Residential property prices in the Dominican Republic continue to increase, supported by strong demand from both local buyers and international investors.

In May 2024, the average price of apartments rose by 7% to DOP118,304 (US$1,980) per square meter (sqm) as compared to the same period last year, according to figures from the real estate listing portal Properstar. Likewise, the average price of houses also increased by 5% y-o-y to DOP93,763 (US$1,569) per sqm over the same period.

“Investors and people who could afford second homes here were buying like crazy,” said Melquis Segura of Santo Domingo-based property firm ApartamentosRD. This statement is backed by Sergio Llach, the chief executive of Dominican Republic Sotheby’s International Realty, who claims that the housing market is accelerating due to pent-up demand and foreign buyers are flooding into the country.

After an abrupt pause during the onset of the Covid-19 pandemic, activity in the housing market is now back to its pre-pandemic level. Before the worldwide health crisis, the Dominican Republic’s residential property market had been growing rapidly, thanks to robust tourism growth and the arrival of luxury international and boutique hotels, coupled with strong economic fundamentals.

“Tourists come for the surfing and the windsurfing, and many of them end up buying homes here too,” says Josefina Covents of the Cabarete-based agency Josefina Covents y Asoc. This is also supported by Llach, who noted that many of the homebuyers were regular visitors to the country. “The people who buy in the Dominican Republic have been here at least 10 times before,” Llach said. “They’re confident in what they want.”

Dominican Republic’s Residential Property Market Report 2024 There are no restrictions on foreigners buying property.

Aside from its reputation as a tax haven and long stretches of sandy white beaches and a balmy temperature, foreign homebuyers are attracted because property is still a bargain, relative to the rest of the Caribbean. A newly built one-bedroom apartment near a beach can be bought for just US$150,000 or less.

Foreign property investment is also encouraged by incentives, which according to the country’s tourism office, include:

• Tax-free receipt of pension income from foreign sources, including moving belongings to the country, is guaranteed (Law 171-07 on Special Incentives for Pensioners and Persons of Independent Means).
• Foreign buyers receive a 50% exemption from property tax
• Exemption from taxes on dividends and interest income, generated within the country or overseas
• Foreign buyers receive a 50% exemption from taxes on mortgages when the creditors are financial institutions regulated by Dominican financial monetary law
• Exemption from payment of taxes for household and personal items
• Exemption from taxes on property transfers
• Partial exemption on vehicle taxes
• Developers are relieved of all national and municipal taxes for ten years, including the tax on the transfer of ownership to the first purchaser of a property, by Law 158-01 on Tourism Incentive.

“Over the past five years, an expanding tourism industry, a stable economy, and friendly tax laws have brought a wave of international buyers to this Caribbean nation of about 11 million residents,” said Sydney Franklin of The New York Times.

During 2023, air arrivals into the Dominical Republic reached almost 8.1 million people – up by 12.5% from a year earlier and the highest level ever recorded. Likewise, cruise arrivals soared by 70.4% y-o-y to reach a new record high of 2.3 million people. The tourism sector continues to grow robustly this year. In the first four months of 2024, air arrivals increased again by 10.2% y-o-y to over 3 million while cruise arrivals rose by 12.8% to 1.1 million.

However, the Dominican Republic is not your usual Caribbean fantasy ‘unspoiled virgin island paradise’. It has almost 11 million people spread over a mountainous 48,072 sq km, and the social problems include a vast gap between rich and poor, and the highest possibility in the world of death from handguns, though the situation has improved dramatically over the past decade.

Dominican Republic’s Residential Property Market Report 2024

There has been an amazing increase in wealth, with the country’s average per capita GDP increasing by 4.5 times from just US$2,460 in 2003 to US$11,187 in 2023, according to the International Monetary Fund (IMF). Moreover, the national poverty rate dropped sharply to 21% in 2019 from more than 40% a decade ago. After increasing to 23.9% in 2021 due to the adverse impact of the Covid-19 pandemic, the upper-middle-income poverty rate (US$6.85 PPP per day in 2017 currency) fell again to about 19% in 2023, based on figures from the World Bank.

Also, it has great attractions for the adventurous traveler. “There’s the natural beauty of the landscape. The country is very green, different shades of green,” says Monique Frings of Dominican-realty.com. “It has the highest mountain in the Caribbean and a small saltwater lake. There are miles and miles of beaches and nobody comes. It is still very open.”

The Dominican Republic offers good rental yields, with some areas registering gross rental yields as high as 10% annually. In Q2 2024, the average gross rental yield in the Dominican Republic was 6.74%, according to the Global Property Guide.

Foreigners are further encouraged by a robust economic environment, stable government, an improving infrastructure, and easy access via its three international airports. The economy is projected to expand by 5.4% this year and by another 5% in 2025, according to the IMF, after growing by 2.4% in 2023, 4.9% in 2022, and 12.3% in 2021.

Dominican Republic’s Residential Property Market Report 2024 Good rental yields

Gross rental yields in the Dominican Republic are good, at an average of 6.74% in Q2 2024, according to research conducted by the Global Property Guide in May 2024.

In Q2 2024:

• In Santo Domingo, gross rental yields for apartments range from 6.26% to 9.82%, with a city average of 7.48%.
• In Punta Cana, apartments offer rental yields ranging from 3.87% to 7.92%, with a city average of 6.01%.

Currently, a two-bedroom apartment located in Santo Domingo is rented for about US$1,400 per month while a similar property in Punta Cana is offered for a slightly higher monthly rent of US$1,500.

Foreign investors pushing property prices up

The surge in foreign property investors has been pushing prices up by an average of 10% every year since the global crisis, according to local real estate experts. In fact, the Covid-19 pandemic did little to slow the housing market. Currently, prices for residential properties with an ocean view typically start at about US$140,000 while beachfront properties start as low as US$160,000.

Recently, the Dominican Republic is moving beyond the retiree market and becoming a more desirable destination for families.

“They’re not here for the ‘starter’ international investment. Instead, they’re paying US$350,000 to US$600,000 for a big house with a nice yard,” said Cheryl Henderson of Keller Williams Dominican Republic.

At the high-end market, prices of luxury homes, which typically have an asking price of at least US$5 million, are stable, but in some areas, these prices are also rising robustly.

The volume of luxury property transactions has been rising strongly since the country reopened and economic activity has returned to pre-pandemic levels, according to local property experts.

Dominican Republic’s Residential Property Market Report 2024 The Caribbean’s top tourist draw

The Dominican Republic has been the top vacation destination in the Caribbean since 2005, by a considerable margin, according to the World Bank.

• During the financial crisis of 2008-2009, the country’s tourism sector remained stable, with around 3.98 million and 3.99 million stay-over tourist arrivals, respectively, based on figures from the Caribbean Tourism Organization.
• By 2016, non-resident stay-over tourists had increased to almost 6 million, while cruise arrivals surged to 809,286 people. In 2017, tourism continued to grow, despite hurricanes Irma and Maria. Non-resident stay-over tourists rose by 3.8% y-o-y in 2017, while cruise arrivals soared by 36.9%.
• In 2018, non-resident stay-over tourist arrivals rose by 6.2% to 6.57 million people from a year earlier. Cruise arrivals fell by 11.3% y-o-y to 982,319 people, but still more than twice as much compared to a decade ago.
• In 2019, non-resident stay-over tourist arrivals fell slightly by 1.9% y-o-y to 6.45 million people while cruise arrivals increased by 12.4% to 1.1 million.

The tourism industry contributes about 15% of the country’s GDP.

However, the succeeding two years have been an exception, with tourist arrivals in the whole Caribbean region almost grinding to a halt after the imposition of travel restrictions and lockdown measures worldwide. Dominican Republic closed its borders during the onset of the Covid-19 outbreak, in an effort to prevent the spread of the virus to the country.

In 2020, non-resident stay-over tourist arrivals plunged 63% y-o-y to 2.4 million people and cruise arrivals dropped 69% to just about 343,000, according to the Banco Central Republica Dominica.

To revive the industry, the government announced a tourism recovery plan, with measures to ensure the health and safety of both visitors and locals, including medical insurance and random breath tests on passengers.

In 2021, non-resident stay-over tourist arrivals more than doubled from the prior year to almost 5 million people – more than any other country in the Caribbean – yet still below the annual average of 6.3 million air arrivals from 2016 to 2019. On the other hand, cruise arrivals remained depressed, falling by another 2.8% y-o-y to just 333,100 in 2021.

Then in 2022, the tourism sector has fully recovered, with air arrivals surging by 43.4% to nearly 7.2 million people. Cruise arrivals also skyrocketed by almost 300% to 1.33 million people.

The year 2023 registered new records. Air arrivals reached almost 8.1 million people – up by 12.5% from a year earlier and the highest level ever recorded. Likewise, cruise arrivals soared by 70.4% y-o-y to reach a new record high of 2.3 million people.

The tourism sector continues to grow robustly this year. In the first four months of 2024, air arrivals increased again by 10.2% y-o-y to over 3 million while cruise arrivals rose by 12.8% to 1.1 million.

Dominican Republic’s Residential Property Market Report 2024 Foreign buyers love the coast

Tourist developments are concentrated in the east and north. Southern areas such as Barahona and Pedernales are less developed and less visited, but there have been efforts to promote them as eco-tourism destinations.

Punta Cana is the most popular tourist destination. Punta Cana’s international airport, situated in the country’s popular eastern region, receives around 65% of all tourists traveling to the country every year.

Some of the most desirable residential areas are in tourist hot spots such as the capital, Santo Domingo, and the areas on the country’s beautiful Atlantic coast, such as the tourist towns of Sosua and Cabarete, the peninsula of Samaná, and Puerto Plata. Luxury beachfront apartments in places such as Punta Cana and Bavaro, Las Terrenas, and Boca Chica have been built in recent years.

One of the most high-profile developments has been the Cap Cana project on the East Coast, a high-end residential and tourist mixed development of hotels, oceanfront homes, golf courses, and commercial establishments.

What is on offer

The Dominican Republic’s property market is very diverse. Prices at the lower end of the luxury market range from around US$100 to US$420 per square foot (sq. ft) for a prime oceanfront home, according to ReMax’s Premal Parekh. However high-end residential property prices can go as high as US$5 million in the north and US$9 million in the south. The highest-priced home in the Dominican Republic is listed for US$25 million, Parekh added.

In Santo Domingo, the country’s capital and largest city, the average price of a two- or three-bedroom house in the city center stands at around US$150,000. In Casa de Campo, a luxury gated community in La Romana, about an hour east of Santo Domingo, villa prices range from US$300,000 to over US$6 million depending on the property’s size, age, and proximity to the ocean, according to an article from The New York Times.

In Puerto Plata, on the north coast, a 200 square meter (sq. m) apartment in upscale neighborhoods of Puerto Plata, like Sosua, costs around US$2,400 per sq. m.

In the Cabarete area, the price of an older two- or three-bedroom condominium farther from the water starts at about US$200,000, while oceanfront homes in newer luxury developments, like Sea Horse Ranch, sell for at least US$700,000, said William Holden of Holden Sotheby’s International Realty.

Several new oceanfront luxury condominium developments have been built in the past several years, with unit prices ranging from US$500,000 to US$2 million.

In other beachside destinations such as Sosúa, Las Terrenas, and Punta Cana, growing interest from foreign investors has led to a residential construction boom. According to Cheryl Henderson of Keller Williams Dominican Republic, at least 90 projects are underway in the area, ranging from oceanfront villas in resort communities to condominium buildings and golf course-adjacent single-family homes.

The construction of major hospitality projects like Cap Cana, the Moon Palace Resort in Punta Cana, and San Souci Port in Santo Domingo are also expected to boost tourism, as well as the real estate market.

The US$220 million St. Regis Cap Cana Resort & Residences broke ground in October 2020. It will feature 200 guestrooms and suites and 67 residences, iconic St. Regis butler service, bespoke amenities, and a world-class 8-hole golf course designed by Jack Nicklaus. It is slated to open this year.

Other tourism-related developments include Amber Cove, the luxurious Carnival Cruise Lines port-and-tourist village at Maimon, located just west of Puerto Plata, which opened in October 2015. Royal Caribbean is also planning to open a new port near Playa Dorada, between Puerto Plata and Sosua.

Though the Dominican Republic has its own currency, the peso, most real estate listings and transactions, especially of high-end properties, are quoted in U.S. dollars.

Residential construction costs stabilizing

In April 2024, construction costs for houses were more or less unchanged from a year earlier, following a y-o-y decline of 1.8% in 2023 and annual increases of 10.1% in 2022, 15% in 2021, 10.2% in 2020, 2.4% in 2019, 9.1% in 2018, 5.1% in 2017, and 3.4% in 2016, according to the Oficina National de Estadistica.

Dominican Republic’s Residential Property Market Report 2024 By property type:

• Detached houses (one level): construction costs fell slightly by 0.1% y-o-y in April 2024, following a y-o-y decline of 0.7% in 2023, and annual rises of 10.5% in 2022, 13.3% in 2021, and 11.3% in 2020.
• Single-family houses (two levels): construction costs increased slightly by 0.3% in April 2024 from a year earlier, after an annual fall of 2.2% in 2023, and increases of 11% in 2022, 15.1% in 2021, and 10.1% in 2020.
• Multi-family houses (four levels): construction costs were down by 1.4% in April 2024 from the previous year, after falling by 3.5% in 2023, and increasing by 9.2% in 2022, 16.5% in 2021, and 8.9% in 2020.
• Multi-family houses (eight levels or more): construction costs increased by 1.4% over the same period, following a slight decline of 0.8% in 2023, and y-o-y rises of 9.5% in 2022, 15.2% in 2021, and 10.4% in 2020.

Shortage of affordable housing

The construction sector accounted for more than 7% of the country’s GDP in recent years. During 2023, the number of permits for construction of apartments fell by 13.6% from a year ago, in contrast to y-o-y increases of 31.6% in 2022 and 24.6% in 2021, according to the Oficina National de Estadistica. Likewise, permits granted for housing construction also declined by 19.4% last year, after increasing by 14.9% in 2022 and 21.3% in 2021.

Most residential construction is aimed at the high-end market.

The low-end market has an acute shortage of accommodation, and the country has a housing deficiency of about 2.1 million homes.

“According to the United Nations Development Programme, the housing deficit in the Dominican Republic is almost 2.1 million units, of which about 60.6% is qualitative. Compared to those who are homeless, there are more people living in inadequate housing. The housing shortage is growing annually by an average of 50,000 to 60,000 homes,” said Habitat for Humanity.

Frequent hurricanes and flooding have exacerbated the shortage. Economic damage from natural disasters in the Dominican Republic costs around US$420 million a year, according to a recent study conducted by the World Bank and the Ministry of Economy, Planning and Development. For instance, in September 2017 alone, two strong hurricanes, Hurricane Irma and Hurricane Maria, devastated a large number of houses, particularly those built of low-quality materials near the sea.

In 2021, President Luis Abinader launched the “Happy Family National Housing Plan” (PNVFF) to build 62,000 homes in four years in a public-private partnership that will benefit 310,ooo people and create almost 460,000 direct and indirect jobs. The initiative will have an initial investment from the government amounting to US$32 million, which will increase to US$200 million in the last year of the project.

In the first phase, 11,000 apartments are planned to be built in various locations, including Los Alcarrizos, Azua, Santo Domingo East, Higüey, Santo Domingo West, Sabana Perdida, La Romana, Pedro Brand, and San Pedro de Macorís.

Around 80% of all homes in the Dominican Republic are detached houses.

Dominican Republic’s Residential Property Market Report 2024 Mortgage interest rates remain high

In May 2024, Banco Central Republica Dominica held its benchmark interest rate unchanged at 7%, where it stayed since December 2023. This followed five consecutive rate cuts in the past twelve months, from 8.5% in May 2023.

“This measure takes into consideration the recent developments of the international environment, particularly the expectations that interest rates in the United States of America would remain high for a longer-than-expected period, as well as the increase in commodity prices. Additionally, the recovery of the Dominican economy and the dynamism of credit to the private sector were also considered, in a context in which inflation is within the target range of 4.0% ± 1.0%,” said the central bank.

The central bank also maintained the deposit and lending rates at 5.5% and 7.5%, respectively.

As such, average interest rates on housing loans remain high.

• National currency-denominated housing loans: the average interest rate was 12.15% in May 2024, slightly up from 12.09% a year earlier and 11.06% two years ago.
• Foreign currency-denominated housing loans: the average interest rate was 8.98% in April 2024, up from 7.62% in the previous year and 5.69% two years earlier.

Developing the mortgage market

Most property transactions in the Dominican Republic are done in cash. The country’s mortgage market was equivalent to just 5.3% of GDP in 2023, even though housing loans grew by almost 17% per year from 2000 to 2023.

More mortgages have been offered by local banks since 2012’s Law on Mortgage Market Development and Trusts provided tax incentives and established the Trust as a legal instrument. As a result, mortgages with a loan-to-value ratio of 70% of the appraised value of the property are offered.

In May 2024, the total value of loans for house purchases was DOP 375.21 billion (US$6.28 billion), up by 15.6% from a year earlier and about 34 times the amount in 2000, according to figures released by the Banco Central Republica Dominica.

Dominican Republic’s Residential Property Market Report 2024 Economy continues to grow, albeit at a slower pace

During 2023, the Dominican Republic’s economy grew by a modest 2.4% from a year earlier, according to the International Monetary Fund (IMF), a slowdown from annual growth of 4.9% in 2022 and 12.3% in 2021.

The economy had been continuously expanding by an average of almost 6% annually from 2005 to 2019 before contracting by 6.7% in 2020 due to the Covid-19 pandemic.

“Over the last two decades, the Dominican Republic has been one of the fastest-growing economies in the region. This was due to a combination of market-oriented structural reforms in the early 1990s and favorable external conditions that supported economic growth. In addition, prudent monetary and fiscal policy contributed to macroeconomic stability,” said the World Bank.

“However, the drivers of this exceptional growth are reaching their limit due to low productivity growth in recent years, insufficient human capital to meet the needs of the business sector, the occurrence of climate change-related disasters, and distortions in key markets, including the inefficient allocation of tax exemptions,” added the World Bank.

The country recorded a budget deficit equivalent to about 3.25% of GDP in 2023, unchanged from a year earlier, according to the Central American Monetary Council. Government debt stood at 58.23% of GDP last year, slightly down from the previous year.

Inflation was 3.03% in April 2024, down from 3.38% in the previous month and 5.15% in the same period last year, according to the Banco Central Republica Dominica. Inflation averaged 2.6% from 2014 to 2020, before accelerating to 8.2% in 2021 and 8.8% in 2022. It stood at 4.8% in 2023.

Unemployment was 6.2% in 2023, up from 5.3% in 2022 but still down from an annual average of 7.1% in 2010 to 2021. The jobless rate is expected to hover around 6% this year, based on IMF estimates.

Dominican Republic’s Residential Property Market Report 2024