It was December 1492 when explorer Christopher Columbus landed on the coast of what is known today as the Dominican Republic, calling it Hispaniola, or Little Spain. In his diary, he described the lush and mountainous terrain as the “most beautiful in the world.” On subsequent voyages to the New World, Columbus returned to Hispaniola and upon his death asked that his remains be buried in Santo Domingo, on the south coast. Santo Domingo is now the site of the longest unbroken European settlement in the New World and a United Nations-designated World Heritage city.
You could think of Columbus as the first Caribbean “tourist.” More than half a millennium later, the Dominican Republic ? which takes up the eastern two-thirds of Hispaniola, the impoverished, politically unstable nation of Haiti comprising the remaining third ? is fast becoming the destination of choice for a growing number of sun-worshipping vacationers and those, like aging boomers, seeking a second home in a tropical paradise. Last year, more than 3.6 million tourists visited the Dominican Republic, up from 7.2% in 2004, well ahead of Cuba (2.3 million) and Mexico's Cozumel and Cancún (2.4 million). The Dominican Republic has overtaken every other Caribbean tourist destination, both in number of hotel rooms ? close to 60,000 rooms ? and the value of their economic impact ? more than US$3.1 billion in 2004. Compare that to second-place Puerto Rico ? which had less than 13,000 hotel rooms in 2004 and tourist receipts of just over US$3 billion. (Most people visiting the U.S. protectorate stay with friends and family.)
The D.R. is also trying to grow beyond its image as a location of choice for bread-and-butter, all-inclusive vacation packages. “In the past, there's been a lot of negative publicity about the Dominican Republic,” says John Schroder, 41, who spent 17 years on Wall Street in the brokerage business (his last job there was as a vice-president of a brokerage division with Citibank) but now runs a business out of Santo Domingo helping North Americans and others with land or business transactions and residency applications in the Caribbean and other overseas hot spots. However, “Things are starting to change,” he says, adding that more people, especially Americans, have discovered both the recreational and investment opportunities in the D.R. “There are a lot of beautiful places in the Caribbean,” says Schroder. “There aren't a lot of affordable places in the Caribbean.” He notes that the recreational property market “isn't as overheated” as in other parts of the Caribbean, say Antigua or the Turks and Caicos.
Canadian real-estate developer Derek Elliott, 36, is one of those taking advantage of this opportunity. “The Dominican Republic has grabbed more attention in the spotlight in the last 18 months than it has in the past 18 years,” says Elliott, CEO of Elliott Group, or what was formerly EMI Group (the name was changed to avoid confusion with the music company with a similar name). Elliott, who has been operating his D.R.-based Sun Village Resort & Spa since 2002, expects the number of tourists to the DR to jump to 10 million within the next decade. With extensive new developments planned, he clearly sees room for the tourism and vacation-home market to grow rapidly. (He notes that in Canada and the United States, the D.R.'s main tourism markets, about 10,000 people a day are turning 60 years old and belong to one of the wealthiest generations to have ever been born.
“I came down the first time, for my birthday in April,” says Harvey Spiegel, a judge with the Superior Court of Justice (Ontario) in Toronto, relaxing by the pool near the resort's new 17,000-square-foot spa, which opened this summer. “I've been back four times since. It's just great.”
Now, Elliott is taking the Sun Village Resort & Spa brand and plunging headfirst into the heady, competitive world of all-inclusive resort tourism in the D.R. In the next three years, he plans to operate four resorts here, with about 1,500 rooms between them. At the same time, he's developing a vacation-real-estate business that emphasizes condominium-style ownership. Sun Village offers two real-estate choices: owning an entire hotel suite or villa, where buyers get the benefit of equity appreciation and the ability to earn income by renting out their unit when they're not using it, paying Sun Village a management fee to do so; or “fractional ownership” ? an upscale spin on time-shares ? where you buy the right to use a suite or villa for a certain period of time, typically a month, but get no equity stake.
Schroder says buying recreational property in the D.R. has all the makings for a good investment, pointing out that three years ago he helped two Canadians buy condos for US$35,000 that today would probably go for closer to US$80,000.
Elliott's company, founded by his father, Fred, has held land in the D.R. since 1988, but only recently started a big development push. The 300-room, 4.5-star (five-star by Caribbean standards) Sun Village Resort & Spa Cofresi is located about a 25-minute drive west of Puerto Plata's international, airport on the island's north coast. In 2005, about 108,000 guests spent 74,875 room nights at Sun Village Cofresi, bringing in revenue of nearly US$5.5 million from the all-inclusive package deals, and projections for this year are that 157,000 guests will spend 99,881 room nights, with total revenue topping about US$9 million.
Elliott acknowledges the average sun seeker can still come to Sun Village Cofresi as part of a traditional weeklong, all-inclusive vacation deal, sometimes even for well under $1,000, using travel agents like itravel2000. But as Elliott stands over a scale model of the Cofresi property, the real-estate developer excitedly details his plans to open a 120-room luxury residence expansion on the oceanfront property: 2,250-square-foot, two-bedroom units, with full kitchen, going for US$800,000 in the first phase and increasing as more are released. These condos can be sold in different configurations, ranging from studios to a two-bedroom unit. (The secret is in the design: strategically placed doors and dividers that can separate the base unit into smaller ones.)
As well, Sun Village Cofresi will likely benefit from the spillover effect of the recent construction of Ocean World Adventure Park, located next door. Ocean World, which features dolphins, sharks and an interactive pool for swimming with sea creatures, is part of a US$35-million development being built by German investor Ludwig Meister, who is also putting the final touches on a marina and casino next to the Sun Village resort. These facilities are set for completion in December, and Elliott says both will provide a tremendous boost to the Cofresi resort. It will be the first full-service marina on the D.R.'s north coast, filling a 300-mile gap between the Turks and Caicos Islands and Puerto Rico on the well-travelled route between Florida, the Bahamas and the eastern Caribbean.
On the southern coast, Elliott is set to open the Sun Village Resort & Spa Juan Dolio in May 2007. The property has been undergoing a renovation that will create 240 deluxe condominiums and “grand presidential penthouses” that are sold out of its first and second phases and now sell for anywhere between US$450,000 to US$1 million. It's located close to world-class golf facilities and an hour from Casa de Campo and La Romana. The area is currently a hot real estate market, with more than US$200 million in acquisitions and renovations registered in 2005. The government has promised completion of the Las Americas Highway to Santo Domingo and the Coral Highway going east to Punta Cana, both through private-sector development. The first phases of the condo-style units at Cofresi are set to go on the market on Dec. 1, while only about 60 units are still available at Juan Dolio.
To help market the Sun Village brand, Elliott has even taken a bit of a leap into the film business. Last year, he launched the Dominican International Film Festival at the Cofresi resort, and it's slated again for Nov. 6-11. While it's still a relatively small festival, with screenings of more than 40 features, documentaries and shorts, Elliott hopes it will serve a boutique market. As well, Elliott has invested in two Hollywood-style films through his Elliott Motion Pictures division, teaming up with Media 8 Entertainment ? which made the acclaimed films Monster (2003), and The Upside of Anger (2005), with Joan Allen and Kevin Costner. To be released soon: Lovewrecked, a teen romantic comedy starring Amanda Bynes; and Man About Town, with Ben Affleck. While getting into the film business is definitely a sideline, Elliott points out that Lovewrecked was shot on the Cofresi location. Elliott says it acts as a “huge product placement” for the Sun Village brand.
All this development indicates the extent to which Elliott believes the Dominican Republic is shedding its image as a cheap package-deal holiday destination. While it's been popular for many years ? with more than 400,000 sun-worshipping Canadians going to the island paradise last year ? it had developed a bit of a Kmart aura, with thousands of unremarkable hotel rooms at three-star resorts serving mundane all-you-can-eat buffets.
Today, however, Schroder says that most of the new resorts going up in the D.R. are at the high-end of the scale, noting that one upper-end project in Punta Cana he was acquainted with sold out in one day. “That's pretty incredible,” he says, given that it involved US$100 million worth of real estate. Schroder adds that 90% of the purchasers were American. Christiane Théberge, vice-president of public affairs for the Association of Canadian Travel Agents, says that one of the reasons that there is more luxury development is the overall trend of North American boomers to want to pamper themselves more when they leave home.
And with a recent rash of celebrity spottings, the D.R. is acquiring a spiffier image. Earlier this year, press accounts had actor Brad Pitt visiting the D.R. to check out real estate prospects. He was also photographed at a Santo Domingo hotel with German architects Lars Kruckeberg and Wolfram Putz, who had previously refurbished his Los Angeles home. And according to a 2004 article in The New York Times, legendary dancer Mikhail Baryshnikov even put his St. Barts house on the market and built one in the Dominican Republic.
What both celebrities and affluent sun seekers are attracted to, says Elliott, is cheap property in comparison to other exclusive Caribbean enclaves. Oceanfront homes priced in the US$600,000 ballpark in the D.R. would probably cost US$1 million in a place like St. Barts, Elliott says. As well, because the D.R. is so much bigger than some tiny Caribbean islands, it's less like living in a fishbowl. Those with money to spend and looking for a second home are drawn by the tax-free interest on bank accounts in the D.R. and few restrictions on foreigners buying or renting out property.
Elliott points out that it's possible to get American title insurance on properties in the Dominican Republic, a rarity for the Caribbean. “If you take your time, poke around, you can still find nice, inexpensive properties,” says Schroder.
As well, the quality of life and infrastructure has been improving dramatically, thanks to a democratic government that is actively courting foreign investment and wants to keep its top industry on track. Elliott says the government has earmarked about half a billion dollars for tourism infrastructure, such as new roads, marinas, boardwalks and golf courses. There's even a new airport, at Samana, set to open this fall, which charter airlines such as Sunquest Vacations, Air Transat and Sunwing Vacations are expected to fly out of.
All this development, says Elliott's father, 64-year-old Fred, is a long way from when he first heard about the Dominican Republic, in the 1980s, from a business colleague. “Back then, I didn't even know where it was. I thought the D.R. was in Central America,” says Elliott Sr., who moved into real estate full time, in 1985, after spending years in the investment industry. But he was intrigued with a colleague's assertion that buying beachfront land in the Dominican Republic was akin to getting in on the land speculation action in Hawaii in the 1940s, before it became the 50th U.S. state.
So after doing a little investigating to decide whether the DR was a safe place to invest ? after all, it had come out of years of dictatorship ? he took a look and was impressed by its potential. He learned that big multinationals like Shell and Esso were building refineries and gas stations there, so figured if they thought it was safe, “why shouldn't I?” Besides, he says, the price of land was so cheap “I had to buy ? even if I lost all my money, it was nothing.”
While Elliott Sr. figured he had found a gold mine of opportunity, he didn't know back then if it would take him 10 or 20 years to hit the motherlode and reap the benefits of his investments. “Did we show up too early? Maybe. Is it too early now? Absolutely not.” His son Derek agrees, noting there is only so much prime beachfront property in tropical climates to go around. “You can never pay too much for good real estate, you can only pay too much too soon.”
Undoubtedly, Christopher Columbus, the pioneer of pioneers when it comes to discovering the Caribbean, would probably have agreed.
