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DOMINICAN REPUBLIC: An Introduction to Real Estate & Tourism

Contributors:

Vilma Veras Terrero

Luis E. Jiménez

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Dominican Republic: Real Estate & Tourism

Since the end of 2020, the Dominican Republic ("DR") has been at the forefront of the tourism industry recovery from the COVID-19 pandemic. In January 2022, during the framework of the International Tourism Fair in Madrid, the World Tourism Organization ("UNWTO") recognized the DR for its successful recovery of the tourism industry and its efficient management of sanitary protocols to combat the pandemic. Furthermore, in May 2022, the DR received further recognition from UNWTO as the number one country in tourism recovery in the world, showcasing record arrival numbers throughout 2022. Additionally, the DR is emerging as one of the frontrunning economies in the region for foreign investment, with the Organisation for Economic Co-operation and Development (OECD) even stating that DR has been the fastest-growing economy in Latin America and the Caribbean since 2010. According to the Central Bank of the DR, the Dominican economy has had an average growth of 5.5% in the first semester of 2022; and the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) has projected a 5.3% growth for the Dominican economy in 2022, almost double the average projection for the region of 2.7%.

The real estate and tourism industry has received numerous new investment opportunities, and renewed efforts to develop real estate and tourism projects in the southern and northern parts of the island, as well as important incentives for real estate and tourism development. This includes the establishment of a trust (Pro-Pedernales Trust) by Executive Decree in 2021 to develop the southwestern province of Pedernales with national and foreign investment. The Pro-Pedernales Trust has already unveiled the master plan for the development, which includes an international airport, a shopping centre and more than 12,000 hotel rooms, aiming to convert the region into a model destination that preserves the environment and favourably impacts the economy of this part of the island. At present, procurement processes for Phase I of the development are underway, with Phase I encompassing 4,700 hotel rooms in 8 hotels which would be operated by Marriott, Hilton, Sunwing, AmResorts, Iberostar Group and Karisma Hotels & Resort. As part of the development, an additional cruise port is currently under construction in Cabo Rojo, Pedernales with plans to be in operation by the end of 2023 and estimates that the port will receive 400,000 tourists per year.

Since 2020, the new governmental authorities have dedicated immensurable time and resources to make important changes to attract foreign investment to the island, with a special emphasis on tourism and real estate development. The new Law 47-20 of Public Private Partnerships and its regulations bring forward a new framework for investment and foreign investment in the DR. The National Council of Public Private Partnerships, established by Law 47-20, at its first meeting in August 2020, decided unanimously to include tourism, housing, road infrastructure, air infrastructure and port infrastructure in the sectors to be prioritized with Public Private Partnership projects, all vital components for real estate development and tourism. Private initiatives of Public Private Partnership projects, in all prioritized sectors, may be presented at the General Directorate of Public Private Partnerships for consideration, with initiatives being already considered in sectors that impact the real estate and tourism industry.

The backbone of the real estate and tourism industry has, for the past two decades, been Law 158-01 for the Promotion of Tourism Development, creating opportunities for tourism development in different regions of the DR. This law offers important tax and importation incentives to developers and buyers of classified tourism projects in the country, including hotels, resorts, facilities for conventions, tradeshows, festivals and concerts, cruise related activities and port facilities, amusement parks, aquariums, restaurants, golf courses, sports facilities, as well as basic services infrastructure developments for the tourism industry.

ProDominicana, the Center for Exports and Investment of the Dominican Republic, has recently unveiled plans to launch in October 2022 the Single Window for Investments to have a single point of contact, speed up procedures, limit bureaucracy and obtain licences, authorizations, and non-objections from governmental entities in a streamlined process. One of the main focuses of the Single Window for Investments would be to promote national and foreign investment in the real estate and tourism industry, with ProDominicana working hand in hand with the Ministry of Tourism. The Single Window for Investments is part of the Zero Bureaucracy project, carried out by the Dominican government with aims to continue approaching the goal of being one of the most competitive countries in the region and the world.

The Dominican Association of Hotels and Tourism (ASONAHORES), the main entity representing the different players in the tourism industry, has recently stated that it projects 2022 to be the best year for the tourism industry in the DR, spotlighting the record recovery the industry has had in the past two years and stating that, with current statistics, the country could surpass this year, for the first time in its history, the seven million tourists marker. Furthermore, the Dominican Association of Real Estate Tourism Companies (ADETI), which organizes the main players in real estate developments in the tourism industry, has recently stated that the investment in real estate developments by its 15 members currently exceeds 10,000 million dollars and encompasses 27,300 rooms with an additional 4,300 rooms under constructions, representing 32% of the current room offer of the tourism industry in the island.

In the air transportation sector, the Civil Aviation Board has recently issued a statistical report showing that the DR, in the past two years, has established 62 new international routes, had a 10% increase in the airlines operating in the country, and increased charter flights 92% with 452 airlines operating charter flights since January 2021. The growth in this sector will continue to flourish with the establishment of the first Dominican ultra-low-cost airline, currently offering flights to 15 destinations and with intense growth plans in fleet and destination offerings.

In the cruise sector, the Dominican Port Authority has stated that by 2025 it plans to double the cruise terminals in the country, increasing the number of terminals to six and opening terminals in regions of the island that currently do not have the capacity to receive cruises, emphasizing that one of the terminals will be built and operated under a Public Private Partnership.

Authors:

Luis Julio Jiménez

Vilma Veras Terrero

Luis Eduardo Jiménez