.37% 2.72% 22.50% 44.85% 2642 / + 54 / 20.1 / – 2125 / + 160 / 20.06 / – 2622 / + 73 / 20.09 / + 5.50 / () 23.63% 0.69% 22.27% 20.73% 1.49% 21.43% 23.66% 0.88% 22.24% 37.16% Universidad 22383 / 2117 / 20.14 / – 2783 / + 132 / 20.07 / – 21.759 / + 96 / 20.11 / + 5.50 / (Malasan˜a) 26.74% 20.76% 23.13% 22.34% 2.24% 21.63% 25.42% 0.61% 22.73% 40.44% 2688 / 224 / 20.17 / – 2266 / + 71 / 20.11 / – 2486 / 229 / 20.11 + 5.00 / 27.88% 20.65% 23.70% 23.27% 2.24% 22.56% 26.21% 20.76% 22.74% 38.17% District’s total 27448 / 29/ 20.12 / 20.89 avg / 23.722 / + 439 / 20.07 / 21.83 avg / 26.472 / + 551 / 20.11 + 5.48 avg / 25.42% 20.09% 22.64% 25.01% avg 22.30% 1.62% 21.61% 211.6% avg 24.40% 0.95% 22.69% + 37.80% Madrid’s + 40,322 / + 35,074 / 20.052 avg / + 0.32 avg / 231,347 / + 22,266 / 20.081 avg / 21.24 avg / 226,986 / 26,204 / 20.072 avg + 2.78 avg / total 1.32% 3.20% 20.93% avg + 2.60% avg 21.00% 1.94% 21.45% avg 210.28% avg 20.88% 2.23% 21.40% avg + 26.47% avg (exc. Centro)

Sources: Municipal Population Register of Madrid, and Idealista.com (https://www.idealista.com/informes-precio-vivienda). 3 4 Urban Studies 00(0) more ‘authentic’ local experience than a transnational gentrification, planetary rent hotel, at an overall more affordable price gaps and recent updates to the wave model (Fu¨ ller and Michel, 2014; Novy, 2019). For theory. The subsequent two sections provide landlords, either renting complete apart- details of the methodology and the results of ments or monetising unused housing capac- our study of Madrid. Finally, we conclude ity can be a more profitable alternative to that transnational gentrification is a charac- the conventional real estate market (Lo´ pez teristic of fifth wave gentrification processes Garcı´a, 2018; Pe´ rez et al., 2015; Red2Red in Southern Europe. Consultores, 2017). This situation changes the classical landscape of gentrification, as contributors to this Special Issue argue. From classical to transnational The aim of this paper is to provide gentrification in Madrid empirical evidence of a new ‘transnational Madrid’s first gentrification processes can be gentrification’ (the arrival of wealthy traced back to the late 1970s and 1980s migrants who change the socio-economic (Figure 1). Chueca (in the Justicia adminis- character of certain areas of Madrid), neigh- trative quarter) evolved from being one of bourhood upgrading that correlates with the the main drug-dealing areas in the city to rapid increase since 2013 in platform- becoming the LGBT + neighbourhood of mediated, short-term rental supply and ris- Madrid, constituting the city’s first great ing rental costs. Madrid offers an empirical urban success story. Malasan˜a having been site for thinking about key concepts and the- the centre of ‘la Movida’ (Go¨ tte, 2014; ories of gentrification in light of contempo- Lechado and Garcı´ a, 2005),1 state-led regen- rary, global forces of real estate eration initiatives turned it (Universidad accumulation and population mobility. It quarter) into a so-called ‘hipster’ area challenges the prism of non-overlapping (Davidson, 2008). In order to renew obsolete waves of gentrification that scholars have urban infrastructure, improve public space, used to describe the phenomenon in the promote local commerce and revitalise a Anglo-American context (Aalbers, 2019; declining neighbourhood in the central dis- Hackworth and Smith, 2001; Lees et al., trict, which had lost 14.6% of its population 2008), broadening the empirical framework between 1986 and 1996 (Justo, 2011), the of transnational gentrification linked to new municipal government established a special forms of hybrid real estate and short-term Area de Rehabilitacio´n Preferente (ARP, or accommodation. Moreover, it shows how in English, ‘preferential rehabilitation area’) the transformation of housing stock from around Dos de Mayo square in Malasan˜ain long-term single use to shorter-term, multi- 1994. A year later, it extended it to the South ple use, challenges the meaning of cities, (Lo´ pez de Lucio et al., 2016). The plan also potentially disrupting communities based on incentivised building restoration to attract place-based ties and shared daily under- developer interest in properties. In the same standings of place. The paper is organised fashion, the municipality launched a pro- into five sections. The first section provides gramme in 2006 to renovate the southern context for contemporary transformations, part of the neighbourhood (‘ARI Pez-Luna’, fitting Madrid’s contemporary gentrification in English ‘integrated rehabilitation area’). within a longer historical timeline. The sec- In 2008, a private operator attempted to ond reviews the recent theoretical contribu- rebrand the south-eastern part of Malasan˜a, tions on the mutation of gentrification largely known as the red-light district, with processes, such as the concepts of the acronym TriBall (Tria´ngulo Ballesta, Ardura Urquiaga et al. 5

Figure 1. Map of the Centro district and its surrounding administrative quarters. The thick dashed line represents its best-connected surrounding neighbourhoods. following the examples of names such as social composition of the neighbourhood SoHo or NoLIta in New York) to create a was changing, as it drew more members of leisure area focused on art, culture and the so-called ‘creative classes’ (Florida, 2002) design. This was the paradigmatic case of or, more critically, members of an intellec- private, commercially induced neighbour- tual bourgeoisie (Garnier, 2017; Ley, 1996) hood gentrification in Madrid (Janoschka as well as some left-wing municipal social et al., 2014; Sequera and Janoschka, 2015). movements. In 1998, the municipality launched a regen- The spatial peculiarities of each area give eration programme for Lavapie´ s (in the the illusion of a graduated gentrification, Embajadores quarter). The neighbourhood with different degrees of urban transforma- is well known as Madrid’s ‘melting pot’, as it tion that vary from a mature stage in the has traditionally received a significant share more ‘noble’ Chueca to a partially con- of foreign-born residents.2 Just as in cluded, ongoing process in Lavapie´ s, where Malasan˜a, the ARP was managed by the building quality is lower and residential units local authority with contributions from smaller (Garcı´ a Pere´ z, 2014: 76). These char- national and regional administrations, pro- acteristics have helped Lavapie´ s retain its viding public funds for refurbishment of pri- active social movement networks (Sequera, vate buildings with no oversight of their 2013), especially the anti-eviction movement. effect on real estate prices. Similarly, the At present (2018), Malasan˜a is considered to 6 Urban Studies 00(0) be in an intermediate stage, with renovations Population Register. The main reason for for the private market rather than for the the residents to put themselves on the public interest leading the transformation of Register is the possibility of accessing certain the neighbourhood. In these areas, where a services – traffic and parking permissions higher degree of housing stigmatisation was and, above all, public health assistance, of used as a political alibi for privatised urban particular importance in Spain. As the dura- regeneration in the 1990s, first stage gentrifi- tion of stay of short-term visitors is not com- cation in Chueca and Malasan˜a coincided parable with renters and owners, there is no with the speculative expansion of the need for them to have access to these public Spanish economy, which accelerated displa- services. Short-term foreign residents – often cement of lower-income groups. Later urban neither traditional tourists nor neighbours in regeneration projects (Lavapie´ s and the the conventional sense – may not be in the southern part of Malasan˜a) coincided with Register. This has led to suggestions that the the end of the expansionist economic cycle, population data may over-estimate popula- mitigating some displacement (Sorando and tion loss (Sorando and Ardura, 2018). Ardura, 2018). Of course, digital platforms greatly facili- The 2008 global real estate crisis led to a tate increased spatial mobility and, as these 40% drop in housing prices on a national emerged after 2012 – especially Airbnb – level, both in sale and rental markets, from a Madrid’s value as a tourist hub drastically peak in 2007 Q3 to a trough in 2014 Q1.3 shifted the real estate market. This created a Despite that, Centro’s population remained rent gap – but not for the local real estate stable until 2011 and, due to pre-crisis gen- market, since there was little additional trification, some of its residents may already higher-income demand from Spanish work- have been economically less vulnerable. ers. Instead, on a European and even global During the crisis, however, housing prices in scale, the relatively low cost of Spanish real the district fell for five consecutive years, estate and the existence of a higher-income, until they began to bounce in 2013 (up 26% mobile population of consumers of urban over 2011), and population in Centro began spaces incentivised speculative investments to fall (6% over 2011 data). Although some based on flexible access to housing via digi- other districts experienced larger decreases tal platforms. Three significant policy deci- in the cost of real estate after the crisis, sions shaped this process in relation to the Centro offered better conditions for realising rental market in Madrid after the financial potential rent increases, as is characteristic crisis. First, the new Ley de Arrendamientos in gentrified areas (Hammel, 1999). Despite Urbanos (Urban Rental Act) (2013) reduced the loss of population, most neighbourhoods the minimum duration of rental contracts grew slightly in the number of households from 5 to 3 years and consequently made the during the 2011–2017 period. The combina- rotation of tenants easier; second, was the tion of factors – skyrocketing housing prices, creation of real estate investment trusts, or loss of population but stabilisation in the Sociedades Ano´nimas Cotizadas de Inversio´n number of households as additional units Inmobiliaria (SOCIMIs by its Spanish acro- are brought onto the market – allows us to nym) (Ley 16/2012); and third, the establish- make the initial assumption that Centro may ment of the ‘golden visa’ programme aimed have become attractive for a new group of to attract foreign investors to the Spanish residents with higher incomes or fewer eco- real estate sector (which accounted for 6% nomic restraints. It also leads us to question of sales in 2018, according to Estadı´ stica the population data used by the Municipal Regional Inmobiliaria (2018: 80)). Thus, the Ardura Urquiaga et al. 7 arrival of international corporate landlords depicting their canonical stages. This model and digital platforms for holiday renting relates the different mutations of the gentri- seems to have played an important role in a fication processes to the global economic cri- new surge of gentrification, helping to trans- sis. A more recent contribution to this wave form the housing market of Madrid. As an model identifies a fifth wave of gentrification example, the investment fund Blackstone that can be considered as the transnational through its SOCIMI (Fidere) has acquired ‘urban materialization of financialized or 1860 houses for e128.5M from the Empresa finance-led capitalism’ (Aalbers 2019: 1) – Municipal de Vivienda y Suelo (Madrid’s where, as Aalbers puts it, ‘corporate land- public housing authority) (Simo´ n Ruiz, lords and platform capitalism’ play a signifi- 2019; Vidal, 2018). Madrid has consequently cant role. Earlier processes of gentrification climbed to the top of the league tables of in Madrid can be characterised as first and international luxury housing investments second wave. They affected central areas of (Lo´ pez Leto´ n, 2019). the city, with later sporadic state-led pro- Although these processes of gentrification cesses, and involved local real estate actors. have been thoroughly studied from the per- Meanwhile, the more recent processes are spective of the increase in housing prices and more akin to Aalbers’ fifth wave. Despite the settlement of new, higher class groups the clarity of this qualitative frame and its (Echaves Garcı´a, 2017; Idealista.com, 2018; obvious applicability to cities in the ‘Global Lo´ pez Garcı´a, 2018; Rodrı´guez Lo´ pez, North’, gentrification waves were essentially 2017), the implementation of new regulations defined in an Anglo-American context. for the real estate market, in combination Therefore, they are not entirely transferable with the emergence of ‘P2P tourism’, ‘home- to other social, economic and political situa- sharing’, ‘holiday’ or ‘short-term rentals’ tions. The shift to the fourth wave – sharply changed this situation (Ardura, 2017; explained in the model by the reconfigura- Gil, 2018), increasing the presence of tourists tion after the dot.com crisis, that is, the mas- and lifestyle immigrants from higher-income sive ‘switch’ of capital to real estate – barely countries and thus accelerating the rise of affected a Spanish economy propelled by its real estate prices and increasing economic own national real estate bubble, which burst speculation in Centro and beyond. simultaneously with the global financial crisis. However, wave theories should also Literature review incorporate not just the temporal modifica- The transnational character of real estate tions of ‘rent gaps’ (Smith, 1979) and loca- speculation and demand in Madrid leads to lised ‘uneven development’ (Smith, 1982) in a new type of gentrification that has not yet relation to a changing political economy. been fully accounted for. This section exam- They should also consider how markets for ines these changes through the lens of the local real estate can be globalised by space– recent academic contributions regarding the time compression (Harvey, 1989). As Smith mutation of gentrification processes. We (2010: 19) has pointed out, cities now ‘find examine the ‘wave model’ introduced by themselves competing economically with Hackworth and Smith (2001), later updated each other across national borders in a way by Lees et al. (2008: 179) – as it permits the that would have been inconceivable in the evaluation of the degree of maturation of 1970s’. Slater (2017) uses the term ‘planetary gentrification processes through time by rent gap’, in which global financial agents, 8 Urban Studies 00(0) real estate promoters, public administrations Methodology and local populations interact in a very Many high-income foreigners come to the uneven way depending on the context to city as tourists, for short stays. We focus produce the optimal conditions for accumu- here on this aspect of transnational gentrifi- lation. From the vantage point of real estate cation – specifically, its relation to tourism. capital, this competition extends to attract- Access to short-term rentals provides tour- ing globally mobile, higher-income real ists with cheaper alternatives to hotels, which estate consumers to the spaces of the city – 4 cities whose amenities are also embellished are also more flexible and apparently more by state institutions or public programmes ‘authentic’ (e.g. ‘live like a local’) than tradi- for art and culture, yet another way in which tional short-term residential rentals (Fu¨ ller the state ‘leads’ gentrification processes in and Michel, 2014; Novy, 2019; Zervas et al., Southern Europe. Furthermore, Spain’s 2017). Our main hypothesis is that the prolif- place as a main tourism destination also eration of short-term rentals produces higher facilitates the exploitation of housing as a prices than the average traditional rent, tourist asset (Janoschka et al., 2014). As potentially inducing transnational gentrifica- Cocola-Gant (2018: 7–8) explains, in lower- tion in some areas of Madrid – that is, an income economies, such as in South-western unaffordable rise in the cost of living com- Europe, where tourism is an important eco- pared with the local residents’ disposable nomic sector, ‘the consumption power of the incomes, accompanied by a substitution of middle-classes is smaller than in advanced the resident population by wealthier interna- economies, [and] tourism comes to supplant tional settlers. Despite the intuitiveness of the lack of local demand that real estate cap- this hypothesis, its verification is debated ital needs for the realization of surplus given the externalities that affect the housing value’. market: overall housing demand, seasonality In this context, the proliferation of short- of tourism, density of touristic venues, sup- term rentals managed on digital platforms ply distribution, accessibility by public trans- appears to be playing a significant role in port, the approval of municipal ordinances transforming housing investment and mar- regarding short-term rentals (Ardura- kets (Barron et al., 2018; see also Sequera Urquiaga et al., 2019). The most recent and and Nofre, 2019). Although tourism gentrifi- comprehensive studies agree that the highest cation has been described before in the case price increases in Barcelona have occurred in of cities such as New Orleans (Gotham, the most touristic areas of the city. However, 2005) or Barcelona, in the case of Madrid it the rise in prices cannot be exclusively attrib- was not on the public agenda until the rise uted to Airbnb (Garcı´ a-Lo´ pez et al., 2019). of digitally mediated holiday rentals, as To verify this hypothesis, we analysed some residents began to see how the activity of key indicators related to transnational gen- these platforms ‘threaten[ed] their right to trification: the growth of the number of resi- stay put while making it increasingly diffi- dents from wealthy economic regions, the cult for residents to find affordable accom- purchasing power of the local population modation’ (Cocola-Gant, 2016). Madrid’s and the dynamics of the real estate market urban transformation helps us to better based on empirical data from short-term understand the particularities of gentrifica- accommodation platforms as well as tradi- tion in Southern Europe, where foreign tional, long-term ones. Analysing these vari- real estate investment and mobile tourists ables, we identify (1) areas where monthly are changing cities. rental prices have grown alongside the Ardura Urquiaga et al. 9 increase of short-term rentals on Airbnb; (2) gentrification processes and the level of areas where monthly rental prices have aggregation of the analysed data can only grown faster than the available income per show us the potential vulnerability of some capita; and (3) areas where the substitution areas of the city to population displacement. of working-class immigrant populations Further residential mobility data from the occurred during and after the economic crisis Madrid census would complement this of 2008. research in the future. First, we use local census data to identify international residents and areas that have Results experienced a decline in local population. Second, these data are contrasted with data Wealthier immigration from Inside Airbnb and Airdna to see which As noted above, the Spanish recession accel- areas of the city have seen higher than aver- erated population loss in the central district age growth in short-term rental supply 5 of Madrid. However, the district attracted (Airdna.co, 2018; Cox, 2015). Next, we international residents, who helped boost the study the evolution of rental prices listed on total immigrant population by 5% from traditional real estate platforms, using data 2015 through January 2018. New immi- from Idealista.com (one of Spain’s most grants settling in the area, however, have a popular real estate websites), correlating it new socio-economic profile. According to with the emergence of short-term rentals in data from the yearly census, the number of some specific areas of the city (Herna´ ndez people from wealthy geo-economic regions is and Grasso, 2017; Idealista.com, 2018; still growing – in 2008, residents from EU15 Lo´ pez Garcı´ a, 2018; Sanz, 2018). At this or OECD countries barely reached 25% of point, some short-term rentals may be the immigrant population in the city centre. reflected in the statistics as empty houses – Now these countries represent almost half of therefore, they would not be substituting the foreigners living in the area. By contrast, traditional rentals. This fact has been con- the size of Latin American and especially sidered by comparing the number of empty African communities shrank dramatically. houses with the increments of short-term This new composition of the immigrant rentals to avoid obtaining skewed results. resident community reflects a shift in the Finally, the hypothesis can be confirmed by model of immigration (Figure 2). Whilst in studying the population’s income in the the past, the central district was a preferred identified areas. This way we may conclude destination for people coming from under- that the local emergence of short-term ren- privileged geo-economic regions searching tals in areas with small numbers of empty for a conveniently located space within the apartments, correlate with housing prices urban system, today the area has become increasing above the disposable income of the popular choice for immigrants from residents6 (Ayuntamiento de Madrid, 2015; wealthier countries. This shift is especially ESNE, 2018; Vivus Finance, 2017) and ver- remarkable in the neighbourhoods where ify the substitution of working-class immi- the most important tourist amenities are grant residents with people from higher- located – such as , Cortes and Sol – income countries. All this provides a clearer or where there have recently been patterns picture of the key aspects of transnational of gentrification made evident by the settle- gentrification which lead to potential displa- ment of local ‘creative classes’ (Sorando and cement of residents. It must be stated, how- Ardura, 2016, 2018). In some neighbour- ever, that the implicit complexity of hoods, residents from wealthier OECD 10 Urban Studies 00(0)

Figure 2. Composition of the immigrant population before and after the Spanish economic crisis by Madrid central district neighbourhoods. Source: Authors. Data from Ayuntamiento de Madrid (2018a). countries reach and exceed 60% of the favour in recent years as a destination for immigrant population, having represented short-stay visitors from the Global North. on average less than 40% before the crisis. The data from the recently started ‘Frontur’ Given that the data presented in this section and ‘Egatur’ initiatives, carried out by the have been gathered from the population cen- National Institute of Statistics, show that the sus, the registered population has met the city has recently experienced significant requirement of providing proof of residence changes in the origin of incoming tourists, in the area for more than three months. from being an established destination for Therefore, it indicates a trend of residents national tourism to becoming an attractive coming from high-income countries and option for short international visits. gaining access to housing, thus supporting International arrivals by plane dropped the hypothesis that the city centre has between 2011 and 2013 but then grew by become an emerging destination for lifestyle 38.5% – or 29.3% over 2008 arrivals migrants, that is, relatively privileged social (Ministerio de Transportes, Movilidad y classes from higher-income countries, who Agenda Urbana, 2017; Rodrı´guez, 2016). may relocate for lifestyle and leisure reasons Overnight hotel stays grew in a similar pro- above labour market reasons (Benson and portion after 2013 (Bacon and Garcia, 2018). O’Reilly, 2009, 2014). However, many of However, the supply of hotel rooms has these international residents from higher- remained stable since 2013 (Ayuntamiento de income countries no doubt also work. Madrid, 2018b; Bacon and Garcia, 2018). This could be explained by the short duration Digital platforms and the touristic of stays, in combination with a high stock of rooms and balanced demand throughout the specialisation of the centre year that translates into hotel occupancy rates In conjunction with the settlement of new, below 70%. However, the number of incom- higher-income migrants, Madrid has gained ing international tourists has grown at a faster Ardura Urquiaga et al. 11 rate than the supply of hotel rooms and the available on Insideairbnb.com (July 2018), occupancy rates of hotels and hostels. Whilst considering only listings available more than occupancy rates grew 5% between 2015 and 90 days a year and differentiating how those 2017, international visitors increased by 15% listings are managed, we observed that only – and national tourism decreased by 3%. half of the filtered 11,224 listings in Madrid Over this period, the number of listings appeared to be offered under the terms of offered on Airbnb doubled (Figure 3). It the sharing economy – hosting visitors in stands to reason that short-term rental plat- spare rooms during short periods of time or forms are accommodating an important part using an entire empty home for that pur- of the increased number of visitors. pose. There are 5264 offerings for ‘complete As the data reflect, the growth in interna- apartments’9 managed by professional hosts tional visitors corresponds with the skyrock- – who manage more than two listings on the eting growth of listings on Airbnb, which platform – which were most likely to have began in 2014. According to Airdna.co (July been removed from the traditional rental 2018) there were 29,588 listings in Madrid, market. Centro accounts for more than 67% 26,925 present on Airbnb – 91% of the total. of them – 3530 apartments of the total According to Insideairbnb.com, the total 70,505 units in the district, including 27,885 number of listings in Madrid on Airbnb in rental units and 11,190 empty ones (INE, July 2018 was 18,362.7 Some hosts rent a 2011). spare room in their home periodically, while The centre is where the Airbnb phenom- others use properties as full-time speculative enon has intensified (Figure 4) – presenting investments and manage them through spe- the highest density of short-term rentals in a cialised holiday rent management companies short period of time. The concentration of – 41% of the listings are available all year tourist attractions in the district, the past round, 59% are managed either by profes- gentrification of several areas, in combina- sionals or by owners of more than one apart- tion with the new regulations for rentals, ment (Airdna.co, July 2018). constituted an optimal setting for the adop- Over the 2015–2018 period, Embajadores tion of the new rental technologies and the (Lavapie´ s) and Universidad (Malasan˜a) consequent transformation of the rental sup- were the locations where vacation rental ply to host international newcomers. It is platforms initially became more popular, not surprising that Chueca, Malasan˜a and coinciding with areas with the fastest grow- Lavapie´ s had the densest clusters of short- ing rates of immigration from high-income term rentals since their implementation took countries and declining numbers of residents place. From that moment, the residential from lower-income countries. Meanwhile, fabric of the district became more and more the supply increased exponentially in the city appealing to landlords and real estate inves- centre, almost doubling the number of list- tors, causing the expansion of the compact ings in the central neighbourhoods. In a cluster of holiday rentals running through location pattern that differs from that of the district’s North–South axis. hotels, vacation apartments have grown around a North–South axis across the dis- Short-term rentals beyond the Central trict, where a large number of shopping fran- chises and souvenir stores are concentrated.8 district Our findings show that the effect of Meanwhile, the supply of vacation rentals short-term rentals on the traditional housing grew in the vicinity of Centro: to the West, market may be considerable. Using the data the neighbourhood of Puerta del A´ ngel; to 12 Urban Studies 00(0)

Figure 3. Number of visitors in Madrid compared with hotel occupancy rates and number of listings on Airbnb. Source: Authors. Data from Ayuntamiento de Madrid (2018b) and Airdna.co (2018).

Figure 4. Airbnb Listing density by census sections, 2015–2019. Source: Authors. Data from Insideairbnb.com. the North, Chamberı´ and Tetua´ n; to the to the South, , and East, Barrio de and (in the . All these areas saw significant growth more affordable areas of these districts, tradi- in the number of listings between 2015 and tionally the wealthiest bastions of Madrid); 2018 (Airbnb, 2016). Given the lack of Ardura Urquiaga et al. 13 tourist attractions in these areas in compari- speculative investments in properties listed on son with the city centre, the presence of out- short-term rental platforms, and if the propor- liers of growth in some sectors of these tion of the local residents’ disposable income districts is remarkable, indicating the emer- spent on housing increases as a result. To test gence of new clusters of short-term rentals. this hypothesis, we considered the growth of However, the potential impact of the prolif- holiday rentals, traditional rent prices and the eration of short-term rentals in these districts population’s income together. Given that is different, given their significant differences homeowners are less likely to be displaced by compared with Centro. Whilst all of them the emergence of short-term rentals, only the are well connected with the centre by public rise of the cost of the rent over renters’ transport, residents’ incomes and purchasing incomes has been considered to evaluate the power vary considerably. possibility of residential displacement. As The southern, western and northern lim- noted above, the central district is receiving its of the M-30 ring road provide access to visitors from countries with higher income lev- significant housing supply that traditionally els who have on average, therefore, greater has responded to the needs of the working purchasing power compared with both the classes and lower-income immigrants. The local and immigrant communities living in the housing prices in these areas plummeted central district before the economic crisis during the economic crisis – thus maximising started in 2008. It can be observed (Figure 6) the possible benefits of new investment in that the overall foreign population (including devalued real estate. To give a concrete migrants from the Global South) fell by 34% example, the areas closest to public trans- in the area between 2010 and 2014, the hard- port – or to the central district in the case of est times of the economic crisis. In the centre ´ Puerta del Angel – have experienced the of Madrid the traditional housing rentals’ highest levels of growth, around three times price shrank 24% from 2007 to 2014. The the average number of listings of their dis- income in the area also decreased by 13% up tricts. By contrast, the eastern and northern until 2014. boundaries of the centre are home to the This was the same year Airbnb began to city’s highest-income earners. There, the take off in the city of Madrid, experiencing number of Airbnb listings has risen in pro- exponential growth until 2017. By that time, portion with that in lower-income neigh- the Municipality had drafted an action plan bourhoods of the city centre – but the to establish restrictive conditions for new increase is concentrated in the lower-cost short-term rentals within the most affected areas of these wealthy neighbourhoods, districts, which was to be approved in 2018 enabling them to garner much higher rents. with the main goal of controlling the pres- Although the central district represents the sure of Airbnb on the housing market. vast majority of listed properties, its nearest However, the proposal was suspended. In neighbours are also providing opportunities parallel, the long-term rental price in the dis- for turning traditional rental units into trict grew by 33% after 2014, situating the short-term rental properties. cost of rent at levels never seen before, even when compared with pre-crisis prices. Income and rent affordability During that period, the number of migrants As housing prices are expected to increase, living in Centro began to recover but at a the hypothesis of potential displacement of much slower pace than housing prices, given the local population is supported if the rise the settlement of migrants from First World in rental prices is related to the increase in economies. 14 Urban Studies 00(0)

Figure 5. Madrid; income per capita in the 2014 census sections. Source: Authors. Data from Ayuntamiento de Madrid (2015).

The correlation between the growth in number of listings is significantly lower. rental prices and the emergence of short- Despite that, the surge in rental prices is term rentals in Centro is clear. On average, a faster than what residents’ purchasing power listing on the digital platform is expected to can keep up with. Given that the recession produce 100% more benefits and earnings negatively affected income from 2009 until than a traditional rental if it maintains an 2014 – and this income had not recovered by occupancy rate above 65% throughout the 2018, the end of the time frame considered year (Ayuntamiento de Madrid, 2017). This in this study – and that rental prices grew by may have subsequently led landlords to raise 39% between 2014 and 2018, and 9% over the price of rents according to these expected prices in 2008, it is possible that lower-income benefits, given that the market allows them groups were displaced from Centro and its to choose between either renting the prop- inner suburbs when trying to renew rental erty through the digital platform or tradi- contracts. Also, the fall in income could lead tionally renting it in an increased price lower-income homeowners to list spare rooms bracket. to complement their wages, making some of Beyond Centro, the growth of short-term the increase in short-term rentals an indicator rentals also coincides with the increase in the of precariousness rather than tourism gentrifi- cost of rent in some areas, especially those cation (Semi and Tonetta, 2019). Using best located and with better transport links income data (Figure 5), the evolution of long- with the centre. However, the increase in the term rental prices (Herna´ ndez and Grasso, Ardura Urquiaga et al. 15

2017) and the monthly price for complete If we performed an equivalent analysis to apartments10 listed on Airbnb, we estimated assess the effects of digital short-term rental the areas where the rising cost of rent could platforms on those rentals paid by more potentially lead to displacement because of than one person, the data show how this unaffordable living expenses for the average alternative could mitigate the potential dis- resident. placement of population. In those cases of First, we considered the case of an indi- shared rents, the loss of purchasing power vidual paying the full cost of rent, earning ranged between 7.3% (Justicia) and 11.6% the average income for the area, and living (Embajadores), deduced from rental prices in a 50 m2 single room apartment. Before which would represent between 32.8% 2014, the cost of renting in the central dis- (Justicia) and 52.2% (Embajadores) of the trict represented between 38.3% (Justicia) average disposable income. and 61% (Embajadores) of the average net As seen in Table 2, the areas where short- income. Assuming the average growth of term rental services grew the most coincide income and rental prices described above, with the lowest registered income. It is worth the expansion of short-term rental platforms noting the case of Embajadores – the lowest- (Figure 6) coincided with rental price income area of the Centro district, where the increases on long-term rentals that now take share of low-income migration dramatically up 49.1% (Justicia) and 78.3% diminished during the recession. Airbnb has (Embajadores) of disposable income. Even grown the most in this sector and the increase as the traditional rental market bit in to resi- in cost of housing represents the highest dents’ disposable income (from 10.8% in losses of purchasing power in the city, vali- Justicia to 17.3% in Embajadores), the aver- dating the hypothesis of gentrification. age monthly rent of an equivalent apartment However, this phenomenon has not been through short-term rental platforms repre- exclusive to Embajadores-Lavapie´ s. Whilst sents between 62.1% (Justicia) and 97% people living in the wealthy north-east (Sol) of the locals’ net income (Table 2). neighbourhoods (e.g. , , These significant increases in housing Salamanca) can afford rising rental prices, prices make the average resident especially traditional working-class neighbourhoods vulnerable to displacement during this new such as Puerta del A´ ngel and , wave of tourist gentrification. As prices both located next to the M-30 ring-road and increased, renters saw their purchasing well connected to Centro, have experienced power reduced, even though data suggest a similar pattern of falling non-housing- their economic situation improved after the related purchasing power resulting from recession – though it is important to note increasing rental costs. that observed economic improvements in the data might reflect the arrival of wealthier Conclusion residents in an area rather than increased income for the existing population. The Although Madrid ranks amongst the world’s reduction of purchasing power might force ‘alpha’ cities11 it had experienced only them to either move to a different neigh- medium range gentrification processes until bourhood – confirming the hypothesis of 2013 – milder than those in Barcelona – that gentrification – or to share the cost of the can be classified within the two first waves rent with others in order to afford it – of gentrification processes (Hackworth and another form of displacement. Smith, 2001), thus arguably in tension with 16 Urban Studies 00(0)

Figure 6. Evolution of international population, cost of the rent, income per capita and supply of short- term rentals on Airbnb. Source: Data from Ayuntamiento de Madrid (2018a) and Airdna.co (2018). the idea of gentrification as a global strategy Given the fact that those countries are formulated by Smith (2002), since urban benefiting from being on the wealthy side of processes in Madrid at this point did not the global rent gap (Lees et al., 2015) in rela- look at all like the gentrification experienced tion to the Spanish economy, their citizens in paradigmatic Anglo-American examples. can, on average, afford to pay higher prices However, since 2013 we can argue that for shorter stays, as long as the accommoda- Madrid has been undergoing ‘transnational tion market is flexible and secure enough to gentrification’ that ‘connects redevelopment access. This situation makes visitors from capital to housing demand not within a wealthy countries the main target of P2P single city-region but transnationally, and accommodation services (Wachsmuth and thus creates new possibilities for profitable Weisler, 2018). Therefore, it is not surprising housing reinvestment – and new threats of that the most touristic areas of the city as displacement – in markets where such possi- well as either the closest or best-connected bilities would not have existed on the basis of surrounding areas have witnessed the high- local demand alone’ (Sigler and Wachsmuth, est increases in short-term rentals through 2016: 2). This can be seen in the demographic digital ‘homesharing’ platforms – amongst statistics of new people arriving to live in which Airbnb stands out. Madrid. While visits from lower-income This paper emphasises the hypothesis of economies in the Global South have been in gentrification as a cause of potential displa- decline since the 2008 recession began, tour- cement of the local population given the ists and immigrants from higher-income unaffordable rise in housing expenses in economies such as the EU 15 and OECD – some areas. The rapid increase in the holiday especially the USA – have outstripped even rental supply from 2013 onwards coincides national tourism in Madrid. in time with the arrival of wealthy Ardura Urquiaga et al. 17

Table 2. Available income and cost for individually paid 50 m2 rents in 2014 and 2017 in the Central district of Madrid.

Neighbourhood Monthly Monthly 50 m2 rental 50 m2 rental 50 m2 rental income 2014 income 2017 price 2014 price 2017 price Airbnb 2017

Cortes 1519.42 e 1621.33 e 664.05e (43.7%) 910.0 e (56.1%) 1276.5e (78.7%) Embajadores 1052.59 e 1123.19 e 642.16e (61.0%) 880.0 e (78.3%) 967.5e (86.1%) Justicia 1803.58 e 1924.55 e 690.81e (38.3%) 946.7 e (49.2%) 1196.5e (62.2%) Palacio 1567.22 e 1672.34 e 625.14e (40.0%) 856.7 e (51.2%) 1244.8e (74.4%) Sol 1296.77 e 1383.74 e 678.65 (52.3%) 930.0 e (67.2%) 1342.9e (97.0%) Universidad 1348.18 e 1438.60 e 654.32e (48.5%) 896.6e (62.3%) 1057.7e (73.5%)

Sources: Ayuntamiento de Madrid (2018a), Idealista.com (2018) and Airdna.co (July 2018). immigration, tourism and the escalation of settlement of new residents arriving from prices for traditional rentals. Moreover, as countries on the positive side of the rent gap Cocola-Gant (2016) suggested as a general with Spain, in combination with an intensifi- pattern, the Madrid neighbourhoods that lost cation of tourism that has made the holiday the most residents (Sol and Embajadores) rental sector into ‘the new battlefront’ between 2013 and 2017 also saw the greatest (Cocola-Gant, 2016), especially in Southern growth of holiday rentals, although the loss of Europe. This new wave of transnational gen- population began earlier than the consolida- trification shows a strong presence of inter- tion of the short-term rental market. national real estate actors making use of This emergence of digital platform- platform-mediated short-term home rentals mediated short-term rentals has intensified and turning them into one of their principal the previously initiated processes of gentrifi- investments. This would make Madrid a cation in the district of Centro, and it has prototypical case for Hackworth and Smith’s broadened the phenomenon to its most theoretical frame, updated by Aalbers. The immediate surroundings although to a lesser flexibilisation of the real estate market made degree, regardless of the income levels of the possible by short-term rental platforms has areas in question. Despite the disparity in intensified the commodification of housing income, the densification of the vacation in and beyond the city centre, rather than rental supply in Puerta del A´ ngel (Western enhancing its use value through sharing. periphery), Tetua´ n (Northern periphery), Arganzuela (South end) and Barrio de Acknowledgements Salamanca (East end, in its less expensive areas) has been similar. However, residents We would like to thank Matthew Hayes, editor of this Special Issue, for his guidance and support living in the first three of these neighbour- through the publishing process. Added to the hoods are more vulnerable to higher costs of reviewers’, his suggestions helped us to improve living, given their significantly lower the overall structure and style of the article. incomes. The data show how they may have either more limited access to housing or dif- ficulty moving within the area after the con- Funding solidation of the vacation rental market. The author(s) received no financial support for To summarise, the gentrification processes the research, authorship, and/or publication of in the case of Madrid Centro and the sur- this article. rounding districts may be the result of the 18 Urban Studies 00(0)

ORCID iDs nightly price – increasing its competitivity Alvaro Ardura Urquiaga https://orcid.org/ with the traditional rental market. 0000-0002-7485-3642 11. According to the Global City Network clas- In˜igo Lorente-Riverola https://orcid.org/0000- sification, available at: http://www.lboro.ac. 0001-8161-8176 uk/gawc/gawcworlds.html.

Notes References 1. A movement of counter-cultural renaissance Aalbers M (2019) Revisiting ‘The changing state in Madrid during the post-Franco era, based of gentrification’ – Introduction to the Forum: in the underground pop music scene. From third to fifth-wave gentrification. Tijds- 2. Currently large communities from Senegal chrift voor Economische en Sociale Geografie and Bangladesh coexistent with a strong 110(1): 1–11. Chinese commercial activity and a signifi- Airbnb (2016) 17 Neighborhoods to watch in 2017: cant Moroccan population. Airbnb data reveals trending neighborhoods for 3. The average for the EU was only around travel. Available at: https://press.atairbnb. 7.5% according to Eurostat (available at: com/17-neighborhoods-to-watch-in-2017- http://ec.europa.eu/eurostat/product?code= airbnb-data-reveals-trending-neighborhoods- prc_hpi&mode=view). for-travel/ (accessed 1 July 2018). 4. The ‘Law for Urban Rentals’ (Ley de Airdna.co (2018) Madrid, Spain. Available at: Arrendamientos Urbanos) of Madrid covers https://www.airdna.co/market-data/app/es/ yearly renting contracts, forcing their exten- madrid/madrid/overview (accessed 1 July 2018). sion up to 3 years from the date of signing Ardura A (2017) La incidencia de la proliferacio´ n at the renter’s demand. del alojamiento turı´ stico en viviendas en el 5. These web pages study the supply of rooms centro de Madrid. In: 3er encuentro europeo and apartments in the city of Madrid by Vivre la ville. Available at: http://www.vivre- scraping and cleaning the data shown on la-ville.fr/wp-content/uploads/2017/03/Vivre Airbnb, making this information and other La-Ville-Madrid-2017_PonenciaTurismo- relevant insights available for download. ES.pdf (accessed 1 July 2018). 6. The disposable income has been calculated Ardura-Urquiaga A´ , Lorente-Riverola I´ ,Mohı´no- by subtracting the income per capita from Sanz I, et al. (2019) ‘No estamos tan mal como the estimated cost of living in Madrid. Barcelona’: Ana´ lisis de la proliferacio´ nyregula- 7. The data source, airdna.co, uses different filtering cio´ n de las viviendas de uso turı´sticoenMadrid protocols than Insideairbnb.com. Also, airdna.co y Barcelona. Boletı´ndeLaAsociacio´ndeGeo´gra- added the listings served on homeaway.com since fos Espan˜oles 83: 1–47. June 2017. Consequently, different counts among Arias Sans A and Quaglieri A (2016) Unravelling platforms can be expected. airbnb: Urban perspectives from Barcelona. 8. A graphic representation of this can be Reinventing the Local in Tourism: Producing, found at http://datos.elespanol.com/proyec- Consuming and Negotiating Place 73: 209. tos/airbnb/. Ayuntamiento de Madrid (2015) Renta neta 9. This is a conservative approach, which media de los hogares (Urban Audit). Avail- acknowledges that a significant number of able at: https://www.madrid.es/portales/muni users may, in fact, be sharing their apart- madrid/es/Inicio/El-Ayuntamiento/Estadis ments’ spare capacity. However, as some tica/Areas-de-informacion-estadistica/Econo municipalities are passing ordinances to con- mia/Renta/Renta-neta-media-de-los-hogares- trol the professionalisation of the short-term Urban-Audit-/?vgnextfmt=default&vgnextoi rentals, the type of listings may change d=65e0c19a1666a510VgnVCM1000001d4a90 (Shatford, 2017). 0aRCRD&vgnextchannel=ef863636b44b4210 10. On average, an apartment rented by month Vgn VCM2000000c205a0aRCRD (accessed through Airbnb has a 30% discount over its April 2018). Ardura Urquiaga et al. 19

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