DOMINICAN REPUBLIC: An introduction to Real Estate & Tourism

A Country on the Rise

The Dominican Republic has been the fastest-growing economy in the Caribbean since 2014. With a population of 11.23 million inhabitants and an estimated GDP for 2024 of USD127,913 billion, it is the seventh largest economy in Latin America and the largest in the Caribbean.

The Dominican economy has transitioned successfully in the past few decades to a well-diversified mix mainly comprised of services, manufacturing, agriculture, mining, real estate, and trade. The service sector accounts for almost 60% of GDP and includes the tourism, telecommunications, and finance industries.

This year, the country experienced continued dynamic growth within key economic sectors, including construction, agriculture, financial services, healthcare, hospitality, transportation, and local manufacturing, with inflation holding relatively steady when compared with previous years.

International trade has also been growing between the Dominican Republic and its most important trading partners: the United States, China, Haiti, Mexico, Colombia, Spain, Brazil, the Netherlands, Belgium, the UK, Jamaica and Cuba.

Real Estate Market Trends

One of the most notable real estate market trends in the Dominican Republic is the rise in demand for both commercial and residential properties in coastal areas as a result of the booming tourism industry, as well as the surge in foreign property investors. There is also increasing demand for housing from the local middle class, driven by economic growth and improved access to financing.

This trend has prompted the development of important projects in the tourism sector by well-known international developers, some of which are already operational, in the areas of Punta Cana, Bani, Miches, Puerto Plata, Santo Domingo and the southwest provinces of Pedernales, Barahona and Peravia.

Another trend is the increasing popularity of luxury properties. The Dominican Republic has become a hot spot for wealthy individuals looking for high-end vacation homes and investment properties. The volume of luxury property transactions has been rising strongly since the end of the pandemic.

There is also a growing trend in producing eco-friendly real estate. Many developers are now incorporating sustainable design features into their projects, such as solar panels, rainwater harvesting systems, and green roofs, making them more appealing to environmentally conscious buyers.

In terms of real estate as an investment, there is a noticeable trend towards buying properties for rental income, particularly in tourist-heavy areas. Properties like beachfront villas, apartments in popular tourist destinations, and properties near major attractions are in high demand among investors.

Areas with high tourist traffic, like Punta Cana, Puerto Plata, and parts of Santo Domingo, typically see a robust demand for short-term rentals. These regions cater to tourists and seasonal visitors who prefer renting over buying, leading to a vibrant rental market.

A growing trend has been the use of public-private partnerships to develop new regions for tourism such as the southwestern area of the country, Cabo Rojo and Bahia de las Aguilas in Pedernales, which are virgin beaches. This will be an eco-friendly development which will include hotels and residential developments, as well as an international airport. There is also Ciudad Juan Bosch, a real estate development of more than 12,000 homes, to which the government contributed land and infrastructure for the private sector to build housing for low-income families in the city of Santo Domingo.

Recently, local promoters, hotel operators and prominent landowners created the Hotel and Tourism Association of El Seibo and Miches (PROMICHES), with the aim of positioning Miches, a coastal town in the eastern part of the island, as an environmentally responsible and inclusive tourist destination. PROMICHES will promote the development and growth of innovative and socially responsible businesses that protect and enhance the environmental and cultural diversity of the area. Its members represent projected investments totalling USD1.18 billion that will add 3,400 new hotel rooms and 1,400 residential rooms to the region.

Impact of Disruptive Technologies

Disruptive technologies have transformed every step of the real estate value chain, providing massive opportunities for the industry. The technologies with the highest rate of adoption in the country include augmented reality (AR), drones, and artificial intelligence (AI), along with instant communication channels and social media, big data, and the 5G network.

So far, the fastest adoption has been in AR and drones for surveying properties and neighbourhoods and for providing virtual tours, and due to the fast-paced nature of the business, instant communication tools and social media have also had a significant impact.

There is still room for improvement in the way big data is being used by the industry, but this will likely change as AI-powered customer relationship management and listings become more prevalent.

There are also high expectations of the 5G network, to which the Dominican government has given priority, as this will influence real estate development, from the way existing structures are used, to the way new structures will be integrated into the internet of things. Smart buildings have been the standard for new constructions in the country for some time now.

In addition, the outlook is that as blockchain technology becomes more mainstream, it will permeate the industry, having been touted as a far more secure and transparent way to conduct high-value transactions.

Regulatory Developments in Real Estate

The Dominican Republic has been improving the legal framework for buying and selling property, making it more straightforward and secure, as well as more transparent. These efforts include streamlining the process for acquiring title insurance and registering property, both crucial for foreign investors.

Part of these improvements include the general regulations of the real estate courts, general regulations for the registration of titles, general regulations for cadastral measurements and for the regulation of parcels and demarcations. There is also the general bill on real estate rentals and evictions, which is being revised by congress.

Regarding government policies in 2024, areas of focus include further development of infrastructure, like road expansions and airport upgrades, refurbishment of ports for cruise ships, enhancing tourism facilities, and continuing to improve the legal framework for property transactions.

In August 2024, Dominican President Luis Abinader announced during the inauguration speech of his second term in office that this year will bring a fiscal reform, as recommended by the International Monetary Fund (IMF).

Foreign Investment in the Dominican Republic

During the past two decades, the Dominican Republic has sought to foster a highly receptive environment for international investors, adopting policies that minimise regulatory obstacles and provide incentives to foreign companies and individuals to invest in the country. As a result, the Dominican Republic has become the primary destination in the Caribbean for foreign investors.

The Dominican Constitution gives equal treatment under the law to foreign and local investors: foreign investors are bound by the same rules and regulations applicable to local investors and can freely hold equity in local businesses and joint ventures, and own real estate.

There are no major restrictions on foreign investment and investors can repatriate their profits and capital.

Income Convergence Progression

The Dominican Republic leads Latin America in rapidly narrowing the income gap with the USA. A recent report by the International Monetary Fund (IMF) stated that the country has the potential to become an advanced economy in the next 40 years.

On 29 July 2024, during the opening remarks of the IMF's XVIII CAPDR Regional Conference, Deputy Managing Director Kenji Okamura stated that “This year, Central America, Panama, and the Dominican Republic outperformed the rest of Latin America and other emerging markets with stronger growth and lower inflation. In the medium-term, we project growth in these countries to be about double that of the Latin American and Caribbean region – more in line with other emerging market economies”.