REASONS TO INVEST IN THE DOMINICAN REPUBLIC
The Dominican Republic is a country that offers many reasons to invest. It is rapidly becoming the most traveled to destination in the Caribbean. The country’s growing economy is supported by an ongoing modernization and aggressive efforts to promote international trade. It has a democratically elected government with strong international ties to the US and Europe and enjoys an environment of political stability. The country is also investing heavily in key infrastructure such as electrical grids, roadways, airports and more. Free zones and tourism are currently two of the most promising sectors for foreign investors. Below is a summary of reasons to invest in the Dominican Republic.
Location – This country is a large Caribbean island and a popular tropical destination in the Atlantic Ocean. It has over 900 miles of ocean frontage, with 300 miles of this frontage being beautiful sandy beaches. It has multiple climate zones and various lifestyles. The mountain range is the highest in the Caribbean and reaches over 10,000 feet. Depending on the route taken, driving time from one tip of the island to the other is over 15 hours.
Accessibility – There are multiple daily flights into modern international airports strategically placed around the Dominican Republic. These airports feature regularly scheduled flights on major air carriers and international charter flights that carry millions of tourists to popular vacation spots around the country. For reference, the DR is 3 hours from New York and less than 1.5 hours from Miami. There is also non-stop service from Canada and Europe. In comparison to other Caribbean Islands, there is no “puddle jumping” or “island hopping” to get to your final destination. To the contrary, most resort areas in the Dominican Republic are less than a 30 minute drive from the airport.
Real Estate Investment – The process of buying real estate in the Dominican Republic is fairly simple. Once the price and conditions of a real estate transaction are established, a Contract of Sale is prepared either by a licensed attorney or a title company such as Stewart Title. After the earnest money deposit has been made (normally 10% of the purchase price) the Contract of Sale is submitted to the Dominican Internal Revenue Office for assessment and payment of transfer taxes. The assessed value of the property is often lower than the contract price, and in all cases, the transfer taxes are paid by the Seller. When all the conditions of the Contract of Sale are met, the Contract of Sale and the Certificate of Title are submitted to the Title Registry Office to be recorded. A new Certificate of Title issued in the name of the buyer is supplied by the Title Registry Office.
Lower Building and Operating Costs – Market comparisons around other parts of the Caribbean will quickly show that both building costs and operating costs are lower in the Dominican Republic. Building costs are lower because many materials are manufactured in the Dominican Republic. Moreover, due to its modern shipping ports and close proximity to the United States, imported goods and materials have competitive pricing. Low labor costs also contribute to lower building costs. There is a very talented and qualified labor pool in the Dominican Republic, which also causes lower operating costs. Because the Dominican Republic is such a large country with hundreds of miles of pristine beaches, land costs are lower in comparison to other islands with limited land supply.
Local Culture – The Dominican Republic has a charming, Latin-based culture rich in heritage. It offers a welcoming and friendly environment for travelers and residents from around the world. The local people are very warm and gracious are are very service-oriented. True, they can be more aggressive when living in crowded metropolitan areas. However, when living in local, family-oriented communities, or when staffing resorts or gated communities, they are truly enjoyable. You soon recognize that they always have smiles on their faces.
Investment Incentives – Major corporations and investors all enjoy various tax incentives; free zone for corporations, tourism zones for tax benefits, and even an attractive retirees law for individuals seeking a place in the sun to retire. There is equal treatment for both local and foreign investors. There are minimal investment restrictions and there is free access to foreign exchange through local banks. Financing up to 90% Loan-To-Value is available from both US and Dominican banks. Some lenders will finance the transfer tax and possibly furniture and appliances.
Weather – There is a very temperate and tropical climate without much variation throughout the year. The trade winds add to the year-round comfortable living conditions and provide great weather for golf, water-sports, and the equestrian lifestyle. Hurricane threats are no worse than the eastern portions of the United States. The north coast of the Dominican Republic seldom has any hurricanes, making it a safe place to both build and reside.
Rental Potential – Vacation rentals and full-time rentals are increasing year to year, and this may offer opportunities for diversifying investments. Rental income can be used to offset operating costs and the timing may now be right for positive cash flows and increases in property values.
From a historical point of view, the Dominican Republic was discovered by Christopher Columbus in 1492. It has a long and interesting history having been ruled by both Spain and France. It was occupied by the Haitians and invaded twice by the U.S.A, the final time between 1963 and 1965. The culture and much of the architecture has been influenced primarily by the Spanish colonization. The Colonial Zone in the capital Santo Domingo is a major tourist attraction with many buildings dating back to colonial times. There are museums displaying artifacts and information on the country’s history. Today the Dominican Republic is a democratic country with a President, Senate and Chamber of Deputies with a strong economy and stable government.
The country has a diverse geography with the highest mountain in the Caribbean, Pico Duarte at 3,098 meters and the lowest lake, Lago Enriquillo at -46 meters below sea level. The topography of the island ranges from rainforest to farmland, from mountains to desert, with a profusion of beautiful beaches. Much of the land is undeveloped and unspoilt resulting in a tropical paradise offering something for everyone.
Additionally, this area is largely protected from hurricanes because of the Cordillera Septentrional mountain range which tends to divert hurricanes to the south. The protected area generally runs from Monti Cristi in the west to the Samana peninsula in the east.