• Abel Aldebot

Why I’m Bullish On Real Estate In Santo Domingo


Dear Island Life Realty Reader,


In Santo Domingo you’re able to command rental rates comparable to what you could get at a beachfront unit in, say, Punta Cana or Las Terranas… but, because your

overall minimum investment requirement is much lower, you’d get double the

ROI.


I also like Santo Domingo because you’re able to market your units to, not

only, regular tourists, but, business travelers as well. In fact, luxury rental

accommodations, specifically, for business travelers is a fast-growing segment

with huge upside.


The Dominican Republic has one of the fastest growing economies in the

Caribbean and Latin America with GDP growing at an average of 6.14%

annually since 2013. Strong GDP growth is expected to continue as the

country has favorable business policies that attract foreign investment and it’s

developing international trade relationships with economic powerhouses like

China.


Over the past year, the governments of China and the Dominican Republic

have worked to establish new diplomatic relationships and bilateral trade

agreements. Further, many Chinese companies, in several industries including

power development and communications, have set up offices in the country.

This new relationship means a couple things… For one, more business

travelers will be visiting from China and, more than likely, they’ll be staying

in the DR’s capital city. Further, they’ll be influx of new residents who’ll be

working for these newly established businesses and they’ll need a place to

stay. And, lastly, the Dominican Republican will become a tourist destination

for Chinese vacationers.


All of this bodes well from a real estate investment perspective, particularly,

in Santo Domingo… and it’s why I’m so bullish on this market.


To boot, I’ve been able to find another project in Santo Domingo’s business

district that’ll get you a yield of up to 15% net.



Torre Armonia by Naco


Torre Armonia (or Harmony Tower in English), being developed by an

established developer with over 33 years of experience, is a new, ultramodern

12-level, 60-unit building situated in Piantini.


The building main amenities are situated on its rooftop, boasting views of the

city, including a terrace with grilling area for relaxing and entertaining guests,

an air-conditioned lounge, a gym, and jogging track. There’s a principal lobby

area with a reception desk and 24-hour concierge. Torre Armonia also has a

back-up generator in the event of a power outage.


Each floor in Torre Armonia has six one-bedroom apartments units, each with

a different floor plan and layout. The units range in size from 65 square meters

(617 square feet) to 62 square meters (669 square feet).


Each one-bedroom unit has L-shaped modular kitchens with granite

countertops along with a breakfast bar, a full and guest bathroom, a laundry

room, and a living room. All of the units have a balcony as well.


The building will be professionally managed by a hotel management company

ensuring high occupancy levels and optimal rental yields. They’ll take care of

everything from marketing, bookings, receiving your guests, maintenance, and

cleaning.


Construction of the building will begin in 2019, scheduled to be completed and

delivered by 2021.


Prices start at US$104,000 for a second level, 57-square-meter (617-square-

foot) one-bedroom unit and go all the US$132,000 for a 62-square-meter

(669-square-foot) unit on the 11th floor. You should expect to pay an

additional US$8,000 to US$12,000 for furnishing and appliances.

Pre-construction financing is being offered by the developer.


You can reserve your unit for up to 30 days with a deposit of US$5,000—fully

refundable less any applicable bank fees.


The terms are 10% down (less your deposit) due at the signing of the contract,

40% to be paid quarterly over the next two years during the construction

period, and the remaining 50% balance is due on delivery.


You could also finance the remaining 50% balance through a local bank.



The Project Rental Returns


The developer has projected an annual occupancy rate of at least 65%, but I

believe you could get up to 80% given the country’s average occupancy rates.


The building is located in the heart of Santo Domingo’s business district just

minutes from where major global hotel brands like JW Marriott, Intercontinental and Embassy Suites by Hilton have properties… so the rental demand is there.


The dfference is you can offer fully-furnished luxury apartments at over 40%

less per night than nightly room rates for basic accommodations at the JW

Marriott, for example.


This is also ideal for a business traveler who looking for extended-stay

accommodations—more than a week but less than 30 days.


Based on the projected occupancy level of 60%, you’d get a net return of

12.40% for the one-bedroom unit priced at US$104,000. That’s after paying

rental and property management costs, utilities, monthly HOA fees, and

furnishing the apartment (a one-time expense).


You’d get a little 15% net if you were able to achieve 70% occupancy.


If you’re an investor looking for autopilot rental cash flow and double-digit

returns, then a unit in Torre Armonia makes sense for you.


For more information on Torre Armonia, get in touch with one of our

investment specialists at info@islandlifedr.com.


Talk with you again next week.


Regards,


Abel Aldebot


Investment Specialist

Island Life Investment Realty

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