Rising Real Estate Prices

[Escott]

Originally Posted by gringo in dr

While no one can predict the future, I believe you are closer to reality than the rosy pictures most are painting.

There are good times coming but not before it gets worse. I personally believe it will be several years before it gets better. My guess is, it will be 5 - 8 years before the situation improves.

What would your explanation for the rise in prices on the North Coast then? I bought a lot for 15k which the seller paid 36k from the developer. Now all the lots have sold for 2$ a meter more than the 36k paid by the seller. That is almost a triple in value from Mar. 03 to July 04. Now all of the original lots in the immediate area have been sold and are being built on.

Possibly because it is a resort area helps this market because it doesn't go with the Dominican economy because of all the foreign money coming in?

I paint no pictures. I am not a seller but a buyer and have nothing to gain. I have real experience and speak to many people every day that come to this town (Sosua/Cabarete) looking to purchase.

I am curious to hear what your qualifications along with Harmony's are. Without knowing it is hard to put a value judgement on your opinions so perhaps you can share your background with us. We get a new doom and gloomer every couple of months on here. Remember Lurker? He was telling everyone including me that I was going to lose more on that 15k lot than the guy I bought it from who paid 36k which was a hoot.

I wouldn't take business advice from someone who goes Bankrupt and blames it on all the others just like I wouldnt take real estate advice from someone who has no experience or on sight knowledge regarding this area.

[timelessdreams]

Originally Posted by Rocky

Some odd 7 years ago, when the government closed down all the bars in the North coast tourist towns, in an effort to control the rampant prostitution, tourist towns died and there was a mass exodus of ex-pats and the real estate prices took a big plunge.

Since I am agnostic in some areas of government reform, please bear with me as I raise this question?

"Any chance of 'land reform' such as the one depicted in Zimbabwe recently?"

Quote from the Associated Press on June 20, 2004.
~Citing a letter by Foreign Ministry official Joe Bimha to Zimbabwe embassies abroad, the Sunday Mail reported that the government would be nationalizing only the land it had seized under its land reform program.

"The correct position is that all land acquired under the current phase of the land reform program now reposes to the state," Bimha was quoted as saying.

The report clarifies a June 8 statement by Land Reform Minister John Nkomo that title deeds to all productive land were being abolished and replaced with 99-year state-issued leases.

Nkomo's statement raised fears of massive new seizures of farms, industrial holdings, private properties and even homes.

"In the end, there shall be no such thing as private land," Nkomo had said. `

Mostly farmland, but private homes and property titles were seized and now have to pay 'rent' to the government for land that was rightfully theirs!

If the government has the control to close down private business and or property in the attempt to control what is considered 'legal' in the DR, what guarantees that this won't happen in a desparate attempt to improve the DR economy?... say, rather than tax bill reform that would otherwise be rejected?

In other words, is there any danger of the DR government acting in such a manner?

Thanks for your comments!
Susie

[Escott]

Sure the DR government can do this. Only problem is that the US Marines would be back in a heartbeat

I don't think the DR would be that stupid nor have they elected a government that would lean in that direction. The present government in my opinion which goes out next month would have been more suspect.

Scott

[Lambada]

I agree. The existing government, PRD, ran on a "socialist" ticket (technically!) & therefore, land nationalisation would have been much more likely under them than under the incoming government. When we first arrived here, there was a law which covered deportation of foreigners & consequent reversion of their property to the government. Not sure if this still exists? But you had to have done something pretty bad to put yourself at risk of deportation!

[KenoshaChris]

We're talking about RD, not Cuba. Prior to buying in another country, one of my concerns was if there was a chance of the government nationalizing my property. I wouldn't dream of it now. Going back on topic, more and more North Americans, particularly those from the USA are learning about RD and the opportunities that exist. This man's opinion is that North Coast real estate prices were at their lowest around April/May of 2003. They've increased significantly since then. Up here in Wisconsin, I'm on the water looking out at the Kenosha harbor and I've appreciated about 18% in the last two years. I believe I've appreciated at an even higher rate on the North Coast. Location, location, location. Sosua/Cabarete has it.

[gringo in dr]

Originally Posted by Escott

What would your explanation for the rise in prices on the North Coast then? I bought a lot for 15k which the seller paid 36k from the developer. Now all the lots have sold for 2$ a meter more than the 36k paid by the seller. That is almost a triple in value from Mar. 03 to July 04. Now all of the original lots in the immediate area have been sold and are being built on.

Possibly because it is a resort area helps this market because it doesn't go with the Dominican economy because of all the foreign money coming in?

I paint no pictures. I am not a seller but a buyer and have nothing to gain. I have real experience and speak to many people every day that come to this town (Sosua/Cabarete) looking to purchase.

I am curious to hear what your qualifications along with Harmony's are. Without knowing it is hard to put a value judgement on your opinions so perhaps you can share your background with us. We get a new doom and gloomer every couple of months on here. Remember Lurker? He was telling everyone including me that I was going to lose more on that 15k lot than the guy I bought it from who paid 36k which was a hoot.

I wouldn't take business advice from someone who goes Bankrupt and blames it on all the others just like I wouldnt take real estate advice from someone who has no experience or on sight knowledge regarding this area.

There will always be a fresh batch of people looking to move/retire here. That is the natural of living on a tropical island. Some of those people will obviously not adjust to life in a new culture. You are in effect, buying those properties and selling them to the next batch. Nothing wrong with that. You are in an excellent position to take advantage of the turn over. I'm not suggesting that you will loose money. Your track record speaks for itself.

You are dealing with property that is mostly bought by foreignors. Of course that sector will not be depressed, as is the rest of the country. For the country as a whole, rock bottom is still a long way off. Inflation, devaluation of the peso will continue. Leonel knows he is in for some bad times. He has already stated that he will not pay the interest on the central bank cd's. He is also considering TAXING those cd's. Hard tactics for hard times.

[Escott]

Originally Posted by gringo in dr

There will always be a fresh batch of people looking to move/retire here. That is the natural of living on a tropical island. Some of those people will obviously not adjust to life in a new culture. You are in effect, buying those properties and selling them to the next batch. Nothing wrong with that. You are in an excellent position to take advantage of the turn over. I'm not suggesting that you will loose money. Your track record speaks for itself.

You are dealing with property that is mostly bought by foreignors. Of course that sector will not be depressed, as is the rest of the country. For the country as a whole, rock bottom is still a long way off. Inflation, devaluation of the peso will continue. Leonel knows he is in for some bad times. He has already stated that he will not pay the interest on the central bank cd's. He is also considering TAXING those cd's. Hard tactics for hard times.

I have always preached that the best time to buy real estate is when things look the worst. We knew that Leonel was in for a tough ride from the start and that some hard decisions have to be made. For the Dominican people as a whole I see tougher times ahead but I don't think Real Estate is going to crash, nor do I think anyone with a dollar based income will suffer much.

Paying 51% on CD's and those that bought them were looking at fools gold. I never thought that could possibly work. Not now and not when they were offered. I also thought that people were taking a big risk on Baninter when they were paying a much higher rate than the rest of the banks and then Mercantile for the same reasons. Greed will burn you every time.

Harmony saying that Real Estate prices will suffer because of the economy is just silly. Real Estate becomes a safe haven and prices rise. Scared money either leaves the country or goes into Real Estate.

I remember trying to get Golo into a conversation a few years ago about real estate prices in the DR but couldnt but would have enjoyed hearing his take but he didn't reply.

I have always kept my investments in a tight area even when in the US because it is impossible to become an expert for the entire country since things are so different even between Sosua and Puerto Plata and it would be impossible to stay on top of it. Hell I called about a 2000 meter piece in Sosua and was amazed at the 95$ per sq. Meter price I was quoted and thought I had this town down pat.

[Harmony]

You may be right Escott. I certainly don't know all the answers. Being a contrarian in the past has helped me a lot and I can't find too many people who are bearish on real estate. The rate increases of late have been supersonic; helped in the U.S. by artifically low interest rates. In the DR I assume most purchases are made in cash so may be quite different situation.

My thoughts on DR prices is based solely on the economy. If people have to sell its usually a buyer's market.

Harmony

[Escott]

Originally Posted by Harmony

You may be right Escott. I certainly don't know all the answers. Being a contrarian in the past has helped me a lot and I can't find too many people who are bearish on real estate. The rate increases of late have been supersonic; helped in the U.S. by artifically low interest rates. In the DR I assume most purchases are made in cash so may be quite different situation.

My thoughts on DR prices is based solely on the economy. If people have to sell its usually a buyer's market.

Harmony

What is your history in the DR Harmony? How much do you know about this country? What is your experience in Real Estate? Have you been involved in R.E. in the DR or other places?

I was going to buy a condo in 1970 in FT. Lee NJ in a complex built on Palisades amusement park property just incase anyone is as old as I am and remembers the place. Cost was 42k for a 2b/2bath river view condo with 4.25 % financing with 10% down. I also considered renting at the Colony which was the most lux building in the entire state at the time.

My mother said rent at the colony, real estate prices were going to crash. I listened to my chagrin. Needless to say the condo was selling for 500k 10 years later and I have been buying all the real estate I can afford since then. Matter of fact I retired a few years ago in the states and live very comfortably in the DR and still have about a bunch left in the States to sell.

I always take Naysayers with a grain of salt ever since I listened to my mother. I did kill her and bury her in the back yard after it hit 400k in value and I missed the boat.

[Simon & Nicky]

All the real estate agents will tell you the same thing: There is no decent property left for sale here in the Sosua Cabarete area. Consequently people who want to realize their dream have to buy land and build. I'm no Economist but I do remember my basics regarding supply and demand.

I often chirp on about the UK property market but it is certainly worth considering. Uk prices were never cheap in comparison with somewhere like Florida. I think I bought my last house in the UK for 135k pounds and sold it two years later for 335K pounds (nearly 400000 dollars profit). I could easily have borrowed money on my house in the UK (at 3.5% if you played your cards right) to finance the purchase of a holiday home here and barely notice the increase in my mortgage payments, which I could have off-set with the rental income from the house over here. With pension policies in the UK now being worth peanuts plenty of British people are here looking to do just that as an investment for the future. I am not one of those people but I certainly considered it. The world does extend beyond North America and there will always be new Gringos! Prices here will continue to rise until the near global house price boom goes belly up.