By Robert Michael
www.robertmichael.com
There are only a few amazing investment opportunities in the world as the one that is currently occurring in the Dominican Republic. Either for second home or investment property, to agricultural land or hotel, this is the hottest place in the Caribbean for real estate. With the on-going price increases of land around the tourism sectors of the country, this is the perfect time for a savvy investor to double or triple their investment. Properties here are a hot buy.
The industry has seen a significant jump in construction in the past few years, mainly fueled by the travel industry. Apart from the massive expansion of hotels, many tourists have bought properties after vacationing many times in the Dominican Republic. Once they see the beauty and the warmth of its people, the desire of ownership is a must. The low cost of living, great interest rates and cheap medications are other positive key points of this country. With such a wide range of prices in many parts of the island (from $60,000 condos to houses of many millions), it is in reach for many to buy.
The demand for housing both for executives and workers of the tourism industry has increased to an all time high. Especially in Punta Cana, 55% of the tourists who travel to Dominican Republic arrive through this port of entry. According to the Central Bank of Dominican Republic, there has been an average of 10% increase in tourism in the past 3 years, with a total of 4,081,295 visitors for 2005 and 4,383,765 in 2006. With such a high rate of occupancy, the hotels prefer to rent a condo to their executives than have to give up a room that can produce cash flow. Some executives are even buying their properties for themselves, which is also an investment for the future.
Many investors have caught on to the idea of buying middle to low class condominium units or townhouses in these areas for rentals. With a steady clientele of hotel employees and seasonal renters this is great investment opportunity.
As the area gets more occupied with hotels and high-end residential developments, more jobs are created. This brings the need for housing and the demand for construction. The amount of land available in the centers decrease and the prices for these increases from the lack there of. This factor creates equity in the property from years of appreciation, plus positive cash flow from rentals.
The meaning of the real estate boom is that everybody wins. Developers are rushing in to construct, and investors and end users are buying. Housing is created and there is more room for guests now that the employees of the hotels are housed in these developing areas; meaning higher revenues for hotels.
This is creating more amenities in the tourism sectors like Punta Cana. The tourist didn’t have an option of leaving the hotel because there was nothing to do outside. But as the area has increased in population, mini centers with shops and restaurants have been created. Allowing the tourist to go outside of the hotel for entertainment. Not only does this make the area more attractive for tourists but it is further fueling the economy of the Dominican Republic.
Developers from Spain to Chicago have purchased large tracts of land and are building incredible retreat communities on the ocean for the astute North American buyer. The Baby-Boomers are responding in droves. Jobs are being created at an astonishing level. Not only is this good for the people in the area and the countries economy, it is even better for the investor who has the opportunity to turn incredible profits. There will need to be many types of construction in these areas, from commercial to residential. Including the housing units for the working force and all the amenities they will need to satisfy their daily lives. Shops and restaurants are only two examples of structures that will be built and bought by the end user or the investor seeking a return on his investment.
There are many opportunities from a short to long-term investments. There are areas the investor may buy today and build immediately as there are some that may be held 10-30 years before selling or developing. For example an investor may buy a property that is in the surrounding areas of developments and hold it for many years. When the time is right, sell it for profit or build on it for an even greater windfall.
Another factor that has contributed to this real estate boom is the “Registry Model”. This system digitizes deeds, so it is very hard to falsify, allowing your property to be protected from deed forgeries. Investors from Europe and the United States are familiar with similar systems and give them piece of mind of their purchase. This system has been implemented in the areas which have the most real estate transactions, which are Santo Domingo, Santiago, San Francisco, Puerto Plata, La Vega, Higüey and San Pedro. This is an essential factor supporting tremendous growth within the real estate sector and vital for timely, accurate transfer of data.
The best part of it all is that it is just the beginning. We are in the forefront of an incredible development boom not likely seen in many places of the world. There are so many incredible beaches and mountain top properties that the world has not been made aware of. When it gets discovered this will become the top destination in the Caribbean without a doubt. You will be surprised to see many baby boomers retire in this peaceful Country. Especially because of its impeccable service and its majestic beauty, and lets not forget it central location.
It is a virtually undiscovered, undeveloped gem in the rough. If you are not familiar with what is going on in real estate in the Dominican Republic I urge you to investigate further. If you are not ready now you can come in later, but remember the best investments are made early in the cycle and before saturation.