Is There A Housing Bubble In Santo Domingo?

[aarhus]

You are trying to find out where all this money is coming from to buy expensive real estate in the DR like Atiemar. It does not sound as if it could be bodegas, taxis an hair salons in NY. Obviously some of it is drug money. And maybe money from the govenrment. I hope it is not from all that ITBIS money and 1% tax on assets we are paying because we feel we have to comply with the laws here. I do think though it is also money from the economy here in general. Clean money. There are a lot of people here who have money and make a lot of money. The money laundering has a huge influence though because it drives up the prices. I think a lot of those wealthy people foreign and local here in the DR will soon be looking at investing somewhere else as the prices here have just become to unrealistic. If you look at Ateimar for instance as an investment what kind of rent do you need from a tenant to be able to make a reasonable return. I heard the prices start over a million USD. Then take into account maintanence, taxes and the months it will be on the market before it is rented out. Obviously it is impossible to make money on it. I can only be for very very wealthy people who dont care.

 

[Mason3000]

There is no bubble. In order to have a bubble, people have to be buying, and no one's buying. Forget Remax and their 9% BS, that's not what's moving the Real Estate sector in SD. People continue to build even though dozens of buildings stand empty at present, why? Because they're laundering money and don't really care if they sell their places today, tomorrow or in 2020 as they have to do something with all that money right now. They'll sell those apartments EVENTUALLY, and in the mean time it gives them a cover story as to how they're able to throw aroundf so much cash, gives them a place to live, allows them to gift a few to the right people in exchange for favors, etc.

That's really all there is to it.

 

[ExtremeR]

We do understand that not all of the money for this construction is drug money but Nal's, Pichardo, others keep insisting that oh its dominicans and they are paying cash and there is no narco effect. That flies in the face of reality.

http://www.dominicantoday.com/dr/lo...ders-luxury-condo-building-confiscated:bunny:

Hey Bienamor, for having living in SD for so long, you really know so little. Do you have any idea of the quantity of money certain families in the DR have. There's also the middle class which pays their house in 5-10 year mortgage loans as my family did when I was a kid. They're now paying their second apartment and renting the old one. Between the middle class and the upper class the housing market in the DR is well sustained (of course there's some narco money here and there, but to assume that EVERYTHING is coming from the narco is being silly).

 

[ExtremeR]

There is no bubble. In order to have a bubble, people have to be buying, and no one's buying. Forget Remax and their 9% BS, that's not what's moving the Real Estate sector in SD. People continue to build even though dozens of buildings stand empty at present, why? Because they're laundering money and don't really care if they sell their places today, tomorrow or in 2020 as they have to do something with all that money right now. They'll sell those apartments EVENTUALLY, and in the mean time it gives them a cover story as to how they're able to throw aroundf so much cash, gives them a place to live, allows them to gift a few to the right people in exchange for favors, etc.

That's really all there is to it.

Mira el otro hablando disparates por un tubo. Get the hell out of those tourists zones and stop socializing with lower level Dominicans. No wonder you'll never think the average Joe will have the purchase power of buying an apartment or a house.

 

[ExtremeR]

Here is another reality-where I live in NYC, the Dominican presence is very strong in two areas-taxis and bodegas. These taxis service communities that yellow cabs do not bother with, and operate with no meters. You pay whatever you and the driver decide on.

Bodegas in these same communities offer similar services that supermarkets do not-the basic necessities like bread, milk, juice, candy, hot sandwiches and coffee. They also dabble in other things, like slot machines in the back room, a numbers racket-whatever their clientele is into. All cash.

Both businesses can operate 24 hours a day. A guy who owns his own cab can rent it out to others and have it out on the streets all day and night. Bodegas only need one clerk to remain open from midnight until 6 in the morning. All they need is a little protective slot in the side window to collect the money and provide the goods to the customer.

So what happens to all that cash? Some of it finds it's way back to the island. You think those little bodegas don't make money? Just ask the owner to show you a picture of his house and jeepetas in the DR.

Life is good when you can avoid paying a large majority of the taxes you owe on an all-cash business.

Excellent post, I also forgot about the huge Dominican diaspora (which I am part of) who works honestly and send or invest some of those dollars/euro back in the DR.

 

[ExtremeR]

Agree! It just doesn't add up.

On the other hand, usually cab drivers make between $600 and $1000 a week. Not bad but I don't see how it could buy Real Estate in Santo Domingo or Santiago, maybe in smaller towns ?
Again, it is really hard work driving 12-14 hours shift in NYC, I know quite a few drivers and they all have back problems after a few years. That's probably why it's a job mostly held by foreigners .

Make it 1200 weekly with a lot of evaded taxes. One thing is the theory you have in your mind and the other thing is the reality, there's lot of taxi drivers and bodega owners who owns really big houses in the DR as investments to rent it out. I hate when people speculate and speculate instead of watching by themselves what is really going on. Berzin is right on the money.

 

[bienamor]

Hey Bienamor, for having living in SD for so long, you really know so little. Do you have any idea of the quantity of money certain families in the DR have. There's also the middle class which pays their house in 5-10 year mortgage loans as my family did when I was a kid. They're now paying their second apartment and renting the old one. Between the middle class and the upper class the housing market in the DR is well sustained (of course there's some narco money here and there, but to assume that EVERYTHING is coming from the narco is being silly).

Need to work on your reading comprehension, No where did I say that EVERYTHING is coming from Narco money.

I said
"We do understand that NOT ALL THE MONEY for this construction is drug money but Nal's, Pichardo, others keep insisting that oh its Dominicans and they are paying cash and THERE IS NO NARCO EFFECT. That flies in the face of reality"

Having lived here for so long, I do know lots of the upper class and upper middle class who are doing, and have done just what your talking about. But it has to be acknowledged that there is also a lot of Narco money floating around. Well aware of just how much money SOME Dominicans have. And am not referencing them.

Was not talking about the housing market anyway the link is about Tower construction. No where am I referencing general housing markets. Just the major construction. No laundry effect in building a house. but a tower yea.

 

[RacerX]

Make it 1200 weekly with a lot of evaded taxes. One thing is the theory you have in your mind and the other thing is the reality, there's lot of taxi drivers and bodega owners who owns really big houses in the DR as investments to rent it out. I hate when people speculate and speculate instead of watching by themselves what is really going on. Berzin is right on the money.

3 points, man, I dont know if you re smoking what you should be chewing but 1. No cab driver makes $1200/week. That doesnt make sense. That guy aint clearing more than $600/week if he owns his own car. Once again, if the business model was that profitable there would be Joe Schmoe Americans doing it, especially with 10% unemployment.
2. There is no middle class here man, cut the bull. People who constitute the middle dont as an average buy 10 year old cars. These appliance stores only function to sell goods to people who either live abroad or whose families do.
3. Remittances are not an industry. Sending money home is not an absolute guaranteed bankable enterprise. On the average how much do you think money wiring has decreased over the past 2 years from people in the US(and other parts)? It much have slowed to a trickle which is the exact same reason why nothing here in terms of RE and houses is moving. As soon as I figure out how to upload pictures I ll show you developments that cant be more than 50% occupied(residential).

 

[pkaide1]

RacerX, there are dominican taxi drivers in new york city making more than 1200 per week.

 

[RacerX]

Prove it.
Yellow cars are more profitable than black cars. Medallions are $600K, gas is $3/gal. and TLC insurance is $4K year. What you mean to say is that there are you "say they earn $1200/wk tax free driving livery..." but common sense would proffer a question "how do they do it if the haitians, russians, greeks, mexicans, ecuadoreans, trinis, jamaicans, etc., etc., etc. dont pull those numbers, in the same cars, in the same street, working the same days?" 12-13 hour days 7 days a week? Possibly...but you ll kill yourself that way.

New York Taxi Cab Driver Salary
Taxi Driver Salaries in New York, NY - Free Salary Search | Indeed.com
A shift in the life of a cab driver | Yellow Cab NYC

 

[amparocorp]

bullsh!T.......i drove a limo in and out of NYC for a couple of years and a taxi in key west for 10.,,,,,,,,,,right now 1200 take home per week is a bad week........guys in KW are pulling in 400 + on a good day. also the salaries quoted above are low because at every chance to turn off that meter and stuff the bill in my shirt ala harry chapin it's done....what taxes? you think taxi drivers are honest with the IRS? i spoke to a lincoln town car driver the other day who works for a good co. in the NY metro area. newark airport to connecticut 150 to 200 plus tip and he's still got ten more hours to work. he's knocking down between 1600 and 2000 a week........and i know a bunch of honest dominicans who bought run down buildings from the city of NY for 10 or 20K back in the bad days of the 80's in fort apache and other run down parts of brooklyn and the bronx who now collect 10 to 12 rents a month plus the bodega on the ground floor.........and NYC rent ain't cheap. then there is my dominican buddy who drives a plumbing truck for 55$ an hour plus overtime.............union ironworkers make the equivalent of 80$ per hour anywhere in the NY metro area, plus overtime. in good weather that will mean a ten hour day, oops! 640 plus 2 hours OT at time and a half = 880$ before taxes.......all in a days work............

 

[amparocorp]

i forgot to add my dominican friend who owns the parking lot next to yankee stadium and two paring garages in manhattan, two pediatricians, with big practices in so.florida who own apts. on anacaona, my dominican buddy who owns the co. that supplys all the sand, aggregate, and re-bar that goes into those towers, my amigo that owns the concrete pump trucks and cranes that make those buildings, the domincan co. that dug the tunnels for febrero 27 and built the overpasses. where do you think these millionaires want to live? it isn't all drugs..............

 

[Expat13]

Are these examples the norm or the exception?
When you look at the countries GDP, incomes, unemployment, percent of middle, upper and lower class stats. What do you see? something that constitutes what you see as for Jeepetas on the streets, new malls and construction everywhere. How did all this activity escape the real world stats.
Everytime I have a visitor, their first comments are always the same. I thought this was a poor country? this infrastructure says otherwise.

I guess its the small class of people considered the upper rich that represent all this activity and wealth.

Dont get me wrong, i see lots of old family/business money here but is that was drives this country.

 

[suarezn]

What we all must understand is that there's been NO SIGNIFICANT change to the DR economy over the last 10-15 years or so (except for the drug business) that would justify such great increase in expensive construction. We haven't discovered oil, have not become the financial center of the Caribbean, have not developed a great IT industry (like Bangalore), NOTHING...very little has changed in what drives our economy from 10-15 years ago to now...

 

[RacerX]

What we all must understand is that there's been NO SIGNIFICANT change to the DR economy over the last 10-15 years or so (except for the drug business) that would justify such great increase in expensive construction. We haven't discovered oil, have not become the financial center of the Caribbean, have not developed a great IT industry (like Bangalore), NOTHING...very little has changed in what drives our economy from 10-15 years ago to now...

2nd this. I think most of this rampant construction was following the condo boom in South Florida for people who desired to live in a tropical area for a portion of the year.

By the way, amaparo so you re saying that 6 or 7 companies are responsible for the entire demand for condos and commercial properties throughout the entire country? Or at least in the larger cities?

 

[aarhus]

2nd this. I think most of this rampant construction was following the condo boom in South Florida for people who desired to live in a tropical area for a portion of the year.

By the way, amaparo so you re saying that 6 or 7 companies are responsible for the entire demand for condos and commercial properties throughout the entire country? Or at least in the larger cities?

That is probally true for Punta Cana, Bavaro, Juan Dolio and Samana. But I dont think the demand in Santo Domingo is people with the desire to live in the tropics. Maybe the demand is speculation somewhat and people who are from here or want or need to live here.

And I agree you cant come up with enough socalled Dominican companies and local rich people to determine where the demand comes from. Of course they influence the demand and they too profit from demand coming from laundering. Especially if they bought maybe 5-10 years ago.

 

[NALs]

"We do understand that NOT ALL THE MONEY for this construction is drug money but Nal's, Pichardo, others keep insisting that oh its Dominicans and they are paying cash and THERE IS NO NARCO EFFECT. That flies in the face of reality"

I would like for you to quote and post a link to the post where I have ever said such, because I don't remember ever saying anything like that. Thanks.

What we all must understand is that there's been NO SIGNIFICANT change to the DR economy over the last 10-15 years or so (except for the drug business) that would justify such great increase in expensive construction. We haven't discovered oil, have not become the financial center of the Caribbean, have not developed a great IT industry (like Bangalore), NOTHING...very little has changed in what drives our economy from 10-15 years ago to now...

Can I see where you're getting this crazy idea from? Any reports, studies, data sets?

BTW, I didn't know you're an economist. If so, you are the only one to ever make such ridiculous claim.

What's your alma mater?

 

[bienamor]

Nals will this do?

Not specifiably about the housing market, but economy in general

Originally Posted by NALs
There is not a single (serious) Dominican economist (on the island and abroad) that has ever given any indication of drug money and money laundering having such an impact in the Dominican economy, to keep the economy either afloat or to enhance its growth. Not a single one, despite everyone being aware that it exist, but the evidence that its such a domineering force in the Dominican economy, as some here want to make believe, simply doesn't exist!


http://www.dr1.com/forums/dr-debates/70825-recession-2008-impact-dr-109.html
Estimates exist based on the amount of drugs seized and its value, from that and based on the known percentage of the total drug production that is seized in any given year; a reliable estimate is produced. However, you can't reach a conclusion in saying that drug money is the reason the DR economy remained afloat during the crisis without offering any type of data or a reliable and verifiable source from you you reached such conclusion. Also, stating a vague statement, such as drug money is part of the reason the DR economy remained afloat is worthless, because the same is true of every sector that has contributed to the actually growth of the economy. And again, without any type of data to back such statement, it will lead people into two camps:

A) Those who will accept your claim with a grain of salt

or

B) Those who will accept your claim because it fits well with a preconceived notion.

I suspect that you simply don't know what sectors have contributed to the actual growth so far registered this year. In the same token, I also suspect you don't know what sectors has gone in the opposite direction.

 

[NALs]

Not specifiably about the housing market, but economy in general

Originally Posted by NALs
There is not a single (serious) Dominican economist (on the island and abroad) that has ever given any indication of drug money and money laundering having such an impact in the Dominican economy, to keep the economy either afloat or to enhance its growth. Not a single one, despite everyone being aware that it exist, but the evidence that its such a domineering force in the Dominican economy, as some here want to make believe, simply doesn't exist!


http://www.dr1.com/forums/dr-debates/70825-recession-2008-impact-dr-109.html
Estimates exist based on the amount of drugs seized and its value, from that and based on the known percentage of the total drug production that is seized in any given year; a reliable estimate is produced. However, you can't reach a conclusion in saying that drug money is the reason the DR economy remained afloat during the crisis without offering any type of data or a reliable and verifiable source from you you reached such conclusion. Also, stating a vague statement, such as drug money is part of the reason the DR economy remained afloat is worthless, because the same is true of every sector that has contributed to the actually growth of the economy. And again, without any type of data to back such statement, it will lead people into two camps:

A) Those who will accept your claim with a grain of salt

or

B) Those who will accept your claim because it fits well with a preconceived notion.

I suspect that you simply don't know what sectors have contributed to the actual growth so far registered this year. In the same token, I also suspect you don't know what sectors has gone in the opposite direction.

Oh my, I guess I have to visit the eye doctor because I don't see what parts can be interpreted as "THERE IS NO NARCO EFFECT."


And what I did stated there is true, drugs and money laundering are not the mainstay of the Dominican economy, its simply not as important as some here want to believe.

BTW, can you post an actual link to the thread so people can read it.

 

[ExtremeR]

What we all must understand is that there's been NO SIGNIFICANT change to the DR economy over the last 10-15 years or so (except for the drug business) that would justify such great increase in expensive construction. We haven't discovered oil, have not become the financial center of the Caribbean, have not developed a great IT industry (like Bangalore), NOTHING...very little has changed in what drives our economy from 10-15 years ago to now...

Do you call 8% annual growth since 2004 until 2008 NO SIGNIFICANT??. Banking is huge over there. If an investor has US$1MM one of the best places to invest it right now would be the DR.