Ana María Ramos
El Inmobiliario
SANTO DOMINGO. -During 2024, the Construction and Real Estate sectors maintained their leadership as key drivers of the national production chain, although they faced difficulties that hampered their growth.
From high interest rates, high prices of construction materials, delays by government entities in issuing permits, to scandals involving real estate scams, these were some of the setbacks, and progress figures will end the year moderate, according to projections from official agencies.
The report from the Central Bank of the Dominican Republic for October places the growth registered in construction at 4.7% in the first 10 months of the year, with some experts projecting that it will end in the range of 3.6% to 4.8%.
The Dominican Association of Housing Builders and Developers (Acoprovi) and economist Alejandro Arredondo cite the increase in construction materials, high interest rates, slow bureaucratic processes, especially in the approval of permits and registration of projects; and limited availability of skilled labor, as part of the obstacles faced during 2024.
Annerys Meléndez, president of the association, adds that the distrust caused by cases of real estate scams, in her opinion, affected the reputation of the sector.
Annerys Meléndez, president of Acoprovi. (EXTERNAL SOURCE).
According to Alberto Bogaert, president of the Association of Real Estate Agents and Companies (AEI), the high interest rates generated a decrease in the speed of real estate acquisitions, although he points out that it was a year of consolidation with the delivery of thousands of housing units and the launch of residential and tourist projects.
A key driver
Arredondo maintains that the construction sector continues to be a key driver of the country's economy, although with moderate figures compared to previous years, estimating that it will end up with between 3.6% and 4.8% growth.
He believes that active interest rates have remained above 14%. “This means that the Monetary Policy Rate (MPR) transmission mechanism, which serves as a benchmark, has not achieved a reduction in interest rates at banking institutions, making financing more expensive for developers and homebuyers, and slowing down the execution of new residential and commercial projects,” he explains.
Alejandro Arredondo, economist. (Fidel Pérez/El Inmobiliario).
Add to these factors the limited access to financing for small builders, the deportations of undocumented Haitians, and the submission of the Fiscal Modernization project, which, although withdrawn from the National Congress, "slowed down the decision on investments and the continuation of infrastructure works.".
Progress
The president of Acoprovi cites, however, advances achieved during the year, such as the use of new technologies that improve the competitiveness, quality and sustainability of construction; monetary policies, such as the release of legal reserve requirements, recently announced, which she specifies, lead to improvements in access to housing and financing; and the approval of resolutions, regulations and laws that improve the existing legal framework in construction and promote the competitiveness of the sector.
Projections
Alberto Bogaert envisions an active market by 2025 with a stable economy in which significant foreign investment will continue to arrive in different sectors of the economy.
Alberto Bogaert, president of AEI. (EXTERNAL SOURCE).
Arredondo estimates moderate growth of 4.8% to 5% for the construction sector by 2025.
The specialist points out that the engines of this growth will mainly be public infrastructure projects, driven by state investment in key areas such as transport, health and renewable energy.
“A rebound in housing construction is also expected, due to the stabilization of material costs and a possible easing of interest rates. Furthermore, the real estate sector, especially in the tourism sector, will continue to be a major focus, with new residential and recreational developments in response to the ongoing boom in the tourism industry.”.
Acoprovi will continue working to reduce permit processing times, expand training and job placement initiatives in the sector, and move towards a legal framework that favors access to housing, with the approval of an updated and adequate Rental Law.
Challenges
For Arredondo, the challenges facing the construction sector remain global uncertainty, input costs, and restrictions on access to financing for small and medium-sized enterprises. He believes that the potential for innovation and sustainability will be key to meeting market demands and maintaining the sector's dynamism in 2025.
According to the president of Acoprovi, the goals are to access skilled labor, improve the sector's competitiveness, promote public-private partnerships that allow for more equitable and sustainable development, and achieve a balance between the sector's growth and respect for the environment by incorporating more green technologies.
Continuing to push the bill to regulate real estate intermediation and the institution's training programs in the National Congress are the challenges for AEI in 2025.
Legal fit
On November 27, the Monetary Board authorized the Central Bank to release RD$35 billion of legal reserve for new loans for home acquisition, interim loans and home construction, at an interest rate of up to 10% per year.
Article originally published in the 9th edition of El Inmobiliario print magazine currently in circulation.
Cover photo: Villa project in Vistacana.
