The State of Dominican Republic Real Estate
By Joe Pike, Special Contributor
Anders Bogebjerg, owner and founding partner of real estate company Group Palmera in the Dominican Republic, began his company in 2013 with just one villa.
Before his company started renting the Punta Cana villa on Vrbo, Airbnb, etc., it spent seven-to-eight months overseeing the complete renovation of the property, which he said was necessary to bring it up to date.
“It was a great learning experience and definitely one that we’ve used many times since, as we’ve helped renovate other villas,” he told Caribbean Journal Invest (CJI), “and also been involved in designing and building several villas from zero.”
Now, the company has more than 40 villas in its portfolio. So, how did it grow so much in less than a decade?
“Slowly, but surely,” he said. “Well, in the beginning, it actually went pretty quickly and mostly by word-of-mouth. Punta Cana is a small town and as soon as someone starts doing something, people start talking.”
CJI spoke further with Bogebjerg and Barbara Warren, director of international business development for Noval Properties, which is headquartered in Santo Domingo, about vital tips on capitalizing on real estate in the Dominican Republic, as well as the current and future states of the market.
Here’s what we learned.
The COVID Effect
“There has been a boom in residential [investment] due to the [COVID-19 pandemic] and the fear of large crowds,” said Warren. “There has been a significant uptick in sales of turnkey-ready properties.”
Bogebjerg also told CJI interest in real estate in the Dominican Republic has picked up, but admitted it wasn’t easy during the beginning of the pandemic.
“As far as the investor market, basically everything slowed down dramatically,” he said. “We run 45 vacation rentals and that main business was basically on hold for about three months.”
But although his vacation rental business stalled, he said interest in the Dominican Republic’s real estate market never really waned.
“What I’m hearing now is an uptick in inquiries about the second home market,” said Bogebjerg. “Interest really hasn’t slowed down with COVID. A lot of people are asking, especially from the New York area and Florida.”
And Lucien Echavarria, director at the Ministry of Tourism of the Dominican Republic, doesn’t expect that interest to disappear anytime soon.
“Interest in real estate in the Dominican Republic, particularly Punta Cana, remains high because smart investors know the D.R. is the type of destination travelers are looking for now,” she said. “It is close and has a strong, stable government.”
Market Gaining Strength
So, how is business doing this year, in general, for Noval Properties?
“2020 came in strong with an increasing interest in the purchase of new properties in tropical Caribbean areas,” said Warren. “This trend came in parallel with the expansion and remodeling of existing hotels, expansions and new builds in Punta Cana, positioning it as a magnet for international investors.”
Warren said Noval Properties constructs tourism investment properties and sells them to “direct clients and via brokerages worldwide.” Noval, she said, has a property management company to manage clients’ investments once they have purchased from Noval.
“We have over 1,200 properties delivered,” said Warren. “With $350-plus million in sales and with more than 1,000 units under construction. Twelve projects are actually under construction.”
Avoid Growing Too Much
As we mentioned, it was less than 10 years ago that Bogebjerg co-founded Palmera Luxury Vacations and it was word of mouth that helped his company take off shortly after buzz started to grow surrounding his one and only Punta Cana villa.
“Before we knew it,” said Anders, “people were coming to us saying they had a villa that they wanted to rent to tourists, or their friend or neighbor had a villa and might be interested, and so on. The word spread and we never really had to actively go after a villa ourselves.”
To begin with, said Bogebjerg, Palmara started exclusively in Punta Cana, where its office is located.
“We took almost anything we could get,” he said, “because we needed to build a portfolio. Obviously, we had some basic standards and criteria, and we only took in villas that were located at the major tourist resorts.”
“As the years went by, and once we grew even more, we decided to slow down a bit and not take in more villas,” he said. “Unless a villa is absolutely breathtaking and we just have to have it in our portfolio, we don’t need it.
“We want to have a good variety of villas,” continued Bogebjerg, “but we don’t necessarily want to become so big that we can’t keep up and we can’t give the service that we want to – both to our villa owners and our clients. We strive for quality over quantity.”
Warren said the Dominican Republic serving as an attractive real estate investment opportunity is nothing new and doesn’t expect the COVID-19 pandemic to have a negative impact on the destination’s real estate market going forward.
“The Dominican Republic has been in the eye of the hospitality investment circuit for decades,” said Warren.
In fact, visitor arrivals to the Dominican Republic reached 6.5 million in 2018, a 6.2 percent increase over 2017, according to the Dominican Republic Ministry of Tourism. It expects to meet a stated goal of welcoming 10 million annual stay-over tourists by 2023.
“When you invest in an area that has this constant growth in tourism, you know that your tourism real estate investment is guaranteed,” said Warren. “The pandemic has made this niche product boom as people are looking to have a second home in paradise for the next quarantine and a lodging alternative to the large resorts.”