“Following the effects of the pandemic and the conflict between Russia and Ukraine, the cost per square meter of construction has increased by 38%, according to the Housing Cost Index (ICDV), due to the rise in the cost of construction materials,” states a press release issued by the entity.
SANTO DOMINGO.- The Dominican Association of Housing Builders and Developers (ACOPROVI) considers it inappropriate to apply tax measures to digital platforms such as Airbnb at this “challenging” time.
The construction industry maintains that after more than two years of a titanic battle for the construction sector, due to the increases in construction materials caused by the effects of the pandemic and the international supply crisis as a result of the armed conflict between Russia and Ukraine, the sector is experiencing multiple challenges.
He explains that this reality drastically affects real estate and economic inflation, and the increase in the cost per square meter of construction by more than 38%, according to the report of the National Statistics Office (ONE) in its latest June report on the Housing Cost Index (ICDV).
“Following the effects of the pandemic and the conflict between Russia and Ukraine, the cost per square meter of construction has increased by 38%, according to the Housing Cost Index (ICDV), due to the rise in the cost of construction materials,” states a press release issued by the entity.
ACOPROVI says that the international situation has shaken the very foundations of the sector, from developers to buyers, who are bearing the heaviest burden with the consequences of this scenario, such as increases in local labor costs and higher interest rates on mortgage loans. This situation is prompting buyers to postpone the decision to purchase a property for short-term rental purposes, projects that currently represent an important part of the sector's performance, and which has allowed it to grow by 23.4% in 2021.
“We have been working diligently to address the challenges of recent years, as we as a sector have tried to cope with the constant increase in the cost of essential construction materials since the beginning of the pandemic, such as steel and cement. And, although the sector has remained resilient, this situation makes projects in the planning stages and underway vulnerable to the inflationary variables that affect us, impacting the sector's dynamism and access to decent housing,” explains architect Jorge Montalvo, president of the organization.
He adds that precisely at a time when the sector is reinventing itself and seeking mechanisms to recover, considering the application of tax measures to platforms like Airbnb would result in a new economic impact.
These measures, says ACOPROVI, added to the events that have occurred in recent years, instead of boosting the sector, would cause it to slow down and, in turn, could cast doubt on the investment decisions of acquirers and/or promoters for projects with such purposes.
“We support these initiatives, but only when the sector can withstand them. And this is precisely not the ideal time to continue adding variables that prevent the sector from breathing and recovering from its current challenges. Even more so at a time when there is a growing demand for projects aimed at short-term rentals. That is why we believe it is appropriate to evaluate—together—more viable solutions to the current situation, because the sector is suffocating,” Montalvo emphasizes.
The association proposes the active participation of the housing construction sector, through working groups, in the government dialogue related to the measures to be implemented for digital platforms, with the aim of creating strategic alliances that help mitigate the negative impacts on the local economy.
