Rather than suffering, residential sales are returning to their usual pace, given that the phenomenon generated by the pandemic with the extraordinary increase in housing placements was an abnormal situation.
SANTO DOMINGO.- The inflation generated as a result of the war between Russia and Ukraine, which broke out on February 24 of this year, has affected global finances to worrying levels, causing the redirection of many of the public policies of governments and changing the economic projections planned for this year.
The Dominican government and its monetary authorities remain vigilant, taking measures to keep inflation below double digits, trying to affect the population's finances as little as possible, although the threat is ever-present given an unpredictable global outlook.
Housing, one of the basic consumer goods, has not escaped the inflationary scenario, since from the debut of the COVID-19 pandemic, construction materials began to register historic increases, generating a complex situation for the industry and its actors.
However, despite the price increases that construction companies have been forced to make, the first half of the year maintained its sales momentum, according to real estate leaders consulted by El Inmobiliario, a digital newspaper.
“We understand that the global outlook affects many sectors of our economy, and I believe that we must be alert as an industry to possible changes in the dynamics, but I understand that the strength of the real estate supply and the advice of our members to investors will keep our sector afloat,” says Alberto Bogaert, president of the Association of Real Estate Agents (AEI).
According to Bienvenido Paulino of Plusval Venta Directa, the first half of this year has been excellent in the Dominican capital. He explains that rather than suffering, residential sales are returning to their usual pace, given that the phenomenon generated by the pandemic, with the extraordinary increase in housing placements, was an abnormal situation.
“Let me give you the example of a car that is going at a speed of 150 kilometers per hour and that of course must reduce it to 100 because it could be fined. So I would say that in the same sector we are reducing the speed that we exceeded with the pandemic.”.
The experienced agent asserts that the residential sector had been on a continuous upward trend for the past two years. “With the exception of Punta Cana, which continues its boom, in Santo Domingo the trend is toward stabilization because what we had been experiencing was abnormal; we are returning to the previous stage when sales were normal.”.
Bogaert maintains that the January-June 2022 period was a positive six months for the real estate sector despite inflation expectations. “The real estate and construction sector is strong and will always be an important investment option for Dominicans and foreigners,” he stated.
He says that when comparing the first half of 2022 with the same period last year, the results he observes are very similar in terms of projects launched and sold in short periods.
For his part, Paulino attributes the disproportionate increase in home sales in the last two years to several factors, including the attractive rates offered by financial institutions, the fact that the lockdown led to savings in families, given that they had nothing to spend it on; in addition to the aid received by the Diaspora residing in the United States, among other factors.
“But we remain a healthy sector; real estate continues to be the sector par excellence for investing and securing your money. We hope that this normalization process will find companies in the sector organized so that we can all survive,” explains the Plusval executive.
The projections
A study by the multinational Marsh projected that the construction industry would become a global engine for economic growth in the post-pandemic era, contributing 6.6% to the Gross Domestic Product in 2022. In 2021, it generated US$10.7 trillion and was expected to grow by approximately 42%, or US$4.5 trillion, between 2020 and 2030. The Marsh report revealed that the sector will reach US$13.3 trillion by 2025.
In the case of the Latin American market, the Marsh report predicted that it would register an expansion of almost double digits (9.6%), higher than the projection for emerging regions in general (7.2% in 2021). And the growth of this sector in the 2030s would be 35% higher compared to what was recorded in the 2020s.
“Projections indicate that global construction GDP growth will average 4.5% from 2020 to 2025, a higher rate than that expected for the manufacturing and services sectors. These results will be driven by a strong recovery from COVID-19 and massive government stimulus,” the study stated.
In the Dominican Republic,
during the first quarter of the year, the construction sector grew by 6.3% and was among the main sectors that boosted the Dominican economy in the January-March period, according to the monthly indicator of economic activity (IMAE) of the Central Bank of the Dominican Republic (BCRD); however, the IMAE placed the growth of the construction sector in January-April at 4.6%, while in the report for the first half of the year it does not appear among the sectors that registered increases.
