In recent years, the term gentrification has jumped from academic and urban discussions to protests in cities like Mexico City, Barcelona, and New York, and even lyrics by global artists like Bad Bunny. But beyond the cultural buzz, the phenomenon has very tangible consequences. In the Dominican Republic, particularly in areas like Punta Cana and parts of the National District, gentrification has begun to alter the landscape of access to housing, both for buying and renting.
The tourist appeal, combined with foreign investment, infrastructure development and the boom in real estate tourism, has raised land values, property prices and short- and long-term rents, silently displacing traditional populations from these areas.
What is happening in Punta Cana and the National District?
In Punta Cana, the growth of housing stock geared towards luxury tourism has put significant pressure on the real estate market. According to figures from the Association of Housing Builders and Developers (ACOPROVI), the average price per square meter in areas like Cap Cana and Downtown Punta Cana has increased by more than 70% in the last five years. This increase is due to strong demand from foreign investors who acquire properties for short-term rentals, primarily through platforms like Airbnb.
In the National District, neighborhoods like Ciudad Nueva, Gascue, Ensanche Piantini, and El Vergel have undergone a quiet but rapid transformation. Urban renewal projects, coupled with tax incentives for hotel and mixed-use investments, have spurred a process of "gentle displacement," where original residents are forced to relocate due to their inability to afford the rising cost of living. According to studies by the Central Bank, the average rental cost in the District increased by 22% between 2019 and 2024, while in areas with high tourist demand, the figure exceeds 30%.
The Airbnb factor and the domino effect on rentals
The rise of short-term rental platforms has had a significant impact on the supply of housing available for traditional rentals. In 2023, a study by the firm Analytica revealed that in areas like Bávaro-Punta Cana, more than 18% of the apartment inventory was dedicated exclusively to tourist rentals, reducing the availability of housing for permanent residents. While this trend is positive from an investment return perspective, it creates structural pressure on housing demand.
Foreign direct investment and upward pressure on land value
Foreign direct investment (FDI) in the Dominican Republic's tourism real estate sector has exceeded US$1.2 billion annually since 2021, according to ProDominicana. Much of this investment has been concentrated in the eastern part of the country and along the north coast, generating a sustained increase in the value of urban land. In Punta Cana, the price per square meter in some areas rose from US$250 in 2018 to over US$450 in 2024. While this growth is a sign of economic dynamism, it also presents a challenge for Dominican families seeking to settle in these areas.
Gentrification or development? A fine line for brokers and investors
For real estate brokers and developers, this phenomenon represents both an opportunity and a responsibility. The arrival of new investments, improved services, increased security, and greater commercial activity are natural consequences of urban development. However, maintaining a balance between growth and equity is becoming increasingly difficult.
In many international markets, gentrification has generated social backlash, stricter regulations for tourist rentals, and limitations on foreign investment without residency. In Lisbon, for example, licenses for new tourist accommodations were suspended in certain areas. In Mexico City, the local government has begun to review the effects of the "expatriation" of working-class neighborhoods like Roma and Condesa.
Conclusion: Can we afford to reject gentrification?
As a country with a tourism-driven economy, the Dominican Republic cannot afford to demonize gentrification without understanding its nuances. While this phenomenon presents challenges, it also generates employment, attracts capital, modernizes infrastructure, and contributes significantly to the national GDP. According to the Ministry of Tourism, 17.3% of GDP in 2023 came directly or indirectly from activities related to tourism and tourism-related real estate development.
The key for brokers, investors, and authorities lies in fostering inclusive urban development with responsible planning, where economic progress does not necessarily imply social exclusion. If managed properly, gentrification can be more than a threat: it can be a tool for positive transformation.
