The Dominican Republic Revisited Caribbean Real Estate at Half Price by John Schroder Build, Buy or Rent - the Dominican Republic still remains an ideal destination for real estate bargains, as well as an excellent retirement or relocation destination. In this article, we will discuss the current real estate market (how to find the bargains plus local constructions costs to build your own home), but also want to highlight in general why the Dominican Republic is so attractive overall for those seeking to live in the Caribbean. First and foremost, while finding reasonably priced real estate is of importance to many, there are other considerations equally important as well. One such consideration is what I would call "Island Fever". That is to say, many believe the stereotype of a typical Caribbean Island as a postage stamp sized location under the sun, and this is often the case with many islands. Aruba, Antigua, Tortola and others, (just to name a few) are indeed very nice islands, but chances are you can drive such an island completely and still be back in time for lunch. While this may be quaint and appealing for some, a good number of people often eventually feel confined or claustrophobic as a result. The Dominican Republic in contrast is located on the second largest island in the Caribbean, offering both high mountains with pine trees and ferns, plus beautiful white sand beaches all at the same time. Many have compared the land mass of size as being about or slightly larger than the US State of Connecticut. As an illustrative example, the drive from the modern metropolitan capital city of Santo Domingo (population 3.5 Million) to the North Coast town of Puerto Plata takes about 4 hours. The drive from Puerto Plata eastward to the Samana Peninsula takes an additional 4 hours. If you want to drive from Santo Domingo to the Punta Cana or Playa Bavaro area, figure on about 4 hours as well. So, if you want to see the country, pack either an overnight bag or lunch, depending how far you want to go. This of course leads us to the discussion of diversity, quality of life and other issues. If you want to live in the Caribbean, but still want the benefits of a city, then Santo Domingo or the second largest city of Santiago (population 1 Million) would be your choice. What's in Santo Domingo? Movie theaters showing recent releases one week after they open in New York or elsewhere (in English with Spanish subtitles), plus a variety of international restaurants as well (not to mention a variety of clubs and nightlife). For other activities and shopping, there are bowling alleys, art museums, orchestra and ballet, modern shopping malls, supermarkets stocked with a number of American and European brands, PriceMart, and K-Mart (coming soon). Many major universities also, just in case you want to keep busy by studying for a medical degree at a cost of roughly US$ 1,000 per semester. Of course if your idea is to get away from it all, then you have the option of the highest mountain range in the Caribbean or miles of uninhabited beaches. If your ideal place involves having the best of both worlds, well - you can. Couple this with high interest tax-free US Dollar banking or other investments (current interest rates are up to 11% for US Dollar deposits, interest paid monthly) and online internet banking access, the appeal for many is not too hard to understand. In addition, three major international airports offer direct flights to New York, Miami, Philadelphia, Panama, Venezuela, Aruba, Spain, Holland, Germany, Martinique, and France.
Now that you can understand why someone would consider the Dominican Republic, let us discuss the real estate market by starting with the nation's capital, Santo Domingo de Guzman. Just as in the case of any growing city, Santo Domingo is expanding, primarily to the north and to the east (towards the airport). As a result, smart investors might want to buy inexpensive land on the fringes of the city and wait for the city to come to them. This is in fact when happened in places like Los Angeles, during the boom period of the 1950's to the 1970's. While properties in the city center of Santo Domingo might still seem reasonable in comparison to North-American cities, such as Denver, Toronto, Seattle or Chicago the fact is that prices have come up. This in part has been a function of the economy (one of the fast growing economies in Latin America) and also demand (many Dominicans are now moving back from New York and elsewhere). As a result, the real bargains are to be found on the outskirts. As an example, new luxury 1,400 square foot apartments in the city can be purchased for about US$75,000 and up (2 or 3 bedrooms plus maid's quarters, 24-hour doorman, intercom, off street parking, etc.). Small new homes in residential tract developments will start off at about US$ 60,000. However, one can purchase a 1-acre building lot within 15 minutes of the city for about US$24,000 and build what you like. While building costs will of course vary on how complicated or luxurious you build, a general rule is to figure on about US$ 27 per square foot. To offer an illustration, one client told us they obtained an estimate of US$ 107,000 to build a 1,000 square foot hunting cabin in the southeastern United States. In the Dominican Republic, an identical sized home will cost about US$ 30,000 or less to complete. However, it is important to note that we are talking about a home built with 8-inch cinderblock, poured concrete and metal bar inside the block. Wood construction is actually more expensive in the Dominican Republic and no one in his or her right mind would build with wood anyway. Concrete or block is stronger, insect and weather proof, and can be finished in such a way in that you would swear your walls are solid poured plaster (the way they used to build houses in the US or Canada 80 years ago). If you finish the outside facing with attractive local stonework (cost of about US$ 6 per every 10 square feet), you can own a modern yet rustic looking house that would be almost prohibitive cost-wise elsewhere. Plus, you will have a house that never needs painting and will last more than a lifetime. Not fancy enough? Add a red or orange colored Spanish terra cotta style tiled roof for about US 60 CENTS per square foot in material costs, or imported tile from Italy or Spain for the floors (about US$ 2 per square foot).
While some building materials will cost about the same (Cement at about US$ 5 per bag, quality 8-inch block at about 70 cents (US) per block), the real difference can be found with local labor costs. A seasoned master mason will charge about US 40 cents per block for labor. General construction labor will cost about US$ 12 per day (no misprint, per day - not per hour). Other labor such as plumbing (using the very same PVC pipe used in the US) or electricity at equally reasonable costs. The real key of course to finding real estate bargains involves staying away from the normal traps. That is to say, there are always two markets, one for the locals and one for the tourists. Can you guess which is more? While it certainly may be more comfortable for you to obtain a nice brochure in English with pretty photos, you can believe you are paying for it in more ways than one. Stated another way, while some very nice residential developments exist, such properties being offered at US$ 60,000 for a building lot or US$ 250,000 for a home are not only outrageous in price, but also way off what a local Dominican would pay for the same thing elsewhere. So, learn to look where tourists fear to tread or may not know about, which most certainly involves brushing up on Spanish (the official language of the country). In summary, the true real estate bargains and true local real estate prices are not to be found by reviewing real estate being marketed in English, or by visiting some of the high priced real estate chains either. Bargains will be found by doing some of your own investigation and by talking to the local people directly. We discussed the city of Santo Domingo, but what about the rest of the country? Certainly, there are a number of very inexpensive or reasonably priced properties both in the mountains and at the beach if you know where to look (and if you poke around in the countryside yourself). One of our clients reporting buying a roughly one acre lot on a bluff overlooking the ocean (North Coast) for US$ 22,000. Another client has purchased 8 acres of farmland for US$ 17,000. Yet another purchased a smaller building lot for US$ 9,000. One client rented a small but very nice home in the mountains for US$ 250 per month. In
Santo Domingo, a brand-new 4 bedroom 3 bath home (the master bath even has a jacuzzi) in a residential area recently rented for US$ 475 per month. In Cabarete, a one-bedroom furnished place on the beach will go for about US$ 400 per month. All of these situations are possible, if you take the time to scout around. Where are some of the best places to investigate? Well, mainly in those places, which are undiscovered by tourists or we can say undeveloped. For beachfront, such areas include sections of Barahona, west of Santo Domingo and the areas near Miches and Sabana de La Mar on the inside bay of Samana. The Samana peninsula also is a beautiful spot and is also one place to look as well. However it is starting to become discovered and this in and of itself has driven up some real estate prices accordingly. For property in the mountains or non-beachfront, areas around Salcedo, Monte Plata, and San Juan offer some prospects as well. Some people have asked about the safety of their real estate investment, and as in many countries, it does make sense to research titles of any prospective properties thoroughly. While a local attorney should be able to assist with this, two private title insurance companies have recently come into the local market. One such company, Stewart Title, is a large US company well known to many Americans. Interesting enough, local title insurance policies issued by the local Stewart Title office in Santo Domingo are backed directly by the US parent company, offering investors some additional peace of mind. Generally speaking, the Dominican Republic may not be to everyone's taste, but it does offer many of the things expatriates and investors are looking for. Whether you are looking for locally tax-free banking opportunities, reasonable real estate, local services or activities to keep you busy, the Dominican Republic certainly has these things to offer, and more. |
