By Joan Feliz Valoys
Special for El Inmobiliario
Over the past decade, real estate trusts have transformed the landscape of the real estate sector in the Dominican Republic. This model, which combines legal security, transparency, and efficiency, has positioned itself as the best option for both those seeking to invest in real estate and for developers leading impactful projects. Today, acquiring a home through a trust is not only more common but is also recognized as the safest alternative for protecting assets and ensuring the success of real estate developments.
Exponential growth of trusts in the Dominican Republic
Since the enactment of Law 189-11 on the Development of the Mortgage Market and Trusts, real estate trusts have shown sustained growth. According to data from the Superintendency of Banks, as of May 2023, 1,258 trust agreements had been registered in the country, 79% of which are earmarked for real estate development. This cumulative growth of 1,298% since December 2014 demonstrates how this instrument has become a cornerstone of the local real estate market.
The impact of trusts is especially evident in the low-cost housing segment. From 2011 to mid-2024, more than 160,000 housing units were delivered through trusts, including 65,000 units in 2023 alone. This growth has not only strengthened the supply of affordable housing but has also boosted the economy by generating thousands of direct and indirect construction jobs.
Advantages for buyers
Real estate trusts have been key to overcoming historical barriers to housing access in the country. Below are some of the main advantages for buyers:
1. Legal certainty and transparency
Buying a property off-plan or under development has always involved risks. However, with trusts, buyers can be assured that their investment will be used exclusively for the project. The trustee, as the regulatory body, oversees each stage of development and ensures compliance with the established terms.
2. Ease of financing
One of the great advantages of trusts is the flexibility they offer in payment plans. Buyers can finance their investment over more manageable terms, tailored to their needs, which has democratized access to quality housing, especially in social housing projects.
3. Tax incentives
When purchasing a home through a trust, buyers often benefit from exemptions such as the Real Estate Transfer Tax (3% of the property value). This translates into significant savings and makes the investment even more attractive.
4. Protection of heritage
The assets of a trust are independent of those of the trustee or developer, meaning that the funds and assets are protected from potential financial or legal problems of any of the parties involved.
Advantages for developers
Developers have also found trusts to be a strategic tool for efficiently and securely realizing their projects.
1. Greater market confidence
The trust structure brings transparency and professionalism, which builds trust among buyers and investors. This translates into increased demand, since projects structured under trusts offer clear guarantees regarding the proper use of resources.
2. Facilitation of financing
Because they are an independent asset pool, trusts are more attractive to financial institutions, allowing developers to access loans or financing with better conditions.
3. Tax incentives for development
Developers can benefit from tax breaks, such as the 27% Income Tax exemption and other incentives provided for in Law 189-11. This reduces development costs and improves project profitability.
4. Risk mitigation
By structuring a trust, developers delegate the management of resources to a trustee, allowing them to focus their efforts on project execution, while the trustee ensures compliance with legal and financial aspects.
How do real estate trusts work?
In general terms, a real estate trust is a contract through which a developer transfers assets—whether land, money, or other property—to a trustee. The trustee then manages these resources independently to ensure the project's successful completion.
The assets transferred to the trust are protected against third-party claims and are used exclusively for the purposes stipulated in the contract. Buyers make their payments directly to the trust, ensuring proper management of the funds and minimizing the risk of misappropriation.
Once the project is completed, the housing units are handed over to the buyers and the profits are distributed as agreed upon by the parties. This model not only guarantees the project's completion but also protects the interests of all involved.
A model that leads the future of the market
Real estate trusts are no longer an option reserved for large projects; they have become the market standard. Their impact extends beyond housing construction, contributing to the development of sustainable communities, job creation, and the strengthening of the national economy.
In a country where housing demand continues to grow, trusts represent an effective solution for guaranteeing access to quality properties under a transparent and secure framework. Both buyers and developers have understood that this structure not only protects their investment but also optimizes returns.
As knowledge about trusts expands and more projects adopt this structure, the Dominican real estate market is positioning itself as one of the most dynamic and reliable in the region. The Dominican Republic is not only building homes, but also laying the foundation for a future of opportunity for all stakeholders in the sector.
A solid future requires firm foundations. And trusts are the key to ensuring that future is secure and prosperous.
The author is: MBA specializing in Digital Marketing, operations manager of the construction company Incaribe, with more than 10 years of experience in the construction and tourism sector.
