The Ministry of Tourism, upon presenting the Central Unit of Tourism Procedures, announced 171 projects under construction in 12 provinces.
In the last three years, tourism real estate investment in the Dominican Republic has grown by more than 100%, and the members of the Dominican Association of Tourism Real Estate Companies (ADETI) alone have more than US$10 billion in construction investment in developed destinations.
These investments do not include remodeling, modifications or reinvestment by owners in properties they already own, according to Michael Lugo, executive director of the Association.
Recently, the Ministry of Tourism, when presenting the Central Unit of Tourism Procedures, announced 171 projects under construction in 12 provinces, with construction deadlines in force, including requests for extensions.
Of these projects, only in the province of La Altagracia there are 100, distributed in 38 hotel projects, 37 real estate projects and 25 of the rest (not specified).
In general terms, 72 belong to hotel projects, with 25,362 rooms and a projected investment of US$4,738 million; another 61 belong to real estate projects, with 25,347 rooms and an investment of US$1,797 million.
There are also 4 projects that are theme parks, with an investment of 175 million dollars.
Growth of real estate tourism
Lugo attributes the boom in real estate tourism to the arrival of the pandemic, which changed the priorities and needs of investors.
“The sector had been growing gradually during the years prior to the pandemic, occupying the role of second home for many families. The boom and dynamism in sales that occurred at the beginning of the pandemic was unprecedented. The priorities and needs of families changed drastically, and this led them to move away from the big cities and look for spaces where they could enjoy the outdoors,” notes Lugo.
In this sense, he points out that La Altagracia continues to be the province where they are mainly investing in real estate tourism, as well as Miches, Samaná, Puerto Plata, Constanza and Jarabacoa, among other locations in the country.
“It should be emphasized that each real estate tourism destination has its own focus, vision and projection; its demand will vary according to its location, offer, amenities, philosophy and public. Any area that has a particular attraction has potential and is being developed,” says ADETI’s director.
When referring to the foreigners who invest the most, the director of ADETI, maintains that each real estate tourist destination has unique attractions and different from the others, which allow a diversity of investors from different countries.
“For example, in the Eastern zone, there are many investors from the United States and Canada. However, the Samana area has a lot of investment from European countries. Other foreigners with large investments come from Spain, France and the United Kingdom,” he says.
Lugo points out that 27 thousand rooms have been built in the projects of the tourism companies of the guild, in addition to 4 thousand rooms currently under construction.
ADETI brings together the 15 main tourism real estate companies in the country, such as: Cana Rock, Ciudad Destino Cap Cana, Costasur/Casa de Campo, Club Hemingway, Green One Playa Dorada, Grupo Punta Cana, Grupo Velutini, Kaynoa, Metro Country Club, Playa Grande Golf & Ocean Club, Playa Nueva Romana, Puntarena, Rincón Bay, Terra RD Partners (INICIA’s asset manager) and Tropicalia (Organización Cisneros).
Likewise, the commercial director of Apartamentos RD in Punta Cana, Juan Carlos Mora highlights that Dominicans residing in the United States, followed by Puerto Ricans, Canadians and Haitians, are among those who are currently making significant investments in the sector.
Mora affirms that Punta Cana and Bávaro are the two areas of the country where most investments are being made, but that real estate development is booming in the north, especially in the municipality of Las Terrenas and other tourist areas of the province of Samaná.
Benefits of the Confotur Law
Juan Carlos Mora explains that these investors have been able to acquire some real estate in tourism projects, due to the facilities they have obtained through Law 158- 01 for the Promotion of Tourism Development (Confotur), through which they automatically obtained a one-time exemption of 100% of the transfer tax on real estate amounting to 3% of the sale value (only applies to the first transfer).
Also, the 100% exemption of the Real Estate Patrimony Tax (IPI) during the first 15 years at a rate of 1% of the value of the property.
In this sense, Mora points out that these benefits have translated into a significant increase in investments in tourist areas, especially in flat projects, because these are the ones that apply for the benefits of the Law.
Mora considers that this Law has contributed to the gradual increase of investment in the country in the tourism sector, due to the important and significant tax exemptions granted to those who risk their capital developing new projects aimed at all types of tourism activities.
“I want to emphasize that Law 158-01 qualifies and benefits the project to be developed, it makes no distinction between who develops it or regarding the nationality of those who wish to acquire a property in a project under Confotur, with the simple fact that the project has the final qualification granted by law all persons, whether nationals or foreigners, residents or not in the Dominican Republic will automatically benefit from the exemptions included in the law,” said Mora.
Foreign Direct Investment
According to the Central Bank report, Foreign Direct Investment (FDI) in the Dominican Republic reached the sum of US$ 1,870.9 million between January and June 2022, for an expansion of 8.0 % with respect to the same period of 2021, and is estimated to reach US$ 3.5 billion by the end of the year.
The report highlights that, in the first semester of 2022, tourism revenues registered US$ 4,121.5 million, an inter-annual increase of 92.5 %.
Regarding the behavior of the Dominican economic activity in the same period, it specifies that real estate activities and rentals had a growth of 4.0%.
A report presented by the U.S. Department of State indicates that FDI plays an important role for the Dominican economy, but also that the country is one of the main recipients of FDI in the Caribbean and Central America.
The report, “Investment Climate Statements 2022: Dominican Republic,” specifies that the government actively seeks FDI with generous tax breaks and other incentives to attract companies to the country.
“Historically, the tourism, real estate, telecommunications, free zones, mining and financing sectors are the main recipients of FDI,” the document states.
In the case of the digital platform Airbnb, which offers real estate tourist accommodation, as of September 1, 2022, in Santo Domingo 5,847 active rentals are registered.
According to the data provider for vacation rentals AirDNA, in the case of Punta Cana, the total number of active rentals as of Thursday is 5,201.
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