Investment Growth In The Dominican Republic

General Factors

Investment property in the Dominican Republic is a much talked about subject amongst Caribbean property buyers. This spectacular island is undergoing a sizeable growth spurt in economic terms, and new developments are on the increase to satisfy the growing demand for quality resort-style accommodation.

Prices are, for now, a good deal lower than in the rest of the Caribbean. After careful analysis, many investors are impressed by the great potential the Dominican Republic has as a property investment location. Not only has it long been a popular package holiday destination, the tourism sector is now rocketing, while government incentives, tax breaks and the mere fact that it is the largest of the Caribbean islands, mean it offers an interesting diversity in attractions and investment opportunities.

Already hosting the greatest number of tourists in the Caribbean, according to the Caribbean Tourist Organisation, the Dominican Republic is set for even more growth partly due to the introduction of more budget airline services from US cities, such as JetBlue and Spirit Airlines. Unprecedented numbers of tourists and investors are flocking in to make the most of Caribbean paradise at affordable prices. The Central Bank confirms that the Dominican Republic is undergoing successive years of economic growth (10.6% in 2007) while welcoming some 4 million visitors last year. Tourism growth forecasts to 2017 reflect increases in demand of an average 3.4% per annum.

Property in the Dominican Republic not only offers the best value to be found in the Caribbean, it is set within a rich diversity of natural beauty, from white, sandy beaches and crystalline waters, to cool mountain breezes. In short, the island equals the beauty of many of the more expensive Caribbean destinations, while its sheer size allows it to boast a far greater diversity – all this at the bargain prices that this growing market provides.

When the world’s largest corporations, hotel chains and most wealthy individuals decide that now is the time to invest in the DR, investors can rest assured that real estate investment in the Dominican holds the potential it needs. Business tycoons are attracted to the charms of the Dominican Republic: Donald Trump believes in the Dominican Republic’s potential to the tune of $2bn at Cap Cana and, within just four hours of first phase release last year, record sales were made to the tune of $300m. This is a clear indication of overwhelming demand on the island for luxury property.

Capital growth

Capital growth is currently around 20% p.a. but the Wall Street Journal predicts up to 50% growth in the near future. Although in times of “Credit Crunch” this seems a tad optimistic, shrewd investors are making the most of the Dominican’s many opportunities for low entry pricing and accelerating capital growth, while looking forward to strong returns for the future.

Rental yields

With tourism figures increasing and year-round holiday appeal a strong feature, rental yields in well chosen resort locations are expected to reach at least 8%. Many investors are making the most of beneficial rental guarantee offers, allowing them to achieve ongoing rental returns to supplement capital growth.

Dominican Republic Economy

The Central Bank reports that the Dominican Republic (DR) economy is in an exceptionally healthy state with GDP growth at around 8.5% (2007 est.), supplementing several successive years of growth.

The Dominican Republic receives World Bank aid, in addition to assistance from the Inter American Development Bank and the EU. Foreign Direct Investment (FDI) has also been increasing, up from $1.02bn in 2005 to $1.18bn in 2006 and then 1.39bn in 2007, with 2008 predicted to be well over 2 billion dollars. This is evident in the Free Trade Zones around the country as well as new real estate projects, with obvious positive effects on economy at large. Some of the international business giants on the island now include Wal-Mart, and famous hotel groups such as Four Seasons, Conrad, Fairmont and Ritz Carlton.

Reasons why the Dominican Republic is an intelligent property investment location:

• Caribbean paradise destination still at affordable prices
• Growing property market on the back of rocketing tourism demand: The Tourism Plan 2008-2012 is to promote an annual increase of around 17,000 international tourists in a bid to reach its target 5 million tourists by 2012
• Government policies and tax incentives designed to further encourage foreign investment
• Relatively low property prices and attractive rental guarantees on many sought-after new developments
• Availability of mortgage finance
• Stunning eco-resorts, golf developments, marinas, spas and major resort developments to provide luxury accommodation and commercial opportunities.
• The Central Bank confirms the Dominican’s economy grew by 10.6%, following several years of successive growth
• International airports and proximity to 300 million holidaying North Americans
• Superb crystalline waters, forested landscapes, and powdery white beaches
• Stars, property tycoons, and business giants all now claiming their stakes
• Considerable government investment on upgrades to the country’s infrastructure
• Warm Caribbean climate for year-round investment appeal
• Mature government with stabilised currency

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