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There is significant
European based tourism traffic throughout the entire island. There
are so many Germans, Frenchmen and Spaniards, it is somewhat rare to see
a U.S. vacationer. Where are we, you may be wondering. How
many think we're in Cuba? Well, we might as well be, but we're not.
Maybe Margarita Island? Not a chance. We are in the Dominican
Republic, known locally to all as the "D.R.". And you should visit
soon.
The Dominican Republic, on the other hand, has many similarities with Cuba, but also many marked differences. Like Cuba, the beaches of the D.R. are beautiful offering world-class surfing and windsurfing, as well as excellent swimming. Unlike Cuba, property rights are strong and have a long history in the D.R. Up until very recently, approval for the purchase of any property over 22,000 square feet by a foreigner required direct Presidential approval. However, this requirement has been recently lifted and there is no approval needed for the acquisition by a foreigner for property of any size. The D.R. also collects no property tax, making land holding costs inconsequential. Though the D.R. has had a centralized system in the past, the election of Leonel Fernandez as President in August of 1996 signaled a transition of government from the administration of Joaquin Balaguer, President for 22 of the previous 30 years. The Fernandez government is instituting significant reforms in the D.R.'s economy, lifting many of the price subsidies and market controls used in the past and making efforts to remove the systemic corruption and favoritism which have permeated the country for many years. Though still early in the Fernandez Administration, the positive signs of change are in the air. One of these signs has been the creation of OPI-RD, Office for the Promotion of Foreign Investment. Created as an agency reporting directly to the office of President, OPI-RD and its internationally-minded staff represents the D.R. government, while also positioning itself as an ally and colleague of the foreign investor. Though this may sound like so much rhetoric, in fact, OPI-RD has instituted a system whereby small, medium and large sized investors can work directly with them to arrange meetings, offer translation services, be shuttled around Santo Domingo and suggest itineraries, all at the expense and assistance of OPI-RD. If you have ever had an idea for a Caribbean-based business, contact Mr. Eddie Martinez of OPI-RD at Roberto Pastoriza 16, Edif. Diandy XIII, 7mo Piso, Santo Domingo, Republica Domincana, 011 (809)683-6633, fax (809)683-6641, e-mail: opi.rd@codetel.net.do. You will not be disappointed by his office's responsiveness. During my trip, I was continually surprised by the low-priced properties I regularly came across. Why haven't U.S. buyers pushed up the prices in the D.R. as in most other Caribbean markets? I came up with three reasons: 1. No Marketing: Through 1997, the Dominican government spent no public funds on marketing in the U.S., relying solely on the foreign (primarily European) hotel owners to use their European based network of travel agents to keep their cheap (though very nice), all-inclusive hotel rooms filled with bargain-hunting tourists. The Tourism Office now realizes that they have been missing out on the huge tourism potential from the U.S. and are now executing plans to spend the dollars to finally attract them. These nearby-neighbors will begin to "discover" the D.R. in 1998. 2. The Haiti
"Problem": Haiti has gotten such a bad rap in the U.S. newspapers that
when a potential traveler checks a map, they believe that going to the
D.R. is the same as going to Haiti. Never having been to Haiti myself
and being suspect of mainstream media, I have few preconceptions, but I
do recognize the problem. From my first-hand experience however,
the D.R. and Haiti share a well-policed border. This is evidenced
by a substantially higher standard of living enjoyed by the D.R.'s residents.
This problem will only go away as more U.S. visitors
3.The Registration Issue: For U.S. buyers, requirements which vary substantially from the property transfer process they are used to back home raise a red flag. The law which required all property purchases over 22,000 square feet be registered with the D.R. government was unpopular and caused many foreign buyers to shy away. This road block has now been cleared with no special permission necessary to purchase property in the D.R. This is good news for property sales throughout the country. Of course, "paradise" is never truly paradise in every sense of the word. My driver in the capital of Santo Domingo was quick to point out the four major problems effecting the D.R. from his point of view: Unemployment, trash, water & electricity. Though I did not notice water problems during my visit, I am told this problem is limited to the poorer neighborhoods of Santo Domingo. Trash on the other hand is better or worse depending on the part of the country you visit. As with any developing economy, there are never enough jobs. The government is attempting to re-position the work coming into its significant industrial free-zones located throughout the D.R. As the standard of living and wage rates of the Dominicans have improved, it has resulted in a loss of much of the labor-intensive, free zone jobs which paid many of the country's workers for so many years. The government is now making efforts to replace these lost jobs by luring higher skilled assembly operations to the D.R. While much money for promotion is being spent, the results of these efforts is less than clear. Electricity is a significant problem in the D.R. The government estimates that 47% of the power is "leaked" to folks illegally connected to the system. Though they are taking steps to continue the privatization of their power utilities, the process is slow. The result is significant periodic blackouts in every area within the country. Every new home is constructed with a back-up generator, and when the public power in Santo Domingo goes down (and it does go down), many of the neighborhoods sound like they are gearing up for a rally car race. The government assures its citizens and investors alike that this problem is being worked out, but the time frames for real improvement is five years into the future and not to be relied upon. The D.R. shares the island of Hispaniola with Haiti. Given Haiti's difficult times over the years, this may be a turn-off for many would be investors, but in reality, the two nations function quite separately. The Dominican's standard of living out-paces the Haitians significantly resulting in some illegal Haitian immigration. There is also plenty of legal immigration of migrant workers working in the Dominican sugar cane fields and as domestic staff in Dominican households. The D.R. is
about the size of New York and Vermont combined and therefore, residents
are less prone to the island fever which grips other island dwellers.
The road system is in excellent repair and public bus systems are
some of the best I've ever used. A 3.5 hours bus ride from
With such a large island, it is difficult to determine where to go. At the suggestion of several contacts, I spent much of my time along the north coast of the D.R. between Puerto Plata and the tip of the Samana Peninsula. I focused on the greater-Sosua market during this trip given its easy proximity to the Puerto Plata international airport. I found several interesting opportunities in and around the Sosua and Puerto Plata area, including the two condominium units mentioned above. My able real estate contact in Sosua was Jim Belair, President of American Realty in Sosua, EPS-D188, P.O. Box 02-5548, Miami, FL 33102, (809) 571-3646, fax (809) 571-2925, e-mail: american.realty@codetel.net.do. Jim has several single family homes, distressed building lots and inexpensive building lots which are all worth a look. For example, this was one good deal that was almost too good to be true. An owner had started construction on a gorgeous hillside lot of a three level home. After about $50,000 of improvements, he moved on to other things. The lot and the existing improvements can be purchased today for US$40,000. A US$60,000 investment would make the property habitable. US$75,000 would do a great job with full furnishings costing another US$25,000. The view over Sosua and looking out to the Caribbean is fantastic. The completed house sells for US$500,000 in Barbados and US$800,000 in the Bahamas. It would be worth US$175,000 in this market when done. If you want to earn a little sweat-equity in paradise, call Jim and ask him about this property referred to as Villa Lorenze If you are interested in something a bit more finished, head to the next neighborhood over, Los Cerros, and visit Villa Fred. Also offering ocean views, this well-treed corner lot is improved with a duplex building featuring two 2 bedroom, 2 bath units. The asking price is US$95,000, but I think a deal at US$80,000 could be made. In this case, the owner may also be willing to offer terms. Rent one and keep the other open for your personal use. Another property I liked for the buyer interested in exclusivity and ease of access was a hillside villa offering fantastic ocean views. This 2,970 square foot residence is located only 8 minutes from the Puerto Plata International Airport. The three level hillside home is well kept and in excellent condition. The lower level with patio and pool has 2 large bedrooms each with its own washroom and common entrance to the pool and patio. The main level has a kitchen, dining room, living room, bedroom, washroom and balcony with views to the ocean. The upper level has a large master suite, washroom and two ocean view balconies. The asking price for the property is US$199,000, but I believe an interested buyer could make a deal at US$175,000. Though there has always been a stalwart set of real estate buyers and vacationers who have been happy with the D.R., the make-up of its tourist traffic is not the typical North American set traditionally dominating most Caribbean islands. Of the 1.6 million tourists visiting the country each year, only 100,000 come from the U.S. Another 600,000 represent Dominican expatriates coming home to visit relatives. The remaining 1.2 million tourists are from Europe, frequenting the many all-inclusive resorts located throughout the country. Many Americans don't realize that there are more hotel rooms for rent in the D.R. than in any other Caribbean country. The U.S. tourist numbers, however, are poisted to change. Why the D.R.? 1.Ease of access: My flight from JFK Airport in New York arrived in Puerto Plata Airport in 2 hours and 45 minutes after take-off. After quickly clearing customs, a ten minute cab ride had me in the heart of Sosua and to my hotel. The return home was equally easy. 2. Lack of Marketing = Lack of Interest = Lack of Demand = Lower Prices: This is the factor which the local Tourism Office complains about and the savvy tourist and investor celebrates. If you are looking for a cheap week of all-inclusive vacationing, call your travel agent and ask about the D.R. A friend of mine recently booked for seven days in May at a mid-level resort and paid a total of $650 for the week. This sounds pretty good at first, but then he told me it included the airfare. This is a steal. 3.Inexpensive
developed real estate: This lack of interest also equates to lower
property prices. The D.R.'s Tourism Office is getting ready to spend
several million dollars in a U.S. national advertising campaign.
Though I don't know their specific slogan, think along the lines
As the Fall approaches, plan a trip to the D.R. to look around for yourself. There are many particularly good deals out there for you to choose from. And if you get in soon and at a good price, I believe you will benefit from the wave of buyers who show-up over the Winter of 1999 and beyond. Note:
I put together trips to various nations to meet many of my personal
contacts and tour countries with interesting real estate potential.
If you would like further information on joining me for one of my expeditions,
please contact me directly at (410) 337-7474, or via fax at (410) 337-7227,
e-mail: Rfordi@Compuserve.com.
Regards,
The Global
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