SANTO DOMINGO – Leaders in the Dominican construction sector remain optimistic that favorable variables in the country will allow the sector to regain its growth potential in 2023. Two of them conditioned their opinion on the economic factors that will shift both locally and internationally during this year.
The president of Aprocovici, the Association of Housing Developers and Builders of Cibao, believes that although 2023 is not a predictable year, some variables will move in favor of the Dominican construction sector.
Alejandro Fondeur, however, that there are several factors to consider when measuring how the construction and real estate development sector will behave, citing demographics, interest rates, the country's economy, public policies, and consumer confidence.
For his part, the former president of ACOPROVI, the Association of Housing Builders and Developers, Fermín Acosta, believes that, as every year, the construction sector faces challenges, especially when there are difficulties, as is the case that humanity has been experiencing in recent years, but he assures that he is committed to its growth.
He understands that the challenging parts have already been overcome and that international and multilateral organizations project for the country a growth similar to that which it has had for many years, "which means that the nation is experiencing normal growth and above what is expected of most Latin American countries, including the Caribbean and Mexico.".
When analyzing for El Inmobiliario digital, regarding the challenges of the construction sector for the year that has just begun, they cited the main factors that will determine the behavior of the block and rebar sector in the Dominican Republic and their expectations.
“Projections for the Dominican Republic, according to international sources and our Central Bank, show a resilient country, where the highest growth rate in Latin America is expected, reaching between 4.25% and 4.50%. This generates confidence and good prospects for the future, which keeps the sector well-positioned for developers, investors, and people who want to build or acquire property,” Fondeur explained.
The second element he takes into account in his analysis is the interest rate, considering that the measures taken by the country were very timely and have achieved their objective of stopping inflation.
“The first six months of the year are projected to remain the same, with a possible gradual easing of restrictions starting in the second half of the year. This will temporarily slow the pace of construction in Santiago,” says Fondeur.
Fermín Acosta observes that the international indices “that we have been seeing in terms of costs have been stabilizing, they have been going down, I don't think they will reach pre-pandemic levels, but there will be significant decreases which will allow us to offer competitive products that remain attractive and beneficial investments for the purchasers of our products.”.
That is why the former president of the Santo Domingo construction association "is betting on growth and profitability, since the Dominican Republic will continue to be attractive to investors worldwide, and consequently, its growth and benefits will impact us all.".
Fondeur also believes that in recent years several international and national crises have converged, leading to economic measures in 2022. He lists the factors that have generated the crisis: global supply chains, the cost of electricity and food, global inflation, monetary measures worldwide, the armed conflict between Russia and Ukraine, the situation in Haiti, and the pre-election year.
He believes that the government's announcement of increased public investment in infrastructure and construction supports the growth of the sector.
“Ultimately, construction and real estate development are constantly changing. The main challenge is adapting to our new reality and improving efficiency in design and development time through the implementation of new technologies and materials, changes in trends and styles, and new legislation to be promoted.”.
Small and medium-sized builders
Eliseo Cristopher, president of COPYMECON, the Confederation of Small and Medium-Sized Construction Companies, believes that to discuss the challenges of the construction sector in 2023, “we would have to evaluate situations, such as the fact that governments globally are experiencing a general recession, which undoubtedly affects the country directly, especially when we talk about the US economy, where it is predicted that there will be an economic recession starting in the first quarter.”.
He cited the slowdown the sector experienced in the country, which fell from second to sixteenth place in the economic growth ranking. “In 2021, we closed with 24% growth, double the national average. However, by November 2022, we had barely reached 1.6%, which represented a huge slowdown, and we dropped from second to sixteenth place. In other words, we didn't have as much influence on the country's economic development,” the leader lamented.
He highlighted the importance of the sector as one of those that offers the greatest spillover effect on productive sectors and "whose decline affects others because the construction sector impacts a large part of the country's productive sector.".
“This 2023 we see inflation as an obstacle, the behavior of the external economy, but also local inflation. We see how during 2022 construction materials maintained an upward trend, we said that this would significantly affect the sector, and we saw how in September steel had a slightly downward trend, that is a great challenge.”.
As a positive factor, he cites the release of the legal reserve requirement, which facilitated funds with specialized interests that impacted the sector, in addition to the recent announcement by the Central Bank that it will no longer continue to increase the interest rate.
“That provides some reassurance, but interest rates are high, meaning we face significant challenges in the development of the construction sector, and this challenge is much more pronounced for micro and small businesses, which bear the heaviest burden when faced with difficulties,” Cristopher explained.
He proposed that the Government allocate specialized resources for SMEs and that organizations such as Pro Consumidor speak with material suppliers to curb the speculative conditions that have been occurring in the sector.
