Real Estate COVID-19 Help Desk in Dominican Republic

Country Introduction

The Dominican Republic is the second largest country in the Caribbean by area with 48,671 square kilometers and the third largest country of the Caribbean by population with an estimated 10.5 million people. The official language is Spanish, although English is widely spoken. The country GDP is 85.56 billion USD which makes it the largest and fastest economy in the Caribbean and fastest growing economy in Latin America.

The Dominican Republic is a country with 900 miles of ocean and the highest peak in the Caribbean (10,164 ft high), with good weather all year long -multiple climate zones-, very accessible with direct flights to/from Europe, the United States, Canada and Latin America, and a friendly environment. Foreigners and Dominicans have equal rights for buying any assets including property. There are tax incentives for tourism, mortgage market development and trusts, free trade zones for corporations and retirees’ benefits.

The Dominican Republic property market has been growing in the last decade. It represents one of the five sectors with the greatest participation in the economic growth of the country, representing 9.3% of the economy. There has been a robust tourism growth with an average annual growth of 5% in tourist arrivals since 2012. In 2019, 38.7 million non-resident foreigners visited the Dominican Republic. Even during the financial crisis of 2008-2009, the DR’s tourism sector remained stable thanks to its robust tourism and resilient housing market.

As the rest of the world, Covid-19 has had a negative impact in the real estate sector and in tourism in 2020.  Most hotels closed during the estate of emergency which latest months, equaling 80,000 rooms approximately. The Dominican Republic has over 800 hotels, of which over 90% closed during the Covid-19 pandemic. On a positive side, the pandemic has reshaped people’s vision on housing, which has led to increased leasing in certain areas and real estate closings, especially in properties with green areas and open spaces.

Are there any emergency and/or interim measure regarding Commercial Lease Agreements in the Dominican Republic?

As of May 2020, there has not been any interim measures regarding Commercial Lease Agreements in the Dominican Republic.

The Dominican Republic declared the state of emergency on March 19, 2020 to prevent the spread of Covid-19. The state of emergency is currently extended until June 1, 2020.

Is it possible to cancel, suspend or modify the Lease Agreements conditions due to the COVID-19 crisis?

The Dominican law requires mutual agreement or a court ruling for a contract to be terminated, suspended, or modified.

In case you are in the middle of a sales and purchase transaction - how can you handle this situation? Are there special urgent measures?

Many sales and purchase transactions were suspended by the declaration of a state of emergency on March 19, 2020 due to Covid-19. However, we expect that most transactions will close after the estate of emergency ceases and the businesses and governmental institutions re-open.

We have not seen a significant decrease in property pricing as a result of the economic restrictions of the pandemic. We have seen an increase in real estate leasing in tourist areas and a shift of the clientele from international clients to Dominican residents. The sale of properties under construction have continued although resales have decreased. Most renovations have been suspended.

The analysis of real estate transactions during the pandemic vary according to the terms and conditions of the purchase and its penalties.

What is the legal situation regarding cancellations of rentals of tourist apartments, hotels or holiday homes?

Hotels and holiday homes in the Dominican Republic have considered Covid-10 pandemic as a cause of force majeure and have exempted their guests from cancellation charges, specially due to the country’s closure of borders -land, sea and air-, except for airplanes to allow the entrance of nationals and departure of foreign citizens, cargo and fuel ships.

What effects does the current situation have on ongoing construction projects and contracts?

The construction sector represents approximately 10% of the country’s Gross Domestic Product (GDP), it has been affected by the pandemic along with several subsectors that depends from it, such as hardware stores and suppliers.

The main impact in the construction sector has been the fluctuation of the U.S. Dollar. The conversion rate of Dominican Pesos (DOP) was 53 DOP per U.S. Dollar (USD) in March 2020, and as of May 26, 2020 is 56 DOP per USD.

Constructions were suspended from mid-March until the end of May 2020. The labor contracts for most (informal) constructions workers were suspended due to the restrictions imposed by the government, including the suspension of the construction works.

In the case of the public sector, the Ministry of Public Works and Communications (MOPC) and the Supervising Engineers Office of State (OISOE) will be able to carry out the necessary processes of purchasing and contracting exclusively those goods and services necessary for the completion, adaptation and equipping health centers, by virtue of decree 133-20 declaring some purchases and contracts emergency, which includes the construction of public health infrastructure.

Which courts have jurisdiction, what are the expected trial times and what are the costs?

The Dominican Republic declared the state of emergency on March 19, 2020 and since then the courts have been closed and the deadlines are suspended.   The only hearings taking place, via conference are the continuous criminal service courts, those related to minors, urgent civil right lawsuits, and habeas corpus.

On May 19, 2020, the Judiciary Council approved a plan to continue the works of the judiciary in phases. The initial phase will start on June 1st, 2020 and will include urgent claims and the rescheduling of the court hearings canceled due to the state of emergency. The date for the next phase has not been determined yet and it will depend on the sanitary and epidemiological conditions of the country. In this phase, the courts may have virtual hearings except for the peace courts.

What financial assistance packages or ways to mitigate the financial impact have been adopted?

Financial intermediation entities in the Dominican Republic have provided certain measures to mitigate the impact on their clients, to include the elimination of charges and/or commissions in specific bank services including credit cards and the extension of the terms to make payments of loans and mortgages.