The Dominican Republic's residential property market is growing fast, thanks to robust tourism growth and the arrival of luxury international and boutique hotels. Non-resident stay-over tourists rose by 3.8% in 2017 to almost 6.2 million, cruise arrivals soared 36.9% y-o-y in 2017 to 1,107966 people. The Dominican Republic has a population of just 10.2 million people and a GDP per capita of US$7,360 in 2017, according to the IMF.
There are no restrictions on foreigners' buying property. "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.
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.
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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.
Foreigners are further encouraged by a strong economy, stable government, an improving infrastructure, and easy access via its three international airports.
However, if the Dominican Republic is not your usual Caribbean fantasy 'unspoiled virgin island paradise'. It has about 10 million people spread over a mountainous 48,072 sq km. There has been an amazing increase in wealth, with the country's average per capita GDP increasing by almost three times from just US$2,460 in 2003 to US$7,360 in 2017. Moreover, the national poverty rate dropped sharply from 41.2% to 30.5% in the past five years.
Also, it does have 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. "It has the highest mountain in the Caribbean and a small salt water lake. There are miles and miles of beaches and nobody comes. It is still very open."
Unlike elsewhere in the Caribbean, US travelers are outnumbered by other nationals more used to risk-taking and adventure: the Canadians, the Germans, and the North Europeans. They come to the Dominican Republic in the winters, for it has an agreeable climate, neither too hot nor too cool (28 degrees to 30 degrees), with a continuous gentle breeze. Only July and August are really hot.
The economy grew by a healthy 4.8% in 2017, amidst the disruptions caused by the hurricanes Irma and Maria, after real GDP growth rates of 6.6% in 2016, 7% in 2015, 7.6% in 2014, 4.7% in 2013, 2.8% in 2012, and 3.1% in 2011, according to the IMF. The economy is still expected to expand by a healthy 5.8% this year and by another 5% in 2019.
However 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. Currently, prices for residential properties with an ocean view typically start at about US$100,000 while beachfront properties start as low as US$150,000.
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 increased by around 10% last year.
The Dominican Republic also offers good rental yields, with some areas registering net rental yields as high as 10% annually, according to some local real estate experts.
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Original Post by Global Property Guide April 2018