As Investors, we usually benefit handsomely when we “time” our investments correctly and as a result we benefit from property price appreciation! We love to ride positive trends! Never easy to predict the future, but I do see right now in this country specific market, environmental and economic conditions that strongly point towards property price appreciation. It’s been a great market to invest for the last couple of years, and I believe the trend is going to continue! So is this the best time to invest in Dominican Republic real estate?
First I want to address the following:
I never invested for price appreciation, nor I would recommend anyone to do so!!! Never, ever count on price appreciation on your financial model to justify an investment. If you absolutely need appreciation for an investment to deliver positive results, you are not really “investing”, you are simply “speculating”. Please keep this in mind!
So what do I believe is the absolute best game plan?
- INVEST BASED ON FUNDAMENTALS: Make sure the property not only has positive cash flows (it pays for itself!), but at the same time that the cash flow generated delivers an acceptable rate of return.
- INVEST IN MARKETS WITH POTENTIAL: Markets and properties where the environmental conditions and trends point towards a high chance of price appreciation.
That’s it, very simple right? If you follow these guidelines, you will win big time! You will win just by holding the right property, even if prices do not go up for a while! And you’ll win again when market prices increase! Whenever you can ride an appreciating market for quite a few years, the gains can be absolutely massive!!! I had the chance to experience this first in Ontario, then in Alberta, and I think it will be the same here in the DR
So what are the trends I see here in the DR that point towards further price appreciation?
- ECONOMIC EXPANSION – The Dominican Republic is the fastest growing economy in Latin America and the Caribbean (GDP up 5.8% annually since 2010). A robust and growing economy usually strengthens the property market, everywhere in the world!
- BOOMING TOURISM INDUSTRY – The Dominican Republic is the #1 tourist destination in the Caribbean. In 2022, more than 8.5 million people visited, this is 3.7% more than the previous year. And so far in Q1 2023, 2.8 million people visited this country! So we are in for another record year in 2023!
- SAFE INVESTMENT ENVIRONMENT – The local government is open for business and welcomes foreign investments. There are important tax incentives for both new construction developers and foreign buyers to invest. Foreign property buyers receive important tax exemptions both at the time of purchase as well as during the first 15 years of owning the property.
- GOVERNMENT POLICIES – The government is constantly investing in infrastructure that supports the tourism industry and the economy. Tourism accounts for 25% of the economy! Examples of such can be found in recent investments to build highways, expand cruise ports and expand airports in key areas.
- RELATIVE AFFORDABILITY – Property prices in the Dominican Republic are still very attractive compared to other “sun” destinations that compete for the same foreign buyers groups, such as retirees, digital nomads and now increasingly investors.
- PROPERTY RIGHTS – Foreigners enjoy the exact same property rights as Dominicans. Property can be owned directly in the buyer/s names, or by local corporations that foreigners can set up easily. This is huge and not that common in other countries.
- LOCAL MORTGAGE MARKET EXPANSION – The mortgage market is still relatively small but growing at a fast pace! From our experience, whenever the available credit grows for the purchase of properties, this constitutes fuel for price appreciation!. And this applies to both locals and foreigners! We are starting to see programs for foreigners to finance the purchase of a vacation rental. Of course terms aren’t as favourable as in North America, but it’s a great start!
- FOREIGN BUYER DEMAND – Last but not least, we see strong demand from many groups, both to buy and rent, such as retirees or soon to retire individuals, digital nomads, investors, as well as Dominicans living abroad!
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