Punta Cana investment and interest is booming right now. Top investor hotel groups like Nobu Hotels are looking to the tropical paradise to make investments for the future. Now is a great time to consider investing in Punta Cana, and below we explain why. Here are some high-level themes:
Tech Expansion - Silicon Valley of the Caribbean
Confotur - Real Estate Tax Incentives for investors
Pandemic Success Story
Real estate is not the only sector getting investment dollars within the Dominican Republic, and specifically in Puntacana. Alongside the real estate investments in the area, there are many companies dedicated to the growth and advancement of the region. Here are a couple of examples:
The Punta Cana-Macao Energy Consortium (CEPM) is a private energy company that provides energy services to the Punta Cana-Bávaro and Bayaíbe area of the Dominican Republic. This company has invested US$140 million dollars to expand the power generation capacity for its clients and they supply 98% of the energy used by the large hotel chains in the area. Their goal? To help Bávaro-Punta Cana to become one of the first smart cities in the Caribbean.
In their effort to commit to green energy, the consortium has replaced 99% of its fleet of gas vehicles to electric vehicles.
Having private investment in energy services is very advantageous for a developing region. As someone who has lived in the Dominican Republic before, I can tell you that the energy services are not always reliable. The country suffers from widespread blackouts from time to time which can negatively affect your home appliances, client experiences and overall quality of life. When investing in the Bávaro-Punta Cana area, having your electricity supplied by CEPM is a positive thing!
The Punta Cana airport is also expanding - making way for more and more international flights from all over the world. Punta Cana is now the country's busiest airport, with over 5.9 million passengers flying through it every year.
This privately-owned airport will receive a total investment of US $280 million dollars (generating about 7,000 jobs) for an international logistics area and an expansion in Terminal B. The logistics area will be called the Punta Cana Free Trade Zone (PCFTZ) and it will include a logistics center, air, maritime, land and free zone park. Part of this will include an aircraft repair and maintenance center, a fuel center with the idea to consolidate the process of cargo operations in passenger planes.
Terminal B expansion will have the capacity to handle 3 million passengers and construction is already underway. This is expected to be completed in November 2022. Terminal B will also have a U.S. Immigration and Customs pre-clearance service - a quick and easy way in and out of the country for Americans.
The following airlines from many international regions are currently operating to the Punta Cana Airport (PUJ):
Latin America: Aerolineas Argentinas, Avianca, Copa Airlines, GOL, LATAM (Chile and Peru), SKY Air Peru, RUTACA, VIVA and Wingo.
United States: American Airlines, Delta Air Lines, Frontier Airlines, jetBlue, Spirit Airlines, Southwest Airlines, Sun Country Airlines, and United Airlines.
Canada: Air Canada, Air Transat, Sunwing Airlines, Swoop, and Westjet.
Spain: Air Europa, Iberojet, LEVEL, Wamos Air, and World 2 Fly.
Rest of Europe: Aeroflot, Air Belgium, Air Caraibes, Air France, Azur Air, British Airways, Condor, Corsair, Edelweiss Air, Eurowings Discover, Icelandair, Gullivair, LOT Polish Airlines, Nord Wind, Pegas Fly, Royal Flight, Smartwings, TAP Air Portugal, TUI Airways and TUIfly Netherlands.
The Dominican government now wants to include the Middle East and Asia to the mix and has started conversations with Qatar Airways, Emirates and Turkish Airlines. More coverage on this expansion can be found on the publication Aviacion Online.
Tech Expansion - Silicon Valley of the Caribbean
The President of the Punta Cana Group, Frank Elías Rainieri announced his plans to make Punta Cana the ‘Silicon Valley of the Caribbean’. Apart from leading the initiatives mentioned above with the Punta Cana Free Trade Zone and the airport expansion, Frank Elías Rainieri initiated the “Punta Cana Hub” - which is intended to create tech companies in the area, as well as an equity fund to promote fintech.
Other countries have tried to gain that title, however have not gotten very far. Grenada, Barbados and the Bahamas have all made the attempt, however have fallen short.
For a quick guide on the Startup Ecosystem in the country, check out Startup Universal’s Startup Ecosystem Summary.
Another way startup communities start in a new location is through co-working spaces, and there are already a few available in Punta Cana for those digital nomads who want to work and live by the beach. Check out our page dedicated to all the work-spots in Punta Cana!
Confotur - Real Estate Tax Incentive
Next we have the CONFOTUR Law No. 158-01 that every investor should know about when considering making a real estate investment in the Dominican Republic. This law applies to both local and foreign property buyers and this can make buying a property in the Dominican Republic that much easier. The real estate developer from whom you are purchasing from.
Benefits to Investors:
Avoid the 3% Transfer Tax that is customary during the purchase of a new property
The Property Tax (an annual payment of 1% of the property value above RD$7.438M pesos (or about US$148K).
Income tax (20%) of Rental Income Earned from renting out the investment.
The exceptions run for a 15 year period. After the 15 years, you are required to make these payments.
There are more requirements to the Confotur Law - as an example, the developer applies for this benefit and there is a strenuous process to get approved. Additionally, only certain approved areas where Confotur applies such as Punta Cana, Las Terrenas, etc. Make sure you check with the developers before making your purchase!
When thinking of international investments, it is important to select a location that already has a steady amount of tourist traffic and still has strong potential for growth (somewhere that is not too saturated).
Tourism in the Dominican Republic overall has soared in the past few years. According to the country’s Ministry of Tourism, hotel occupancy is at an all time high. To check out stats changing month over month, check out the cool interactive tool on tourist visits put together by the official Ministry of Tourism here.
With hotel occupancy rates being as high as they are, more and more people are choosing to do short-term rentals as their vacation choice instead. According to The Dominican Republic Sun, ever since the pandemic, people are shifting to staying in short-term rentals rather than hotels, and we see this shift continue even now with Airbnb stays rising.
Here we see the official Ministry of Tourism report on hotel occupancy in the country. We see the numbers remain in the 70% range month after month and we see Punta Cana being second to Romana-Bayahibe in terms of occupancy in July 2022. Please note: Although Punta Cana here is second to Romana-Bayahibe, Punta Cana represents nearly 50% of all hotels in the country.
Rental growth from AirDNA is also exemplified here. Sustainable growth quarter over quarter in this pocket of the country.
Pandemic Success Story
Apart from the global dip in tourism from 2020 during the pandemic, growth numbers for tourism in the Dominican Republic just keep going up and up. Given the country's reliance on this sector (tourism), the country's new leadership was diligent in putting in place the necessary sanitary protocols to protect citizens and tourists from the virus during the pandemic. In January 2022, the World Tourism Organization (UNWTO) recognized the Dominican Republic for successfully recovering the tourism industry post the pandemic. They specifically highlighted the management and sanitary protocols that the country put in place in order to ensure tourist safety. They have had the most successful tourist recovery in the region and have surpassed tourist numbers prior to the pandemic. The country was the only in the region where 100% of people working in the tourism sector (totaling about 174,000 people) were fully vaccinated with two doses or more and had the lowest rate of contagium in the region.
The year 2021 was one for the books in terms of tourists arriving in the Dominican Republic. In total, nearly 5 million people visited that year, with December breaking records from any month prior and reaching over 700,000 visitors. This was more than any other country in the Caribbean. Some financial analysts even suggest that the country is having its best financial years within the past 30 years.
In May of 2022, another record was set. Over 561,000 visitors visited the country in the single month. Of these visitors, This represents a growth of 11% against May 2018- detailing the post-covid growth in the country.
In conclusion, there are many places where you can be investing abroad - many options out there. Here we've listed the reasons why Punta Cana makes a great location for investment and why you should consider this for your future. If you are looking for some advice and consulting services for your next investment in Punta Cana, check out our consulting services!