While it felt the effects of the global economic crisis, the Dominican Republic is coming back with a growing GDP and a recovering property market. It continues to be the Caribbean region’s largest economy and biggest tourist destination.
Both the ECLAC (Economic Commission for Latin America and the Caribbean) and the IMF forecast a 6% GDP growth for the Dominican Republic for 2010. It is the best result for the Caribbean, though it still lags behind several Latin American countries. The prediction was made on the back of the country’s 7.5% year-on-year GDP growth in the first half of the year. Furthermore, free trade agreements with the US and Central America (DR-CAFTA) and the European Union (EPA) have increased Dominican activity in international trade. The country is presently conducting similar free trade talks with Canada and Taiwan.
The Dominican Republic has over 9 million people spread over a mountainous 48,072 sq km, with an average GDP per capita of US$5,464. Despite its potential, it also has a ton of problems, including a vast gap between rich and poor, a high unemployment rate, government corruption, and constant power outages.
However, the number of foreign investors swarming to the Dominican Republic is a sign of progress. There are several new projects in the high-end segment of its real estate market, the most high-profile of which is the Cap Cana development. Built on more than 30,000 acres of land, it is the country’s largest resort and residential complex, with several hotels, golf courses, and luxury villas, lodges and apartments.
Realtor Josefina Covents of the Cabarete-based agency Josefina Covents y Asoc, sees the overseas housing market growing next year. “We in the Dominican Republic were some of the last ones to feel the global crisis, so we’re some of the last ones to come out of it,” she says. Covents anticipates that interest should start rising during the tourist season—from mid-December to April—so there should already be increased activity by the end of the year.
There are no restrictions on foreigners’ buying or renting property in the Dominican Republic. However, the country being a buy-to-let destination, landlords find it difficult to evict tenants as long as they pay rent (these rental laws do not apply within specific tourist areas). Yields are very low, according to Global Property Guide research.
Both the ECLAC (Economic Commission for Latin America and the Caribbean) and the IMF forecast a 6% GDP growth for the Dominican Republic for 2010. It is the best result for the Caribbean, though it still lags behind several Latin American countries. The prediction was made on the back of the country’s 7.5% year-on-year GDP growth in the first half of the year. Furthermore, free trade agreements with the US and Central America (DR-CAFTA) and the European Union (EPA) have increased Dominican activity in international trade. The country is presently conducting similar free trade talks with Canada and Taiwan.
The Dominican Republic has over 9 million people spread over a mountainous 48,072 sq km, with an average GDP per capita of US$5,464. Despite its potential, it also has a ton of problems, including a vast gap between rich and poor, a high unemployment rate, government corruption, and constant power outages.
However, the number of foreign investors swarming to the Dominican Republic is a sign of progress. There are several new projects in the high-end segment of its real estate market, the most high-profile of which is the Cap Cana development. Built on more than 30,000 acres of land, it is the country’s largest resort and residential complex, with several hotels, golf courses, and luxury villas, lodges and apartments.
Realtor Josefina Covents of the Cabarete-based agency Josefina Covents y Asoc, sees the overseas housing market growing next year. “We in the Dominican Republic were some of the last ones to feel the global crisis, so we’re some of the last ones to come out of it,” she says. Covents anticipates that interest should start rising during the tourist season—from mid-December to April—so there should already be increased activity by the end of the year.
There are no restrictions on foreigners’ buying or renting property in the Dominican Republic. However, the country being a buy-to-let destination, landlords find it difficult to evict tenants as long as they pay rent (these rental laws do not apply within specific tourist areas). Yields are very low, according to Global Property Guide research.
Analysis of Dominican Republic Residential Property Market »
RENTAL YIELDS
Last Updated: Jan 31, 2012
Average apartment prices in Puerto Plata have increased by a whopping 23%, according to the latest Global Property Guide survey. Bigger apartments showed the highest price appreciation. Last year, a 200 square metre (sq. m) apartment cost around US$2,042 per sq. m. This figure has jumped by 19% and now it costs around US$2,426 per sq. m to buy a 200-sq. m apartment in upscale neighborhoods of Puerto Plata, like Sosua.
The same trend is evident for house prices in Puerto Plata, though the price appreciation is not that high. Last year, the average house price in Puerto Plata was US$1,578 per sq. m. This has slightly increased to US$1,689 per sq. m. now.
The same trend is evident for house prices in Puerto Plata, though the price appreciation is not that high. Last year, the average house price in Puerto Plata was US$1,578 per sq. m. This has slightly increased to US$1,689 per sq. m. now.
TAXES AND COSTS
Last Updated: Feb 07, 2012
Rental Income: Nonresident foreigners earning rental income in the Dominican Republic are liable to tax at the corporate rate of 25%.
Capital Gains: Capital gains are taxed at a flat rate of 25%.
Inheritance: Inheritance taxes are levied at a flat rate of 3% for properties.
Residents: Residents are taxed on their worldwide income and some kinds of investment income derived from abroad at progressive rates, from 0% to 25%.
Capital Gains: Capital gains are taxed at a flat rate of 25%.
Inheritance: Inheritance taxes are levied at a flat rate of 3% for properties.
Residents: Residents are taxed on their worldwide income and some kinds of investment income derived from abroad at progressive rates, from 0% to 25%.
BUYING GUIDE
Last Updated: Apr 03, 2008
Roundtrip transaction costs are around 12.3% - 17.3% of property value. The agent’s commission of 5% - 10% the property value accounts for the greater part of the costs and is usually paid by the seller. The buyer pays the transfer tax (3%), property registry tax (2%), document stamp tax (1.3%) and legal fees (1%).Buyers must be vigilant. There is much history of fraud by real estate agents in the country, and little protection is offered to the buyer. Any knowledge of Spanish must be shown off. Real estate agents tend to offer higher prices to foreigners, especially when their services are employed in English.
LANDLORD AND TENANT
Last Updated: Jun 08, 2006
The law is strongly pro-tenant.
Rent Control: Rents are strictly controlled in the Dominican Republic. The maximum monthly rent is fixed at 1% of the rental property’s value. The tenant can request the Rent Control Authority to reduce the rent if it exceeds the maximum rate.
Tenant Eviction: It is not easy to evict a tenant even when the owner decides to use the property for personal reasons. A hearing must be conducted and the tenant is usually given months, or even years, to look for an alternative dwelling that he can afford.
Rent Control: Rents are strictly controlled in the Dominican Republic. The maximum monthly rent is fixed at 1% of the rental property’s value. The tenant can request the Rent Control Authority to reduce the rent if it exceeds the maximum rate.
Tenant Eviction: It is not easy to evict a tenant even when the owner decides to use the property for personal reasons. A hearing must be conducted and the tenant is usually given months, or even years, to look for an alternative dwelling that he can afford.
ECONOMIC GROWTH
Last Updated: Jul 31, 2010
Catching up in tourism and development
Despite recent economic growth, the Dominican Republic is still one of the least developed countries in the Caribbean. The economy is primarily dependent on agriculture, trade, and tourism. The economy grew an average of 3.5% per year from 2000 to 2005. The GDP growth rate for 2006 was a stellar 10.7% (after 9.3% in 2005) and growth of 6% is forecast for 2007.Tourism is a major contributor to the country’s economic development. It is relatively cheaper than other Caribbean islands making it one of the most popular destinations.
The Dominican Republic’s President, Leonel Fernandez, began his second non-consecutive term in August 2004. He successfully ran for president in 1996, and during his first term the Dominican Republic experienced economic growth of 7% a year. But his successor, Hipolito Mejia, oversaw rampant inflation, a plummeting currency and high unemployment. Campaigning amid economic turmoil Fernandez pledged to reduce inflation, to stabilize the exchange rate and to restore investor confidence.Upon taking office he introduced austerity measures, including cuts to state spending. The moves helped to secure an International Monetary Fund loan. He has since overseen a policy of actively encouraging tourism. Problems of poverty, inequality and violence remain, but the Dominican Republic is clearly on the right track.
RSS
Global Property Guide on Twitter
Global Property Guide on Facebook
Global Property Guide on Linked In