Real estate continued to experience strong demand in 2014, with the domestic house market expanding markedly, and ever greater interest from the tourism sector.

Across the property market, Dominican real estate is riding a wave of popularity—continuing a trend that began at the turn of the century, and one which was largely unaffected by the global financial crisis of 2008. The continuing success is partly attributable to the boom in tourism over the past few years, and to the mushrooming of luxury international and boutique hotels across the country. Almost 5 million tourists visited the Dominican Republic last year, a country with a population of just 10 million. It is no surprise, then, that it has the highest rates of hotel construction in the Caribbean, and demand for both short- and long-term accommodation remains high year-round.

In the domestic market, too, there is an increase in demand, as the country's youthful populace (35% are aged under 35) reach an age where they are wanting to get a foot on the property ladder. This, and the changing lifestyles of today's young people, means more properties are needed to cater to singletons and young couples as yet without children.

The consequence of all this has been a surge in construction, particularly in coastal areas and in towns which just 10 years ago were fishing villages. A government program has ensured that a certain quota has remained as social housing. Nonetheless, the average price of accommodation has risen to $2,078 per sqm. Since 2005 the Dominican Republic has been attracting more tourists than any other Caribbean country—attracting more than 5 million in the year to June 2014, according to data from the World Bank. This number of visitors, in a country of only 10 million, puts considerable pressure on property prices in general. At the same time as boosting the local economy, many visitors are second-home owners, or else stay in up-market hotels. Tourism generated $5 billion in 2013, up 6.3% on the previous year.

The cumulative effect on property prices has been considerable, as they are up 7.5% YoY according to the Global Property Guide. Cumulative price increases since 2008 come to 11% YoY. The Dominican Republic, then, is a place where tourism and real estate are inextricably linked.


A huge rise in the number of so-called investment properties has fueled the rise in house prices. The average price of an apartment in desirable Puerto Plata has soared by 23% over the past 18 months. Larger apartments have risen further still as demand at the top end of the market has surged. In 2014, a 200 sqm apartment in a plush neighborhood of Puerto Plata cost on average $2,426 per sqm. The average price for a house in Puerto Plata is $1,689 per sqm, reflecting the rise in demand at the upper end of the market, with sea-view “loft" style luxury apartments in particular demand in upscale parts of towns such as Sosua and Cabarete.

One of the biggest changes in recent years has been the rise of luxury developments along the coast, particularly in and around the capital, Santo Domingo. In fact, though, overall real estate in the Dominican Republic has remained relatively affordable, and the country is still one of the least expensive markets in the Caribbean.


It is in Santo Domingo, though, where the prime real estate lies. This is hardly surprising. The country's capital city boasts excellent infrastructure links, internationally and domestically, with road, air, and maritime transport all fully integrated, making the city an important hub for the region. Santo Domingo is also the most historic in the Caribbean, with an attractive walled harbor and old town alongside modern offices and retail parks. A prime location in the Caribbean is, then, an attractive place to live for many.

This all makes for a sustained rise in property prices—a trend that is expected to continue for the foreseeable future, with ample opportunity for lucrative returns on investment. Luxury beach villas near to Santo Domingo already fetch a handsome $7 million with relative ease on the international markets.

The majority of buyers are from the US and, increasingly, Canada, as northerners seek a home, sometimes second, sometimes retirement, in what is to many nothing short of a tropical paradise. To help clients achieve their dreams, Sotheby's International Realty has been operating in Santo Domingo since 2013.

The legal structure of the Dominican Republic is highly conducive to foreign investment, encouraging some 20% of the wealth of high net worth individuals (HNWs) to be invested in property. The system also facilitates the property market, making it easier for estate agents. To this end, the sector has quietly, but radically, transformed from being the traditional terrain of banks to one in which the private individual is king. Hence the luxury market—and the construction that goes with it—is booming.


Constructora Rizek is one of the largest construction companies in the Dominican Republic, and is behind many of the major infrastructure projects in the country. The Santo Domingo Ring Road, described to TBY by the company's President, Raúl Nazario Rizek Rueda, as “the most important road project in the country… [it] connects all main Santo Domingo roads." Indeed, the long-awaited project has transformed the efficiency of the island—vastly improving journey times to neighboring Haiti, for example—and is giving easy access to vital ports and airports in the north of the country also.

But behind the infrastructure and luxury housing success stories lies a very real deficiency in low- to middle-income accommodation. By some measures the deficiency is thought to be as severe as 600,000 homes—some of which are existing structures in need of renovation. One of the reasons for this is the severity of the climate: the country has been repeatedly hit by hurricanes, while damage from winds and flooding has exacerbated the shortage. It follows that low- to middle-income housing is likely to be the worse affected by tropical storms.

The government has pledged a commitment, with the costs met by public-private partnerships (PPPs), to construct up to 40,000 new homes a year through newly set out social housing programs. These new affordable homes form a longer-term target of 400,000 such dwellings by 2023, in an effort to redress the balance and respond to changes in living patterns as well as the current shortage.


Despite the efforts of central government—and the very real demand for housing at both ends of the social spectrum—the construction sector is still relatively far from regaining its 2005-06 peak of around $2.3 billion. Current figures put the industry at $2.3 billion, though this is expected to continue growing in 2015-16, superseding its 2005 high-water mark over the coming two to three years. In 2014, the construction sector accounted for 7.3% of Dominican GDP.

For a time, cement prices were outstripping demand, rising more than 8% YoY in 2013. This is now leveling off, with supply and demand on an even keel, and the growing market cooling prices. This is helped by a healthy overseas market, particularly among neighboring Caribbean countries (the Dominican Republic is a net exporter of cement, adjusting its exports according to domestic demand, with some 300,000 tons exported to Haiti and Caribbean islands in 2013 and 2014). Nonetheless, cement producers have invested well over $1 billion in the domestic construction sector over the past 15 years. Constructora Rizek and ADOCEM, and the association of cement producers, have seen an increase in foreign investment in 2014, as growth in the new homes market continues.

New projects are also a big part of the government's ambitious push for more health and education facilities, as Julissa A. Báez, Executive Director of the Dominican Association of Cement Producers (ADOCEM), explained to TBY: “The government plans to build 18,000 schools over [the next] two to three years. For years we have not seen an increase in demand, but in 2013 it was at 16%, mainly due to government investment in the building of schools."

Developing the Dominican mortgage market is expected to boost real estate in the coming years.

As reported in Fitch's Construction Sector in the Dominican Republic—Challenges and Opportunities, the sector is highly sensitive to changes in the economic cycle. From 2003 to September 2013, the Dominican Republic's construction sector registered an average growth of 2.4% and high volatility, reflected in a standard deviation of 10.3%. Therefore, according to Fitch, the sector's performance, in the short- and medium-term, will depend on the state's capacity to invest in infrastructure, as well as on the implementation of public policies to encourage private investment in the sector.

In 2012, the Dominican Republic enacted Law No. 189-11, aimed at supporting the country's efforts to expand its housing stock and helping the Dominican Republic's mortgage market to develop while providing significant opportunities for investors. In order to promote private sector participation in low-cost housing projects, the new Law on Mortgage Market Development and Trusts provides several tax incentives and exemptions. Moreover, it established the Trust as a legal instrument in the Dominican Republic's legal framework. Therefore, legal entities incorporated to manage assets, banks, investment fund managers, stock brokers, and other financial intermediaries, authorized by the Monetary Board of the Dominican Republic, hold the right to act as trustees. As stated by Jorge Yanes, Director in Fitch's Latin America Group, “The implementation of the Law for the Development of the Mortgage Market and Trust is expected to help boost the sector in the medium- and long-term, and to mitigate the increased housing deficit in the country."

Infrastructure projects in the Dominican Republic remain highly attractive for private capital, both from construction and financing standpoints. The country continues to improve its sanitation system, water and energy distribution, as well as roads, bridges and similar infrastructure items; therefore the investment in the construction and real estate is expected to see an increase in the short- and medium-term.