Authored by the expert who managed and guided the team behind the Mexico City Property Pack
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Mexico City's Airbnb regulations have fundamentally altered the short-term rental landscape since their implementation.
The new rules impose a 180-night annual cap on short-term rentals, along with stricter registration requirements and higher compliance costs. While average daily rates have only declined slightly, the occupancy limitations and additional expenses are significantly impacting overall rental yields for property investors in Mexico City.
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Mexico City's Airbnb regulations have capped annual rental nights at 180, reducing maximum income potential while adding compliance costs.
Despite these restrictions, well-located properties in Roma Norte, Condesa, and Polanco continue to show strong performance with occupancy rates averaging 68%.
| Metric | Pre-Regulation | Post-Regulation (2025) |
|---|---|---|
| Average Daily Rate | MXN 1,022 ($60) | MXN 1,012 ($59) |
| Annual Night Cap | 365 nights | 180 nights |
| Average Occupancy | 62% | 68% |
| Maximum Annual Revenue | MXN 373,030 ($21,900) | MXN 182,160 ($10,620) |
| Payback Period | 9-12 years | 13-16 years |
| Net Yield Range | 8-12% | 5-7% |
| Active Listings Change | Baseline | -1% (700-1,000 fewer) |
How much have average daily rates for Airbnbs in Mexico City changed since the new regulations came in?
Average daily rates for Mexico City Airbnbs have declined modestly since the new regulations took effect.
As of September 2025, the average daily rate sits at approximately MXN 1,012 ($59) per night, representing a 1% decrease from pre-regulation levels of around MXN 1,022 ($60). This relatively small decline suggests that demand has remained fairly stable despite the regulatory changes.
The slight decrease in daily rates reflects increased competition among the remaining active listings, as hosts compete more aggressively for bookings within their limited 180-night annual allowance. Premium neighborhoods like Roma Norte and Condesa have maintained stronger pricing power, while secondary areas have experienced more pronounced rate pressure.
It's something we develop in our Mexico City property pack.
What are the current occupancy rates across Mexico City's main neighborhoods compared to before the rules?
Occupancy rates in Mexico City have actually improved since the new regulations were implemented.
Current citywide occupancy averages 68%, representing a 6% year-over-year increase from the previous 62%. This counterintuitive improvement stems from the reduction in total available listings, which has concentrated demand among the remaining compliant properties.
Roma Norte, Condesa, and Polanco continue to lead with occupancy rates often exceeding 75%, while neighborhoods with less tourism infrastructure have seen more modest gains. The regulatory framework has effectively reduced supply faster than it has reduced demand, creating a more favorable environment for well-positioned properties.
How many nights per year are hosts now legally allowed to rent out, and how does that cap affect annual income potential?
Mexico City hosts are legally limited to 180 nights per year for short-term rentals, representing exactly 50% of the calendar year.
This cap dramatically reduces maximum annual income potential compared to pre-regulation periods when properties could theoretically be rented 365 nights per year. With the current average daily rate of MXN 1,012 ($59), the maximum theoretical annual revenue is now MXN 182,160 ($10,620), compared to the previous potential of MXN 373,030 ($21,900).
Exceeding the 180-night limit results in immediate permit revocation and a one-year rental ban, making compliance essential for sustained operations. This cap forces hosts to be more strategic with pricing and booking management, often leading to higher minimum stay requirements and more selective guest acceptance.
What kinds of extra taxes, permits, or compliance costs do hosts now face, and how much do they cut into net returns?
Mexico City Airbnb hosts now face substantial additional compliance costs that significantly impact net returns.
| Cost Type | Rate/Amount | Annual Impact |
|---|---|---|
| ISR Income Tax | 35% | MXN 63,756 ($3,717) |
| VAT (IVA) | 16% | MXN 29,146 ($1,699) |
| Local Lodging Tax | 3-5% | MXN 5,465-9,108 ($319-531) |
| Registration Fees | Biannual renewal | MXN 2,000-4,000 ($117-233) |
| Required Insurance | Annual premium | MXN 8,000-15,000 ($467-875) |
| Violation Penalties | Up to MXN 21,000 | MXN 21,000 ($1,225) if non-compliant |
| Total Tax Burden | 54-56% | MXN 98,367-107,010 ($5,734-6,244) |
These costs reduce net returns to approximately 5-7% annually, down from the previous 8-12% range before regulations were implemented.
Which neighborhoods still show strong demand despite the restrictions, and where has demand dropped the most?
Roma Norte, Condesa, and Polanco remain the strongest performing neighborhoods for Airbnb properties despite the new restrictions.
These prime areas continue to attract consistent demand from international tourists and digital nomads, maintaining occupancy rates above 75% even with the regulatory constraints. Their established tourism infrastructure, dining scenes, and cultural attractions provide sustained appeal that helps justify premium pricing.
Secondary neighborhoods with less developed tourism amenities have experienced the sharpest demand drops. Areas lacking metro connectivity, international restaurants, or notable attractions have struggled to maintain competitiveness under the new framework. Properties in these locations often cannot command rates high enough to offset the reduced rental nights and increased compliance costs.
The concentration of demand in prime neighborhoods has increased competition but also created opportunities for well-managed properties to capture higher occupancy rates than the citywide average.
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What is the average monthly yield for a Mexico City Airbnb today compared to long-term rentals in the same area?
Mexico City Airbnb properties generate an average monthly yield of MXN 19,922 ($1,161) as of September 2025.
This translates to a capped annual yield of approximately MXN 239,000 ($13,000) before taxes and expenses. After accounting for the 54-56% total tax burden and operational costs, net annual yields typically range from 5-7%.
Long-term rentals in the same areas often provide more stable returns, particularly for non-premium properties. Traditional rentals face lower tax rates and fewer regulatory requirements, making them increasingly attractive for investors seeking consistent income streams. The gap between short-term and long-term rental profitability has narrowed significantly since the regulations took effect.
It's something we develop in our Mexico City property pack.
How have property purchase prices in key Airbnb hotspots like Roma, Condesa, and Polanco evolved in relation to falling rental yields?
Property purchase prices in Mexico City's prime Airbnb neighborhoods have continued to rise even as rental yields have declined.
Roma Norte, Condesa, and Polanco have experienced sustained price appreciation driven by both international buyer interest and local demand. This price growth, combined with reduced rental income potential, has created a challenging environment for yield-focused investors.
The disconnect between rising property values and falling rental returns reflects the broader appeal of these neighborhoods beyond just short-term rental investment. Many buyers are purchasing for personal use, long-term rental, or capital appreciation rather than Airbnb income, which helps sustain property values despite regulatory pressures on rental yields.
What's the payback period now for someone buying a property in Mexico City to rent on Airbnb, versus pre-regulation?
The payback period for Mexico City Airbnb investments has extended significantly under the new regulatory framework.
Current payback periods range from 13-16 years, compared to the pre-regulation average of 9-12 years. This extension reflects both the reduced income potential from the 180-night cap and the increased operational costs associated with compliance.
Investment viability now depends more heavily on capital appreciation than rental income. Properties in prime locations may still justify longer payback periods due to strong appreciation potential, but investors must factor in the regulatory constraints when calculating returns.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Mexico versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
How do yields differ for entire homes versus private rooms or shared units under the current framework?
Entire homes continue to generate higher yields than private rooms or shared units, but both categories face the same 180-night annual limitation.
Entire apartments typically command daily rates 40-60% higher than private rooms, with average rates around MXN 1,200-1,500 ($70-87) per night in prime neighborhoods. However, they also incur higher operational costs including full property maintenance, utilities, and furnishing expenses.
Private rooms and shared units offer lower daily rates but also have reduced operational complexity. The annual night cap affects both equally, making the choice between formats more dependent on initial investment capacity and management preferences rather than regulatory advantages.
What share of listings has disappeared from Airbnb since the rules were enforced, and how has that affected competition?
Approximately 1% of Mexico City Airbnb listings have disappeared since the regulations were enforced, representing roughly 700-1,000 fewer active properties.
This reduction in supply has paradoxically benefited compliant hosts by reducing competition and increasing booking opportunities. The listings that remain active tend to be better managed and more professionally operated, leading to improved overall market quality.
The decreased competition has allowed well-positioned properties to maintain higher occupancy rates and, in some cases, increase their pricing power. Properties that invested in compliance early have gained market share as non-compliant competitors exited the market.
How do Mexico City's new Airbnb returns compare with those in other major Latin American cities like MedellĂn or Bogotá?
Mexico City's Airbnb returns remain competitive within the Latin American market despite the new regulations.
| City | Average ADR (USD) | Average Occupancy | Net Yield Range |
|---|---|---|---|
| Mexico City | $59 | 68% | 5-7% |
| MedellĂn | $45 | 65% | 6-8% |
| Bogotá | $42 | 62% | 5-7% |
| Buenos Aires | $38 | 58% | 4-6% |
| Lima | $48 | 60% | 5-7% |
Mexico City maintains higher daily rates than most regional competitors, and its tourism infrastructure and international appeal continue to drive strong demand. The city's occupancy rates exceed those in MedellĂn and Bogotá, partially offsetting the regulatory limitations.
It's something we develop in our Mexico City property pack.
What are the most effective legal strategies local hosts are using to stay profitable under the current restrictions?
Successful Mexico City hosts are employing several key strategies to maintain profitability under the new regulatory framework.
- Early compliance and registration: Hosts who registered promptly with the city's technological platform registry avoid penalties and operate with full legal protection
- Strategic pricing optimization: Implementing dynamic pricing strategies that maximize revenue within the 180-night constraint, often including higher minimum stay requirements
- Professional property management: Investing in high-quality amenities and professional management services to justify premium pricing and ensure maximum occupancy
- Comprehensive insurance coverage: Securing appropriate insurance policies that meet regulatory requirements while protecting against potential liabilities
- Legal challenge preparation: Some hosts are exploring "juicio de amparo indirecto" procedures to challenge specific aspects of the regulations through Mexico's legal system
The most profitable hosts focus on maximizing revenue per available night rather than simply increasing total nights, adapting their business models to work within the regulatory constraints rather than attempting to circumvent them.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Mexico City's Airbnb regulations have fundamentally altered the short-term rental investment landscape, but opportunities remain for strategic investors.
While yields have decreased and compliance costs have increased, well-located and professionally managed properties in prime neighborhoods continue to generate competitive returns within the Latin American market.
Sources
- Airbtics - Annual Airbnb Revenue in Mexico City
- PriceLabs - Mexico City Vacation Rental Market Outlook
- Hostaway - Airbnb Short-Term Rental Mexico City
- The LatinvestOR - Airbnb Mexico City Analysis
- Mexico News Daily - Airbnbs Mexico City 180 Days
- K&G Legal - Mexico City Tourism Law Modifications
- America Economia - Mexico City Airbnb Regulations
- Property Investor News - Mexico City Caps Airbnb Rentals