Although pros and cons can be argued on both sides regarding the benefits and virtues of the various tax incentives laws, in particular the Export Services Act (Act 20) and the Individual Investor’s Act (Act 22), it is undeniable that in the past years they have had a major impact on the local real estate market. This is especially true of mid to high-end residential properties in niche markets such as Condado, Ocean Park and surrounding neighborhoods, as well as the resort areas of Dorado Beach, Bahía Beach, Palmas del Mar and the historic zone of Old San Juan.

Real estate submarkets typically have unofficial boundaries and are not necessarily geographically contiguous. A submarket can be defined by property type and other characteristics and can be spread about in “pockets”. The dynamics of these new residential submarkets in Puerto Rico are unique and greatly influenced by the influx of investors and individuals who have moved to Puerto Rico to take advantage of the tax incentives. Individuals seeking beachfront condos or houses, investors and millennials redefining areas in Santurce, cryptocurrency and blockchain entrepreneurs flocking to Old San Juan, and most recently, businesses joining the game to work on the island’s reconstruction, together make up this new class of residential real estate clientele.

In spite of the fact that Law 45 of 2017 replaced the real estate purchase requirement with a $5,000 charitable contribution requirement, demand for properties in these submarkets remains on the rise. Rental rates have reached record highs with rents in prime beachfront condominiums and homes going up anywhere from 15% to as much as 40% over previous years.

Decreased opportunities for discounted listing prices together with a limited inventory and healthy competition from prospective buyers have driven prices up. New construction in these niche markets has also been scarce. In addition, high end home buyers are less price sensitive and more prone to be willing to improve on their purchase. Deteriorated ocean front condos in Condado that sold for $365,000 and $1.2 in 2015 now have registered sales of $540,000 and price tags of $1.7 respectively. Resellers in these submarkets, many of which are exempt from paying property taxes as well as taxes on capital gains, are demanding hefty price tags for properties they purchased during the market low between 2012-2015 when few were buying. A property that sold for $1.5 in 2016 in Ocean Park is now listed at $3.8 after undergoing significant renovations.

Is it the time to get in the game and buy? Definitely.

For more information: giselle@puertoricoproperties101.com or call 787 420-4799

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