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Living in the Dominican Republic Using a Dominican Corporation to own Property Restaurant & Nightlife Review Guide Purchase
The Report - Inside The Dominican Republic
Living in the Dominican Republic Using a Dominican Corporation to own Property Restaurant & Nightlife Review Guide Purchase
The Report - Inside The Dominican Republic
Living in the Dominican Republic Using a Dominican Corporation to own Property Restaurant & Nightlife Review Guide Purchase
The Report - Inside The Dominican Republic
Living in the Dominican Republic Using a Dominican Corporation to own Property Restaurant & Nightlife Review Guide Purchase
The Report - Inside The Dominican Republic
Living in the Dominican Republic |
With just 15% of the tourists coming from the United States its no wonder that most Americans are not familiar with this wonderful island nation. Europeans have been coming to the Dominican Republic for years. Many have purchased homes or businesses and are enjoying the terrific weather, tax free banking and a host of other attributes that make this country a must see destination for anyone interested in finding a Caribbean bargain property or investment opportunity. But what really is the attraction about the Dominican Republic? To answer this question, let us make some basic assumptions regarding what an investor is looking for. First of all, most investors want to invest in a country that offers a stable & democratic government. Second, they want to know that they have some protection under law and that they will not be taken advantage of simply because they are foreign investors (I refer to past incidents that have taken place with foreign retirees that have purchased property in Costa Rica and elsewhere). In addition, most investors want a situation whereby they can buy into a market at affordable prices. It makes sense to invest into a growing market that offers the potential for long term return. Why would you invest someplace or in something that is over-priced? Even when we add fixed income investments into our discussion, such as commercial paper and time deposits, it stands to reason that investors will seek out those investments offering the best rate of return. The Dominican Republic offers both fixed income and growth investors these things and much more. Why is the Dominican Republic a secret and how can investors profit? “The Dominican Republic last year (1997) had one of the highest growth rates and lowest inflation rates in the Western Hemisphere. Since 1991, the country’s economy has grown at an annual rate of 5% or more, inflation has fallen and remains below 10%” Forbes Magazine, September 21, 1998 To be sure, we can classify the Dominican
Republic as an “emerging market”. But the fact of the matter remains
that it is a market that is emerging very quickly and in the right direction.
While legislation had been passed to create the Stock Exchange in 1989,
in reality it has only been operating since 1991. This means
that the market is new, and the idea of both an equity and capital market
is just coming into consciousness. Due to the fact that most companies
do not wish to sell shares to the public (this is a common theme among family
owned Latin-American companies), the majority of activity has been in the
capital and fixed income markets. Due to the desire to keep companies
privately held, the real current opportunities are in commercial paper,
bonds and longer term Hotel or real estate related investments.
That will change in the future as more companies look to both stock and
bond offerings for capital, and not the banking sector. You will
not find a Merrill Lynch or Dean Witter office in Santo Domingo. But
what you will find are true opportunities for the small investor to earn
some attractive returns in a market that most Americans are not even aware
of. Many investors do not realize that money, like everything else in life, has a cost. We all understand that car companies increase the price of new and best selling models. We also understand that toy stores increase the price of popular children’s toys when the demand outweighs the supply at Christmas-time. Money, or more correctly interest rates, works the same way. When sufficient or excess capital is present in the economy, interest rates or the cost of money goes down. When money is needed or in short supply, interest rates or the cost of money goes up. This is the current situation in the Dominican Republic. The country is entering into a growth phase and capital, especially dollars, is sought after. For this reason, US dollar interest rates remain much higher than in the US. The truth of the matter is, because of the new publicly traded capital markets that have come about with the creation of the Stock Exchange, interest rates have actually come down from five or six years ago. This is a natural progression in a developing market. With that said, rates still remain very attractive when compared to the current 4.5% money market rates or bond rates in the US. All one has to do is look at the new housing construction and perhaps more importantly, the new infrastructure. The Government is actively developing new highway systems and has recently completed an express tunnel running directly through the capital of Santo Domingo. Plans are being discussed for a Monorail system in the capital as well. What do these things indicate for the forward thinking investor? For me, it points to a country moving ahead. Any country that is investing into its infrastructure and moving ahead with pro-investment legislation is a country worth adding to your investment list. Timing is everything and now is the time! As the economy grows and as more investment enters into the country, the opportunities at the ground floor will start to disappear. Interest rates will come down eventually and capital will start shifting to equities. For the moment, the capital markets are the place to focus. Many people are interested in owning
a vacation or retirement home in the Caribbean. Part of the problem
is that homes in places like the Bahamas, Aruba, St. Martin, the Virgin
Islands and elsewhere are priced way out of line. Not so in the Dominican
Republic. Because it has remained a secret for US investors, prices
have remained in the “I can afford that” category. The Dominican Republic
is one of the few places in that Caribbean that you can still buy a home
for less than $50,000 and a building lot for less than $12,000. Find
out for yourself what the Europeans already know. The Dominican Republic
is certainly one of the best all around bargains in the entire Caribbean.
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