Construction, tourism and real estate have good prospects to end 2023
By Yamalie Rosario
El Inmobiliario
SANTO DOMINGO- Projections indicate that 2023 will end with favorable indicators for the construction, tourism, and real estate sectors, which is attributed by key players to the Central Bank's policies to keep inflation under control and promote expansion by releasing economic resources to ensure liquidity.
However, although the forecasts in the aforementioned economic sectors are encouraging for 2024, representatives of the Dominican Association of Tourism and Real Estate Companies (Adeti); the Association of Real Estate Agents and Companies (AEI) and the Dominican Confederation of Small and Medium Construction Companies (Copymecon) pointed out challenges and obstacles for the coming year.
They cited the need for the government to promote tax reform, to make banking access more flexible for SMEs, to regularize short-term rentals, and to make procedures through the Single Window for Construction (VUC) more efficient.
The encouraging forecasts for 2023 intensified in October following the announcement by the Central Bank Governor, Héctor Valdez Albizu, that the Monetary Board had authorized a new rapid liquidity facility, for 40 billion pesos, for construction, manufacturing, export and agriculture.
A prior release of economic resources was made in January of this year for 21 billion pesos to be loaned for the construction and acquisition of low-cost housing, with an annual interest rate of 9%.
“It is worth highlighting that during the current year the aforementioned measures have meant loan disbursements of some RD$158 billion at rates no higher than 9.0% per year, which together with the reduction of 125 points in the monetary policy rate have led to a reduction in the weighted average of loan interest rates of approximately 200 basis points, which means a more than complete transfer of the monetary policy signal to market rates,” the Central Bank noted in its report on the behavior of the economy in October.
An important aspect highlighted in the report is that for the fourth consecutive month, the construction sector, as of the aforementioned date, exhibited positive variation rates, reflecting a year-on-year growth of 4.7%. The agency attributed this to the effectiveness of the liquidity provision measures with guarantee securities implemented by the monetary authorities, as well as the faster pace of execution of public capital spending compared to the same period last year and the stabilization of prices for inputs used in this activity.
Furthermore, according to the National Statistics Office (ONE), in October 2023 the Direct Housing Construction Cost Index (ICDV) averaged 215.50, registering a monthly variation of -0.40 percentage points, compared to September's 216.35. “From December 2022 to October 2023, the index showed a cumulative variation of -3.98%. When comparing the results with those of October 2022, the index has shown a variation of -4.67%,” the agency's report highlights.
From the perspective of SMEs
In an interview with El Inmobiliario, the president of the Dominican Confederation of Small and Medium Construction Companies (Copymecon), Eliseo Christopher, analyzed that the beginning of 2023 was "extremely tragic" but that after overcoming that stage the construction sector continued to demonstrate that it is one of the most dynamic economic sectors.
He recalled that, although the construction sector declined in the first half of the year, the situation changed after the release of legal reserve requirements by the monetary authorities, and it is projected that the year will end with a growth of around 3 percent.
He hopes that next year the Central Bank will continue with this expansionary policy and that inflation will remain under control so that the construction sector "continues to recover" as it has done so far.
Tourism behavior
The so-called "Smokeless Industry" registered a remarkable evolution, judging by the Central Bank governor and the statistics.
Tourism saw a year-on-year increase in revenue of 19.3 percent, reaching $7,594.4 million, from January to September 2023.
In the first ten months of the year, 6,554,589 tourists arrived in the country by air. Including the 1,696,711 cruise ship passengers who arrived in October, the total number of visitors from January to October reached 8.3 million, a record high according to figures reported by the Ministry of Tourism.
Authorities anticipate that tourism revenue will exceed $10 billion, with over 10 million visitors arriving by air and sea. They have a similar projection for remittances, which they expect to reach approximately $10 billion by the end of 2023.
Real estate tourism with rapid growth
Tourism real estate investment continued its accelerated growth, just like the previous two years, according to the Dominican Association of Tourism Real Estate Companies (ADETI).
According to its president, Jorge Subero Medina, 2023 was an extraordinary year for the sector because, in addition to growing, it was able to consolidate and project itself as the best example of tourism diversification.
He highlighted that from January to October of last year, the Tourism Development Council (Confotur) approved 42 projects with an investment amounting to US$1.567 billion, which will build 9,260 rooms in the next three years.
According to Confotur statistics, as of August 2023, there were 355,177 accommodations listed on the Airbnb platform, of which 67% were hotels and 27% private. In total, there were 43,302 properties, representing a 222% increase in one year, with 106,990 rooms, a 212% increase.
Real estate sector reaching milestones
Another sector that continues to make steady progress is el inmobiliario because according to the president of the Association of Real Estate Agents and Companies (AEI), Alberto Bogaert, 2023 was one of the best years in the history of that entity, highlighting the boost to the draft Law on rentals of real estate and evictions, which is currently under study in the Chamber of Deputies.
Challenges and opportunities from a union perspective
After reviewing the past year, the president of Adeti, Jorge Subero Medina, mentioned the tax reform that the government will have to face and the regulation of short-term rentals, among the challenges and opportunities for real estate tourism in 2024.
Meanwhile, the president of Copymecon, Eliseo Christopher, insisted that the government increase its capital expenditures in the construction sector and that SMEs have greater access to banking facilities because he believes that the reserve requirement only benefits the largest companies. He believes that the services provided through the Single Window for Construction (VUC) need to continue to be streamlined.
Originally published in the 5th edition of El Inmobiliario (print). Cover photo of the Reserva Real residential project by Noval Properties.
