The former president of Acoprovi points out that the combination of high rates, institutional delays and international uncertainty keeps the sector at its most critical point in years.
SANTO DOMINGO.– Businessman Fermín Acosta, former president of the Dominican Association of Housing Builders and Developers (Acoprovi), stated that the construction sector is going through one of the most complex in recent years, marked by high interest rates, international uncertainty, and a notable slowdown in project approvals.
In an interview on the program La Ventana Media Group El Inmobiliario, Acosta explained that construction activity, which once represented up to 17% of the national GDP, currently hovers around just 2%, after several quarters of negative growth.
He pointed out that this downturn not only affects developers, but the entire economic structure that depends on the sector. “When construction stops, everything stops: banks, suppliers, businesses, and services. From the cement industry to the woman who cooks for the construction workers,” he stated.
Acosta attributed part of the slowdown to external factors, especially economic uncertainty in the United States. He indicated that the Dominican economy, being linked to the U.S. economy, is highly sensitive to changes in the interest rates set by the Federal Reserve (Fed).
He recalled that interim construction interest rates reached levels of 16% and 17%, which he described as "unsustainable" for both builders and buyers, as it significantly increased the cost of projects and limited families' purchasing power.
Fermin Acosta.(Fidel Perez/El Inmobiliario).
Dominicans abroad
Fermin Acosta said that the current scenario in the construction sector has directly impacted Dominicans residing abroad, who —he stated— represent about 60% of home buyers in the country, a segment that usually acquires properties through financing and that has also been hit by the increased cost of credit.
He explained that builders have had to include clauses in contracts because a project can last for years and, therefore, any increase in the rate ends up impacting all execution costs.
He pointed out that although the direct cost index measures some increases, it does not include administrative or operational expenses, which have also risen and directly affect the final price of homes.
Hopeful outlook
The businessman considered that, despite the complex outlook, there are positive signs, such as the recent reductions in interest rates announced by the Fed and reflected in the local market during the last few months.
Another factor he highlighted was the approval of the Rental Law, which he said provides legal certainty to investors and can encourage the development of projects intended for rent, expanding the housing supply.
Acosta also noted that the country has a housing deficit of over 1.5 million homes, which is why he considers it crucial to unblock private projects that are currently stalled or progressing slowly due to institutional delays.
He indicated that although the Ministry of Housing exhibits greater efficiency in its processes, the developments require additional approvals in other entities, and the accumulated delays affect the profitability and continuity of the works.
In that regard, he appreciated that the President of the Republic had requested to identify where the files are being held and which officials are responsible for the delays, a measure he described as necessary to reactivate the sector.
Acosta stated that, despite the drop in sales recorded in the last year and a half, in the last two or three months there has been a slight recovery in the placement of units due to the downward trend in rates.
Finally, he insisted that the combination of greater financial stability, more agile processes, and direct intervention by the Executive Branch could help the construction sector regain its momentum in the coming months.
