Exploding Tourist Demand Creates New Markets Of Opportunity In The Dominican Republic
I’ve been watching the Dominican Republic for more than a decade. This island nation is one of the best places in the world to invest in rental property, thanks to a growing demand and an undervalued property market. You can buy a rentable apartment for as little as US$100,000 or even less. And you can get financing in the Dominican Republic as a non-resident foreigner.
When I first visited the DR, in 2005, areas such as Punta Cana and Puerto Plata were getting all the attention. At the time, those spots weren’t interesting to me. My interest back then was in the Samaná Peninsula, particularly Las Terrenas, which was still developing. I recommended the area as a buy for my real estate investor readers. Prices were cheap, and the product offering was as good as it gets from an investor point of view.
Today, while Las Terranas is still a buy, I have shifted my focus to other areas of this country that I now find at least as compelling. I’m speaking specifically of the Caribbean coast near La Romana about an hour east of Santo Domingo, where I have identified excellent investment opportunities, including one in particular that I’ve detailed in the first issue of my new Global Property Advisor service, out this week. In addition, I’ve invited the developers behind this project offering a capital appreciation opportunity similar to that in Las Terrenas a decade ago to participate in my Global Property Summit in March.
In fact, in the case of this particular investment, I see greater potential for capital appreciation than I’ve perceived anywhere in Las Terrenas, because this investment is in a master-planned beachfront resort community being built by developers with a track record. This is a very solid product.
And it’s being developed in a market where the tourist rental demand is exploding.
According to the United Nations World Tourism Organization‘s annual report, the Dominican Republic was the sixth-most-visited country in the Americas in 2014, with more than 5.1 million visitors—an increase of 9.6% over the previous year. Year to date 2015 over 2014, tourism in the Dominican Republic is up a further 12%, and tourist figures for the month of October alone were up 18.5%. Furthermore, the country’s tourism growth has been focused primarily on Punta Cana and La Romana, the area outside Santo Domingo that has my attention.
As the upward trend in tourism progresses, short-term rental demand will continue to increase, further solidifying the market opportunity, particularly for beachfront resort communities with five-star amenities.
Many markets can make sense for tourist rental investment, but prices for primo product tend to be high. Again, not the case in the DR.
Furthermore, the Dominican Republic’s burgeoning tourism economy is not reliant on one market. The DR attracts travelers from North America, Europe, and South America, with direct flights from all three continents. Beaches are the main draw, but Santo Domingo adds one of the biggest and oldest colonial town centers to the mix of sites to see. The beach areas are diverse, ranging from all-inclusive resort destinations to quaint Caribbean beach towns. Prices for properties in some locations with an ocean view can be as low as US$50,000, but expect prices for most ocean-view properties to start around US$100,000, with beachfront properties starting as low as US$150,000.
With prices this low, you’d expect capital appreciation to be the investment play, and, as I’ve explained, it is. But this market also offers the potential for excellent rental yields, as high as 10% net per year in some areas.
Bottom line, this is a growth market offering an abundance of opportunity. My top Dominican Republic contacts will be in the room with me in Panama in March to lay out your top current options for taking a position.
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