Joan Gerardo Feliz
Special for El Inmobiliario
The construction industry in the Dominican Republic is going through a complex period that is impacting not only developers and builders, but also—and especially—those investing in their own home or real estate. Significant increases in the price of construction materials, combined with a worrying shortage of skilled labor, have created a domino effect resulting in higher costs and project delays. However, the harshest reality is that the burden of this crisis falls primarily on the end consumer, who bears the brunt of this chain reaction.
Sustained rise in material prices: constant pressure
According to official data from the National Statistics Office (ONE), the Direct Housing Construction Cost Index (ICDV) has registered a cumulative increase of over 32.8% between 2020 and 2024. This increase reflects the rise in the main inputs that make up the total cost of construction.
The following increases are particularly noteworthy:
Corrugated steel: +58% in the last four years, due in part to the fluctuation of the dollar and global demand.
Portland cement: has risen by around 27%, an indispensable product in every construction project.
Timber for formwork: 41% increase, caused by international shortages and higher transport costs.
Logistics costs: transport and logistics have risen by 38%, aggravated by the increase in fuels and international freight.
This price increase directly impacts the final costs, but beyond that, it affects the financial planning of thousands of Dominicans who invest their savings in a housing project, often in early stages, under the off-plan purchase modality.
Buying off-plan: a promise under pressure
Buying off-plan has been a widely used model in the country due to its financial accessibility and the possibility of acquiring a property at a price generally lower than when the project is completed. However, the current context of inflation and scarcity has transformed this benefit into a source of uncertainty.
Buyers who signed contracts two or three years ago with clear expectations of price and delivery now face a different reality: delayed deliveries, additional costs, and changes in specifications that, at times, were not formally agreed upon.
Uncertainty regarding delivery times not only causes inconvenience but also entails a real financial cost: invested money remains tied up while market prices continue to rise. Furthermore, for those who rely on mortgage financing, the changing conditions make accessing credit and planning payments even more difficult.
Labor: the increasingly weak link
Added to this is the growing problem of skilled labor. Construction is a labor-intensive sector, and the shortage of qualified personnel is one of the main challenges facing developers. Migration to other economic sectors with better wages, coupled with a lack of adequate technical training, limits the responsiveness of construction companies.
This scarcity generates multiple negative effects:
Increased salary costs to attract and retain talent.
Delays in the critical phases of the work.
Potential deterioration in construction quality if rigorous control is not achieved.
These factors not only raise costs, but also affect buyer confidence, as they see delivery times lengthen and their investment delayed.
Who bears the final cost? The buyer
In theory, construction companies should absorb the costs resulting from these increases. However, in practice, the burden falls on the end buyer, who faces a double blow: higher prices and longer waiting times.
This happens because the real estate market operates on a principle where the consumer, upon signing a contract, accepts a price that, in most cases, is subject to adjustments for inflation and variations in input costs. When these increases exceed expectations, developers typically negotiate price hikes or modifications that ultimately result in a higher outlay for the buyer.
Banks and financial institutions, for their part, are also reacting cautiously to these dynamics, tightening criteria for mortgage loans, which further limits the average buyer's ability to access housing.
Impact on the market and economic development
This situation has a negative effect on the Dominican real estate market. On the one hand, decreased confidence affects demand, while on the other, projects face greater financial and operational risks.
The construction sector is a fundamental pillar of the national economy, not only for its contribution to the Gross Domestic Product (GDP), but also for its capacity to generate employment and stimulate other related industries. Therefore, any factor that limits its development also impacts the country's economic growth.
Proposals and paths forward
Given this situation, it is essential that the private and public sectors coordinate actions to mitigate these effects and protect the buyer.
Clear and fair contracts: Purchase contracts need to include transparent clauses that explain how price adjustments due to inflation or shortages will be handled, with limits that protect the buyer.
Greater supervision and support: Promote greater oversight and guarantees in projects to ensure they meet deadlines and specifications.
Technical training: Invest in training and education of a specialized workforce to improve supply and reduce costs.
State incentives: The government can design mechanisms that support the production of affordable housing and promote stability in prices and deliveries.
Conclusion: A call to protect the buyer
In short, the construction industry in the Dominican Republic faces challenges that require collaborative and responsible solutions. However, in this scenario, one undeniable and compelling truth remains: the end consumer is the one who ultimately pays the price.
Thousands of Dominican families, young professionals, and investors are currently facing a market where initial purchase agreements are hampered by price increases and delays beyond their control. It is time to demand greater transparency, protection, and commitment so that housing, rather than being a source of uncertainty, becomes a right and an opportunity for all.
Because if anything should be clear, it is that in Dominican real estate development, the one who can least afford the costs cannot also be the one who bears the greatest losses.
The author is an MBA, a digital marketing specialist, and the operations manager of the construction company Incaribe, with more than 10 years of experience in the construction and tourism sector.
