Airbnb investments: opportunity to increase the wealth of absent Dominicans

The construction of apartments in the main tourist areas of the Dominican Republic has boosted short term rentals, becoming an investment alternative for Dominicans. The high profitability makes the real estate sector a safe business to diversify capital in the medium and long term.

For César Iván Santana, partner of Urban Group real estate, there is an element that makes this sector attractive: the profitability in the tourist area of the island located in the Caribbean. “The country has positioned itself as an attractive destination for foreign investors and an ideal nation to live in during retirement,” he said. This is evidenced by the fact that 80% of his clients were absent nationals.

Real estate attracts the 2,835,593 nationals abroad, mainly the 2,393,718 residents in the United States, 188,308 in Spain and 28,812 in Italy, according to the study “Informe del registro sociodemográfico de los dominicanos residentes en el exterior 2022”, elaborated by the Instituto de Dominicanos y Dominicanas en el Exterior.

However, foreign direct investment has shown a fluctuating growth during the last five years. In 2022 alone, the country captured US$484 million in the real estate sector, 85.9% less than the US$536 million reported in 2021 and US$31 million more than in 2020, when this amount reached US$453 million.

César Iván Santana, partner of Urban Group real estate.
Between 2018 and 2019 presented a variation of 14.8%, going from US$518 million to US$441 million, that is, a difference of US$77 million. Meanwhile, in 2017, it reported an investment of US$546 million.

The real estate company transformed its services to combine real estate with tourism in the area of Bávaro, Punta Cana and Macao in La Altagracia, and Las Terrenas in Samaná, due to the interest of people in acquiring a second property in the tourist poles. In the tourism line, it went from US$704 million in 2017 to US$1,011 million in 2022, for a growth of 43.6%. During 2018, foreign capital stood at US$854 million, followed by US$994 million in 2019 and US$954 million in 2020. 2021 closed with US$975 million.

Market

The Dominican tourism market is characterized by sun, beach and sand, but consumers demand other alternatives, which promotes diversification that represents an opportunity for investors. Particularly for those who want to diversify their income by renting and renting an apartment.

Platforms such as Airbnb have become the main driver of this modality, allowing people to acquire apartments, houses and villas to rent them for an average of three nights and four days.

He explains that as long as you have the amenities in the type of real estate you want, you can start with investments from US$50,000 and then increase the amount to invest. While 80% of foreigners spend eight days in a hotel, 88% of absent Dominicans stay for 17 days in a private home and only 12% in a hotel.

Is it possible to make a living from rental housing in the Dominican Republic? The executive affirms that yes, because rental prices will depend on the season, the length of days and the number of people.

Location

In April 2023 alone, the Dominican Republic received 681,567 tourists, 86.1% being non-resident foreigners (587,455) and the remaining 13.9% were absent Dominicans, that is, 94,112. According to the executive, those who buy real estate in Punta Cana are “because of the high volumes of tourists arriving through the air terminal”, however, the minimum for an apartment amounts to US$150,000.

This thought is demonstrated in the statistics of the Ministry of Tourism. 59.9% of April arrivals this year were through Punta Cana, or 408,376 visitors, followed by Las Americas in Santo Domingo with 22.7% (154,718), Santiago with 67,654 tourists and Puerto Plata with 32,871 passengers.

Public

Dominicans buy properties to invest in their native country, either to generate income or retire in the short term. “In three years we sold more than 4,000 units in the Bávaro-Punta Cana area. The unfulfilled dreams of absentee Dominicans is to have a property in their homeland,” he said. However, he points out that young people are interested in investing in the accommodation market located in Macau with costs ranging from US$50,000 to US$70,000 due to their purchasing power.

Foreigners from South America are inclined to buy properties in Las Terrenas, Samana, for the tranquility and proximity to the beach of the province located in the eastern region. “Capital gain is what the consumer is looking for, the value of the apartment will go up the more amenities and the closer to the beach it is located. They tend to make a financial effort because they recognize that its value in about five years will increase,” he said.

Data from the Dominican Republic Export and Investment Center (ProDominicana) indicate that foreign capital from Brazil amounts to US$2,348.5 million, followed by Mexico with US$1,998.1 million, British Virgin Islands and Panama with US$981.6 million and US$357 million, respectively. Meanwhile, Venezuela reports US$493.7 million.

Does being a real estate agent generate high income? Santana indicates that earnings depend on the value of the real estate property, since the agent receives from 3% to 6% of the commissions.

Source: Eldinero.com

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Dominican Republic Live Editor

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