Navigating Property Markets In The Dominican Republic

Clean Up In The Caribbean

A decade ago, this real estate market was the Wild West. Roads in Las Terrenas, in the Dominican Republic’s Samana Peninsula, were rugged and all dirt back then, and the property they led to was sold with or without title, with or without access, with or without the necessary permits, by the owner or maybe not…

No one kept track of property sales in any formal way. At one point, construction permits existed for more than the total land area of the country.

That was the reality on the ground in this remarkably beautiful corner of the Caribbean 10 years ago. Today?

Today, the scam artists are history (for the most part), and the Caribbean bargain-hunter should have this coastal town on his radar. It’s more accessible and better serviced than ever, thanks to a new international airport, the now-paved highway connecting the region to capital city Santo Domingo, a just-opened state-of-the-art hospital (with 24-hour emergency care), and a likewise brand-new national-chain grocery store.

The Samana-Santo Domingo highway leads directly to Las Terrenas and has reduced the drive time from the capital from up to six hours to two. Its advent in 2009 increased traffic to town in a noticeable way and has also helped to lower the cost of living, as more goods are now more readily available.

The importance of the new hospital, the only real health center in the area, is obvious. Maybe less so is the importance of the new grocery store. However, Super Pola addresses a growing problem of monopolies in this small town. Food costs had been on a steady rise because shops had no competition.

All this development is not accidental. The country’s Dominican Liberation Party (PLD), in power for the past decade, has targeted Las Terrenas for investment. Former PLD President Leonel Fernández had a long-term plan for the Samana Peninsula and Las Terrenas in particular. During his two terms, he saw the Santo Domingo-Samana highway laid and launched a massive marketing campaign to make Las Terrenas the “St. Tropez of the Caribbean,” investing the country’s money and his own in the area. He built El Catey, the small international airport that offers domestic flights as well as direct access to Canada and the United States and that has meant bigger numbers of foreign visitors and foreign investors.

In fact, much of Las Terrenas is owned by foreigners, mostly European, who have a big stake and therefore a big interest in how development plays out. Meantime, Fernández’s wife, Margarita Cedeño de Fernández, is the current vice president to incumbent PLD President Danilo Medina, meaning a continuity of leadership and of attention for the Samana region.

Change comes slowly in this part of the world, but the sustained focus on this region has been important, for infrastructure, for health care, for education, and for the real estate market.

As I said, a decade ago, the property market here was about as unregulated as a property market can be. Then, four years ago, the government got serious about cleaning things up, coming down hard on developers who were playing by their own rules. One important agenda was to make sure all construction was up to hurricane standards. What officials found when they began looking closely caused them to completely overhaul the relevant building codes.

A second important agenda was to clean up titles. Corruption in this sector of the government had been running rampant. Recorded history of land ownership was a mess. The systemic overhaul the government carried out resulted in the halt of work on many buildings and developments. Some developers rectified errors and carried on, but some buildings had to be torn down. Starting from scratch was the only way to salvage the value of the land. Many buildings fingered were abandoned. Decaying developments in varying states of non-completion dot the peninsula.

Now all development and construction are subjected to a rigorous permitting system that breaks the process down into stages. You can’t move on to a next step until the permit for the proper conclusion of the previous step is in hand. Each step is managed independently, minimizing the possibility for corruption.

That is not to say that corruption has been 100% abolished. It’d be naïve to think that. Things have been reined in, though, so that this is no longer a concern for the average buyer. The occasional opportunistic official might ask for a “facilitation fee,” but a refusal is accepted without negative consequences. Maybe someone else will try asking for a little something on the side, but a second refusal gets the message across and word spreads: This one won’t pay. Be warned, though, that if you pay once, you are forever labelled a payer… and that news travels fast.

Long-time expats with property purchase and house construction experience in Las Terrenas report that, when they arrived, land investment was still a scary thing. You could expect a shakedown around every corner. Everyone did whatever they could get away with, and it was hard to know the “right” way to do anything.

Those I spoke with who’ve bought more recently report a straightforward and comfortable purchase process.

“It feels secure to buy here now,” said Las Terrenas expat and real estate professional Helen Mitchell. “Today, it’s very clear what the process should be, and you are obliged to follow it—which makes it easier for everyone.”

Kat Kalashian
Reporting from the scene of last week’s Live and Invest in the Dominican Republic Conference

 

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