he construction sector was among the top three contributors to the Dominican Republic's economic growth in 2018 (10.6%), according to statistics released by Banco Central de la República Dominicana (BCRD). The sector has surpassed tourism and hotels, traditionally seen as the pillars of the island nation's economy.
Nevertheless, one must bear in mind that the real estate, construction, and tourism sectors are highly intertwined in the Caribbean nation; favorable economic conditions over the last five years have brought more investment in tourism infrastructure projects such as hotels and resorts.
According to the country's Central Bank, foreign investment has been on the rise since 2016, registering a 45% jump to USD3.6 billion in 2017. And, that investment has been, in part, directed to real estate and construction enterprises.
At the same time, the republic has been exhibiting more political stability since the 1990s despite widespread complaints about corruption. This, combined with the country's tropical charm, has added to the Dominican Republic's appeal as a holiday or retirement residence, particularly as the country's laws and regulations impose no limitations on property ownership by foreigners.
The Dominican Republic has been rebranding itself as a Caribbean haven for long-term residence in recent years—especially targeting North Americans. As such, a large number of residential projects currently under construction are compatible with the demands of American and Canadian customers.
In fact, investments in the real estate sector are largely made by individuals, with some real estate firms promising healthy returns of 10% or higher for modest personal investments starting from USD100,000. This level of capital appreciation is made available by an all-time high demand for rentals by tourists.
The number of gated communities under construction continued to grow in 2018 and 1Q2019. Market analysts believe the current relatively low prices—USD600-1,000 per square meter—may skyrocket if such development projects in La Romana, Punta Cana, Puerto Plata, and Samaná Peninsula find favor with foreign customers. After all, a similar pattern was observed when foreigners rushed in to buy properties in the UAE in the late 2000s.
Residential buildings in the Dominican Republic come in different styles across the country. While multistory buildings are the norm in central parts of Santo Domingo and other major cities, standalone houses in the form of Caribbean-style villas and bungalows are common everywhere else in the country.
Traditionally, most houses in the Dominican Republic are built using concrete and blocks, with the sector showing a preference for locally-available items. Cement as the lifeblood of the sector is manufactured in several plants across the country by Grupo Corripio, Domicem S.A, and Cemex, among others.
The cement market is sometimes regarded as an indicator of the real estate and construction sectors' performance. And, according to the Dominican Association of Portland Cement Producers (Adocem), the market in 2017 saw a modest increase in sales, which was followed by a 4.1% YoY leap in demand in 2018. However, this decade has also seen a change of preference for construction materials. With international-standard construction techniques becoming more commonplace, steel has been gaining popularity. Meanwhile ultramodern materials and eco-friendly designs are also entering the market.
Many architects and developers have come up with designs with a minimal impact on the environment, by employing sustainable construction materials and integrating natural elements such as tress and terrain contours in their designs. In particular, the country's northern coast has been likened to an eco-conscious wonderland.
Even if this is a marketing strategy to win the hearts of eco-conscious buyers—as some cynics have pointed out—it is a good trend to set as far as the island's future and climate is concerned. Indeed, the overlaps between the branding strategies of the country's real estate sector and environmental sustainability are a most fortunate coincidence.