Liz Demaison is a highly experienced inward investment professional and is a series of blogs, in which this is the second, we look at the experiences of leading European regions in those sectors which are driving growth in European economies.
Digital Nomads – Introduction
Digital nomads are workers who are not permanently located in one particular location and work remotely using technology to perform their job – hence living a ‘nomadic’ lifestyle.
The global Covid-19 pandemic and related lockdowns led to a considerable increase in remote working. As borders were opened, this created a bigger opportunity for people to work in different countries.
For many countries, digital nomads have been a boost to their local economy, attracting more qualified remote workers as travel restrictions relaxed post Covid-19. Over 50 countries now offer digital nomad visas.
It estimated that in 2023, there are 35 million digital nomads with an estimated economic value of c£787bn per year. (Harvard International Review, October 2023).
With one of Europe’s most ageing populations, Portugal wants to attract younger people to counter its ageing demographics as well as attracting highly qualified people to help boost their economy. In October 2022, the Portuguese government introduced the digital nomad visa (a one-year visa) for non-EU remote workers.
Within a year of launching the digital nomad visa, 2,600 digital nomad visas were issued. However, it is important to note that only reflects a small proportion of all digital nomads and according to Nomad List, Lisbon is now home to over 16,000 digital nomads.
Digital nomads are required to earn at least €2,800 per month to get the special visa. This is compared to just over half of all Portuguese workers who earn less than €1,000.
The higher earnings of digital nomads is seen as benefiting the local economy as well as providing a younger and tech related workforce who can work and collaborate with local entrepreneurs and businesses.
Creating a supportive digital nomad and start-up environment
In 2022, Lisbon was ranked in the Nomad List as the best city for Digital Nomads and was also ranked no 1 as a location for executive nomads.
As week as providing a good quality of life, Lisbon developed a soft infrastructure to support digital nomads. Collaborative networks are key for nurturing digital nomads and local networks include the Lisbon Digital Nomads Meetup group and the Lisbon Digital Nomads Slack channel.
Whilst most digital nomads are based from home, Lisbon with over 50 co-working spaces can also provide collaborative space which brings together entrepreneurs, founders and digital nomads.
The local start-up community includes the Lisbon Tech Hub and Lisbon Startup Weekend. Startup Lisboa provides entrepreneurs with office space as well as a full support structure. In October 2022, Startup Lisboa launched Unicorn Factory Lisboa, a start-up accelerator.
In additional there are hundreds of yearly tech events including the annual Web Summit. The latter is cited by Reuters as being ‘Europe’s biggest tech conference’.
Digital Nomad Sustainability
Whilst there have been considerable benefits in attracting digital nomads to Lisbon, there have been press reports that local residents are feeling priced out of local rented housing stock, with this being attributed to the high number of digital nomads living in the city.
Whilst Lisbon (with a population of 548,000) is the country’s most popular location for digital nomads, the National Tourism Organisation is working to promote other cities and regions outside of Lisbon to help ease pressure on housing and spread the economic benefits.
Conclusion
Over the last two years Lisbon has changed its image to being a city with a strong international outlook and a hub of young global digital talent. This is also supporting Portugal’s drive to position itself for wider technological investment.
Lisbon has also created an environment to support innovation and collaboration, with a view to creating more new start-ups and supporting entrepreneurs using the digital nomad method to test the market and chose Portugal as the country for permanently establishing their business.
With 46% of digital nomads originating from the US, the UK has a considerable advantage over other European locations. Given the importance of finding accommodation and overall costs, it is more likely that London would not have much appeal as other more affordable UK’s cities and larger towns. Indeed, the Digital Nomad List for the UK ranks Newcastle-upon-Tyne 1, Aberdeen 2nd and Manchester 3rd ahead of London in 4th place.
Whilst the UK does not offer a digital nomad visa, it is important to note that these visas are not necessarily used by all digital nomads. According to a recent digital nomad survey (Flatio), 44.2% have never used a digital nomad visa. UK temporary work visas could be used by a remote worker/digital nomad contingent on the kind of work they would be undertaking in the UK.
Digital Nomad Profile
- The average age of 32.
- 5 top countries of origin of digital nomads
- US –46%
- UK –7%
- Russia– 5%
- Canada– 5%
- Germany– 4%
- The top 3 industries that digital nomads work in are: IT and technology (19.3%); Media, advertising, PR and marketing (19.3%); Entrepreneurship and business (17.2%).
- 42% of digital nomads are full-time employed and 17% freelance.
- Average annual salary of $122,714
- 60% work in a home office; 15% in co-working spaces and 8% in cafes.
- Top 3 frustrations: – finding accommodation (39.8%); finding friends/meeting people (23.2%) and tax issues (18.5%).
Sources: Digital Nomad Report 2023 Flatio and Digital Nomad List
If you are interested in looking at your own inward investment strategy, structure or even trying to develop a targeting list of potential investors then get in touch with Mickledore at nwilcock@regionaldevelopment.co.uk