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Haiti Earthquake: Impact on the Dominican Republic?

Jan 27th, 2010
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How has the disastrous January 12 earthquake in Haiti impacted its island neighbor, the Dominican Republic (DR) and how might it impact the DR in the future?  It’s impossible to say what the long term consequences might be; however, the short term is more clear.  

The actual quake was felt in some areas of the Dominican Republic, including the capital city, Santo Domingo.  High rise buildings shook, sending people downstairs and into the streets, fearing that the tremor might intensify.  Thankfully, there was no damage or deaths in the Dominican Republic as a result of the devastating Haitian earthquake.  

The Dominican Republic’s response to the Haiti earthquake has been both one of concern for the victims and immediate action.  The authorities, businesses, humanitarian groups, and the Dominican military joined forces to mobilize humanitarian aid.  Dominican humanitarian groups arrived in Haiti only a few hours after the earthquake struck, and many have remained there since. Bottled water and food is being sent to survivors, while heavy machinery is being sent to remove the rubble.  Hospitals and airports have been made available.  The Dominican Institute of Telecommunications (Indotel) helped restore telephone services.  Dominican technicians are helping to restore power. Along with the International Red Cross, the Dominican Red Cross has been providing health relief services.  The Dominican government has spent more than $20 million dollars in humanitarian aid for Haitians.    

Maria Montez International Airport located in the southwestern Barahona province of the Dominican Republic has been lent to Haiti, allowing Haitians who live abroad use the airport to travel to and from Port-au-Prince.  It’s estimated that the airport is handling one hundred and fifty flights per day. The last stretch of the trip to and from Haiti will be made by bus.

Haiti Embassador Fritz Cineas called the Dominican authorities decision to offer Maria Montez Airport a great gesture of solidarity with the Haitian people.  He also thanked the Dominican government for agreeing to build a 12 kilometer span of highway from Jimani to the Haitian town, Fond Parisien.

UN secretary general Ban Ki-moon said that “From the beginning of this crisis, the Dominican Republic government has been providing very generously and swiftly all possible assistance to its neighboring country, Haiti, and we are very much grateful to them. I am also aware of the Dominican Republic’s intention to dispatch troops there – that is also welcome. For the immigration issues, I am also aware that the Dominican Republic Government is trying to accommodate as many as possible, those people within the existing rules and regulations of their country, but they have been very generous.”

Despite the tremendous amount of support the Dominican Republic has given, and continues to give to Haiti, there are some who have criticized the Dominican Republic for not doing more.

Historically, there has been tension between the two countries.  The Dominican Republic earned its independence from Haiti in 1844, and has since built a stable government and economy for itself.  Haiti remains one of the poorest countries in the world, and would require far more aid than the Dominican Republic, with its limited resources, could ever possibly offer.   

For years the Dominican Republic has been criticized for its treatment of Haitians living in the Dominican Republic. Though the Dominican Republic has always defended its right to exercise tight border control, about a million Haitian immigrants live in the Dominican Republic, mostly working in construction and agriculture. The DR has frequently been bombarded with refugees fleeing Haiti’s political and natural disasters. In the aftermath of the earthquake, some say Haitian refugees should be allowed to enter and stay in the Dominican Republic. It’s even been suggested that Punta Cana’s luxury resorts should house displaced Haitians, instead of accommodating wealthy tourists.  

Dominican hospitals are currently overwhelmed with sick and wounded Haitians. When the injured Haitians are well, the Dominican Republic will want them to return to their own country. It is likely that some will not agree with this approach.

Though the Dominican Republic has opened its border to accommodate truckloads of Haitians badly injured from the earthquake, the DR is still maintaining immigration controls fearing some of the 4000 inmates who escaped from a Port-au-Prince prison may seek refuge in the DR.  

It remains unclear just how the Dominican Republic–and Haiti–will be impacted by the recent earthquake disaster.  If international aid is successful long-term, perhaps Haiti will offer more opportunity for its people, and the country will become stronger in the years following the horrendous suffering caused by the quake.  Perhaps relations between the countries will be improved as a result of the outpouring of support Dominicans have offered their neighbor.  As to how the earthquake will effect the Dominican economy, world perceptions of the DR, and even tourists and real estate markets, we will have to wait and see.

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Dominican Republic may see a 2nd wave of French investments

Dec 7th, 2009
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December 3, 2009

Article supplied by Dominican Today

 

PARIS. – The French Enterprise Movement (MEDEF) today stated its interest in making Dominican Republic the front door for a second wave of investments from its country in the areas of tourism, energy, rail transport, technology, banks, perfume and telecoms in the rest of the Caribbean.

 

As part of the French strategy to continue investing abroad, president Leonel Fernandez was treated to a breakfast to explain Dominican Republic’s attractive investment facilities in beach and mountain tourism, extreme aquatic sports and in the renewable energy, telecom, medical industry and retail sectors, with legal security guaranteed.

 

Around 35 representatives of French companies heard Fernandez affirm that despite the global economic crisis’ negative effects, the Dominican economy grows steadily , which spurs confidence in foreign investors who continue bullish on the country’s stability.

 

He said the country offers the best possibilities for French investors, that already have a massive presence in northeast Samaná province, especially Las Terrenas, where 80 percent of the hotels and restaurants are French managed.

 

The chief executive noted that after 11 years since his first official visit in 1998, fruit  those efforts the companies Alstom, Accor, Carrefour and Orange have set up operations in Dominican Republic where their performance has been more than satisfactory. “We’re very confident this new encounter can contribute to the alliance between our two countries and materialize other business projects as a way to continue fortifying the progress which we have obtained in recent years.”

 

“This crisis definitively affected us in the second half of 2008 and alerted us to the importance of preparing ourselves to confront the difficult problems at any moment,” Fernandez said.

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What crisis? Dominican Republic tourism real estate projects forge on

Nov 30th, 2009
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Article provided by Dominican Today

Santo Domingo.- Contrary to what occurred in other countries which compete with Dominican Republic, investments in tourism real estate projects continue growing as the result of the strong position of local banks and lower interests in the wake of the global financial crisis.

Dominican Tourism Realtors Association (ADETI) president Juan Bancalari affirms the scenario has led to the creation of new residential facilities in the different tourism regions. “The financial sector played a preponderant role in the reactivation of the tourism real estate sector.”

Though the hotelier didn’t specify figures the Tourism Ministry had previously announced that to October 30 the Tourism Promotion Council approved and classified 44 projects of US$7.9 billion, to build 54,725 non-hotel rooms and complementary offers.

Bancalari affirms that the tourist who invests in luxury real estate projects and tourism residences become part of the country due to the society created, adding that they come to Dominican Republic more than twice a year and bring relatives and friends with them, which may produce a new investor.

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3% growth rate forecasted in Dominican Republic for 2009

Nov 22nd, 2009
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Article supplied by dr1.com

Government Bullish on Economy
The Dominican government’s economic team is optimistic about growth prospects for the end of the year, as reported in Listin Diario. The team forecasts a growth rate of at least 3% for this year. The IMF forecasts growth of 2.5% for next year with the creation of some 10,000 jobs following the injection of money from the International Monetary Fund (IMF), the Inter-American Development Bank (IDB) and the World Bank. 
According to Listin Diario, the economic team says that the economy is responding to recent funds injections and results will be seen in less than a month and a half. The best demonstration of that, they say, is the fact that banks have increased loans by RD$29 billion, in contrast to the situation at the end of 2008 and during the first months of this year. 

The authorities say that the amount of money being moved by the entire banking community, both public and private is setting the pace, with banks lending money at between 10% and 14%, a low in banking credit in the DR. They mentioned that commerce had received loans for more than RD$9.5 billion, which they expect will make 2010 a take-off year. The entire agricultural sector has received around RD$4 billion, including fishing and forestry products, says the government. Perhaps more importantly, the housing and construction sector is showing signs of reactivation, with banks lending out RD$4.5 billion for mortgages at a “privileged rate” of 11%. Finally, for the first time in the history of private lending, micro-businesses received RD$1.4 billion worth of financing. 

As part of the IMF agreement, the injection of more than a billion dollars into the local market over the next 12 months will permit an acceleration of the economy.  The economic authorities say that the drop in imports had compensated for the drop in export revenues.

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Arab Emirates confirm natural gas plant for Dominican NW

Oct 21st, 2009
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I’m not sure yet what the impact will be of this natural gas plant in the northwest of the Dominican Republic, but I read another article stating the the plant would provide cheaper and more efficient power.  What I read was the cost would be up to three times cheaper.  Though there have been some nay sayers, it does sound like good news to me.  What do you think?  Do you see any possible downside?    

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Arab Emirates confirm natural gas plant for Dominican NW

Article provided by Dominican Today, October 6, 2009

Santo Domingo.- President Leonel Fernandez met for more than one hour yesterday with United Arab Emirates Foreign Relations minister, to confirm the start of construction, in the next few days of a modern 600 megawatt natural gas plant in Manzanillo, Montecristi (northwest), at a cost of US$800 million.

The presence of Sheikh Abdallah Binzayid Al Nahyan and the official delegation stems from Fernandez’s visit to Qatar and the United Arab Emirates eight months ago, when he held various meetings.

After the meeting Al Nahyan held a press conference accompanied by his Dominican par Carlos Morales, and firmed the establishment closer relations. The Arab official said his country will also install an embassy in the country, which will serve all of Latin America.

Al Nahyan said he felt impressed with the country’s beauty and with Dominicans and also with its relation with the company that manages the Caucedo Multimodal Port, adding that his nation may also invest in the country’s energy, financial and tourism areas.

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$2 billion resort and residential project planned for Samana Peninsula

Oct 8th, 2009
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This newly announced project means more good news for the Samana Peninsula.  Though the project won’t be completed for 20 years, the scope of this project indicates to me that  Samana has a very bright future.  The Samana Peninsula, where Las Terrenas, Samana and Las Galeras are located, has been getting attention from travelers, retirees and investors for many years.  Real Estate appreciation in the area has been as high as 35% per year, averaging about 20% over the last five or six years.  

Cisneros announces his Investments – article supplied by dr1.com

Venezuelan businessman Gustavo Cisneros has announced plans to build Tropicalia, a resort and residential project in the Samana Bay-Miches area in the east of the DR, with an estimated value of US$485 million. Construction is due to begin in March 2010 and will be completed by 2030, with a further US$1.5 billion investment over that period for a total investment approaching US$2 billion. 


Cisneros spoke of a vision for building a socially responsible tourism venture. He made his announcement during an American Chamber of Commerce luncheon, which was also attended by President Leonel Fernandez.

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Cruise ship arrivals up 24% in Dominican Republic

Oct 8th, 2009
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Cruise Ship Boom – article supplied by dr1.com

“We are talking about a boom in cruise ship visits,” said Tourism Minister Francisco Javier Garcia, speaking at the IFTM/Top Resa 2009 event in Paris. He said numbers show that cruise ship arrivals are up 24%, despite the general lull in travel. 
He said that cruise ship arrivals to the DR have been increasing in the past two years. From 375,000 cruise arrivals in 2007, some 505,000 visitors arrived in 2008, and a greater number is expected by year-end 2009. The Minister predicted that this growth was set to continue, adding that the leading Caribbean cruise ship conference is booked for Santo Domingo in October 2010. The main players in the cruise industry will be visiting the city for The 17th Florida-Caribbean Cruise Association (F-CCA) Conference & Trade Show from 25-29 October. 
DR has three main cruise ship ports: Casa de Campo in La Romana, Samana and the Port of Sans Souci in Santo Domingo with its Don Diego and Sans Souci terminals.

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Santo Domingo – Samana Highway gets additional funding

Sep 8th, 2009
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The new highway connecting the Dominican Republic’s capital city, Santo Domingo, to the popular tourist area of Samana has been open for use for over a year.  However, there are a few sections that have not yet been completed. Currently the drive is about two and a half hours from Santo Domingo to Las Terrenas.  With the new sections completed, it should take about two hours for the same trip.  Before the highway was opened in 2008, the drive was approximately five hours on a road in poor condition. 

 

According to the following article posted on September 8, 2009 on the Gov Monitor, the Inter-American Development Bank will lend up to $44.8 million to the highway project.  The 99 kilometers of existing highway that connects Nagua, Sanchez, Samana, El Limon, and Las Terrenas will be rehabilitated and there will be a new 24 kilometer route connecting Las Terrenas and Majagual.  

 

Last year when making the drive from Santo Domingo to Las Terrenas we took a few photos of the new highway.

 

Here’s the article that appeared in the Gov Monitor:

 

IDB Supports Toll Highway in Dominican Republic

 

Project will back development of road infrastructure to improve travel connections in areas with great tourist potential

 

The Inter-American Development Bank will support a toll highway project that will reduce the travel time between Santo Domingo and the Samaná peninsula, an area with great tourist potential, located in the northeastern part of the Dominican Republic.

 

Continue reading article: The Gov Monitor

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How to Prosper in International Resort Real Estate

Sep 4th, 2009
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Do you dream of owning property in a tropical paradise? Do you know the essential steps you must follow to truly prosper by investing in the right international resort real estate project?

Knowledge combined with a solid plan can make the difference between a strategic and smooth decision-making process leading to a successful profitable transaction and an ongoing headache (and heartache) project that never pays off. 

Most people don’t realize how affordable and accessible beachfront and resort property can be; however, it’s critical to do your homework before you commit to anything. LasGaleras_Hotel

 

The first steps are all about getting educated. This part of the process will likely be the most time-consuming and the most valuable. 

Resort real estate can be very profitable and may offer significant tax and lifestyle benefits.  It is important to be clear about your financial strategy and risk tolerance on the front end, since every project and opportunity will present unique risks and benefits. 

How would you hope that owning international real estate would impact your lifestyle?  Is it appealing to you to benefit from the tax advantages and lifestyle of visiting your investment property periodically as part of your investment management plan?  Or, do you simply want to enjoy a second home in a beautiful beachfront resort and know you have an appreciating asset? Would you be greatly disappointed if a project took five years to be completed, when you were hoping for two?  Be clear about what you want.

Buying raw land and building a home or a project of any scope often offers the highest return potential hand-in-hand with the most risk (Think 500 – 1000% ROI, over a three to eight year period, assuming everything goes exactly as planned–which rarely happens).  Investors who buy into a development project in its earliest stages will benefit from lower prices and will assume more risk than those who purchase just prior to construction or after construction has started.  The safest bet (and the highest cost) is usually found with completed construction.  Not to say there are not risks with purchasing finished homes; however, the risk of the developer running out of money and not completing the project, the risk of permits being denied, or the risk of an extraordinarily slow building process are mitigated when the building is already completed and ready to move in. 

There are several trends, which have led to the popularity of resort investment, but perhaps the most significant trend is that baby boomers are hitting financial peaks in their careers and are also inheriting substantial sums of money from their parents.  More and more Americans are flocking to resort-like cities.  Kenneth Johnson, a senior demographer at the University of New Hampshire’s Carsey Institute said, “You get the wave of the baby boom, which is bigger than the wave before it, and on top of that, the baby boomers are more likely to purchase these second homes, or amenity homes, or move to these areas. And so you get, essentially, a demographic perfect storm.”1 

A “demographic perfect storm” seems like a compelling argument to invest in a resort location, but you must decide if this asset class is a good fit for you.  Also, you will need to decide if you will pursue raw land, pre-construction, completed construction, or rehab projects.  This is largely a decision based on risk tolerance and desired timeline.  

If you have determined that international resort real estate does in fact fit your investment strategy, risk tolerance, and life goals, it’s time to begin investigating potential geographic markets. Factors you might want to consider first include the political and economic stability of the country, the year round climate conditions, the policies and attitudes towards foreign investors, and ease of travel to the country. If you are starting your search for prospective investment markets from scratch, the Internet is a good place to begin.  There are an abundance of global real estate portals, packed with information, including http://www.escapeartist.com, http://www.globalpropertyguide.com, http://www.overseaspropertymall.com, and http://www.viviun.com. 

This market investigation process will inevitably lead to the discovery of multiple projects in your desired geographic market that warrant further research. 

Conducting adequate due diligence on each project under consideration will help mitigate your risk exposure.  At minimum, you will want to understand how property management will be handled, investigate the builder/developer’s background and track record, and verify that property title and permits are in place.  It is also important to know the exact location of a project and its immediate surroundings.  For example, a project may be located in a beach town, but its proximity or access to the beach may be less than ideal. 

Visiting the real estate market you are considering, getting a feel for the community (if one exists), meeting face to face with the developer and seeing the exact location of your prospective projects is one of the best ways to conduct due diligence.  Plus, you’ll likely have a lot of fun exploring the area. 

At this point, much of the research and education process is completed; however, there are still important steps to take.  You’ll need an international real estate team including an international tax attorney or CPA, and a possibly an attorney in the market you have chosen.  Financing options, tax implications, impact on cash flow and net worth all need to be considered.  Always look at the worst-case scenario, and make sure you can “wait it out” should that become necessary.  Know your exit strategy options.

Once you have narrowed you search down to one or more properties or projects, Review all purchase contracts and payment terms with your attorney.  Be ready to walk away if you don’t like the terms and conditions offered in the contract. Make sure that everything in the contract is clearly stated. 

Now you are ready to commit to and finalize your deal by signing the contract and submitting payment. If you have found a good project, you will have a new asset to add to your portfolio and you will have a beautiful property to enjoy.

1 ‘Amenity Migrants’ Alter Life In Resort Towns, by Daniel Kraker, Aug. 19, 2008, NPR

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Dominican Republic Starts to Recover

Sep 1st, 2009
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This article, written by Joachim Bamrud, appeared in Latin Business Chronicle on August 11, 2009.  

 

The Dominican Republic is starting to see signs of recovery, leading to more optimism among local and foreign investors…

 

Osvaldo Oller, a director of the Oller Group, sees real estate in tourism areas like Punta Cana, Puerto Plata and Samana picking up after months of low or no demand. ”There’s a noticeable improvement,” he says. The Oller Group is involved in real estate, construction and tourism. 

 

Continue reading article

 

Another article, also featured on Latin Business Chronicle, states that the Dominican Republic has largely been spared by the international economic crisis, seeing only a slight decline in tourism for the first half of the year.  

 

The article points out “The Dominican Republic last year received a total of 3.8 million international visitors, which was virtually the same as in 2007.  However, tourism receipts grew by 2.8 percent to $4.2 billion, according to the World Tourism Organization (WTO).

 

The Dominican Republic is also the largest tourism destination in the Caribbean and the fourth-largest in Latin America after giants like Mexico, Brazil and Argentina. When measuring arrivals compared to total population, the Dominican Republic ranks third in Latin America.”

 

Read this article

 

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