Build Better, Not Just More

“The city’s government has made significant efforts to improve access to housing for lower income residents,” says Anavel Monterrubio, a professor of urban sociology at Universidad Autónoma Metropolitana, referring to Mexico City’s Housing Law, which was established in 2017. “The law is centered on protecting the right to housing, but a disconnect between urban planning policies and their impact on housing limits its effectiveness.”

Displacement in the city’s central districts may not have been AMLO’s intent, but gentrification is often the unintended outcome of well-meaning progressive policies carried out in a neoliberal framework — one in which the state retreats from direct intervention and instead relies on market mechanisms to achieve social goals.

Within that framework, AMLO’s agenda helped pave the way for Mexican magnate Carlos Slim to transfigure roughly 375 acres of underused industrial land into a vibrant mixed-use district, attracting thousands of professionals to live, work, and play in a luxury enclave rebranded as Nuevo Polanco, in the Miguel Hidalgo borough.

Today office and apartment towers rise from the neighborhood’s renovated landscape, where iconic architectural landmarks encompass a host of shopping, entertainment, and cultural venues, including Slim’s own Museo Soumaya — a display window for the wealth of the world’s nineteenth-richest man, concealed behind a veil of philanthropy.

In the last decade, more than 8,000 apartments have been built in Nuevo Polanco alone, yet housing in the city center remains out of reach for most working-class residents. Between 2019 and 2024, rents rose by 19 percent in the Miguel Hidalgo and Benito Juárez boroughs, and by 26 percent in the Cuauhtémoc district. Even in Venustiano Carranza — the most affordable of the four central districts — rents posted the sharpest increase in the city last year, rising 5.5 percent. Over the same five-year period, the average home price across Mexico City increased by 36 percent.

Some argue the solution is straightforward: build more housing. And, indeed, more supply is needed. According to estimates from the country’s building association, the Mexican Chamber of Construction Industry (CMIC), and real estate market research firm Softec, at least a hundred thousand new dwellings must be constructed in Mexico City’s central boroughs by 2030 to meet demand.

But in a city where only one in five families earn a living wage — enough to cover basic expenses like food, rent, transportation, and utilities — leaving the construction of housing to the free market is unlikely to mitigate displacement.

Subsidizing Displacement

“Unless housing is built, or highly influenced by the government, it simply won’t be affordable,” says León Staines-Díaz, a professor of architecture and urbanism at Tecnológico de Monterrey. “Because land is too costly, the state has to play a role. The free market has already been given an opportunity, and all it did was create an unsustainable city.”

Indeed, a key limitation of AMLO’s densification strategy, known as Bando 2, was that the government had long since stepped back from building housing. Since the early 1990s, the role of INFONAVIT — a federal housing fund created in 1972 to pool employer contributions toward workers’ housing — had been reduced to mortgage financing. Public construction fell by the wayside and housing became a commodity.

“People thought the market would solve the problem,” Staines-Díaz says, “government intervention was frowned upon.”

While Bando 2 was meant to encourage the construction of affordable housing in well-connected neighborhoods with existing infrastructure —public transit, schools, public parks, and markets — in practice, the private sector responded differently. Although low-interest loans from INFONAVIT were available to the city’s workers, affordable homes continued to be built on the urban fringe. Meanwhile, luxury towers proliferated in the well-served neighborhoods of the central boroughs. Financial speculation surged and a real estate “cartel” emerged amid growing market concentration.

In 2019, as calls for action against gentrification in the city’s center intensified, Claudia Sheinbaum, then Mexico City’s mayor, introduced an initiative to nudge private developers to build between 7,500 and 10,000 affordable homes in gentrifying areas by 2024.

The initiative waived development fees and taxes for projects that committed to selling a third of the units built below market prices. It also fast-tracked permit approvals and directed public investment toward neighborhood infrastructure upgrades.

But the program underperformed. By the end of 2024, just 253 affordable units had been approved — across only three apartment towers — according to information obtained by Jacobin via a freedom of information request.

Planning Beyond the Market

“Developers want more density, not incentives, because that’s where the return on investment is,” says Monterrubio, whose research work focuses on the limitations of city planning that prioritizes capital accumulation over the right to housing. “That’s why developers haven’t been swayed by the program.”

When land-use regulations are relaxed to allow for taller buildings, the potential value of that land increases. This, in turn, raises land prices and exacerbates the chasm between the neighborhoods created for the affluent, and the shrinking number of options available to the working classes who serve them, Monterrubio explains.

“Deregulation creates enclaves of wealth and enclaves of poverty because it increases the value of the land, and the value of the land impacts the cost of housing.” As a result, the right to housing — which is enshrined in Mexico’s Constitution — remains largely aspirational.

“The right to housing is only guaranteed for those who can pay for it, whether they’re rich or poor,” Monterrubio says. “From my perspective, this won’t be addressed by private development, but by the meaningful participation of the government.”

Reversing the impact of four decades of a market-led urban policy won’t be easy, especially when government intervention in the free market is perceived with suspicion. But recent federal initiatives offer a glimmer of hope.

In October, President Sheinbaum put forward an ambitious plan to build one million affordable homes across the country before the end of her mandate, in 2030.

This time around, construction won’t be left at the mercy of private real estate developers.

Thanks to a recent reform to INFONAVIT’s regulatory framework, the federal government subsidiary will acquire serviced land in well-connected areas, and build social housing for lower-income workers for the first time in three decades.

In Mexico City, Sheinbaum’s plan is expected to produce 26,000 affordable homes over the next five years, and mitigate displacement in the city’s center.

“The federal and Mexico City governments have a shared vision,” said Mexico City’s new mayor, Clara Brugada, in a February press conference. “We both want to protect the right to housing and fight gentrification. These housing projects will help us do it.”