Overview

Over the last two decades, construction activity has shown remarkable growth in the Dominican Republic, reflecting the substantial investment by the GODR and the private sector. However, in 2022, the construction sector only grew by one percent. The increase in the prices of building products is one of the main reasons for the slow growth of this sector.  Although the sector did not grow significantly in 2022, the U.S. export value of building products to the DR increased 20%.  This increase was driven by private investment in real estate development projects of low and medium-cost residential units, commercial establishments, and the expansion of hotels, as well as public investments in reconstruction and maintenance for highways and urban improvement.

Among the main civil engineering works carried out by the GODR are the reconstruction of the highways of Nagua, Juan Pablo Duarte, the Ecological Avenue, and the construction of the La Cumbre “General Gregorio Luperón” Tourist Highway that leads from Santiago to Puerto Plata. Likewise, the GODR funded project for the Baní, Azua and Los Alcarrizos bypasses, and others. Other improvements in the province of Santo Domingo include initiatives aimed at reorganizing transport, such as the expansion of Line 1 and the construction of Line 2C of the Metro, as well as the construction of the second line of the Cable Car of Santo Domingo, Santo Domingo Oeste, and Los Alcarrizos.

The resources channeled through the financial system for the construction and acquisition of housing reached the sum of US$5 billion as of December 2022, 14.6% more than the previous year.

In 2022, the volume of national imports and sales of the main inputs of the construction sector increased, including, paint (5.9%), cement (2.9%), as well as the imported volume of asphalt cement, whose growth was 101.8%. Income generated by the sale of other materials grew by 31.9%.

The GODR and local banking institutions have created better financial and credit conditions, allowing the resumption of important construction projects in the tourist, commercial, and residential sectors. Conversely, the increase in construction materials prices during the period had a negative impact on construction.

 Unit: (Millions of U.S. Dollars)

Sources: U.S. Census Bureau, Economic Indicators Division

The sector’s solid growth is associated with the initiation and resumption of important tourism projects, the reactivation of real estate projects for residential units, and the start of new programs to expand the number of medium and low-income family homes in the market.

U.S. products enjoy an import market share of approximately 25 percent in the local construction sector. Best sales prospects, at least for the short term, include products used in the construction of low-to-medium cost housing, shopping malls, and commercial buildings.  Public works projects, such as highways, bridges, and marine ports also present short-term opportunities.

There is strong competition in this sector as companies from the United States, Asia, Europe, and various Central and South American countries attempt to develop business opportunities locally. In order of importance, the main selling points for building products are: 1) price, 2) quality, and 3) time to delivery.

The local building industry is open to foreign companies interested in selling their products in the Dominican market.  The best way to enter the market is by finding a distributor who is familiar with the Dominican technical requirements and who can be as competitive and aggressive as the local firms already working with other foreign companies.

Since the DR is a member of CAFTA-DR, most U.S. manufactured construction materials enter the country duty free. CAFTA-DR gives U.S. companies as significant trading advantage over non-CAFTA-DR competitors.  However, the openness of the market has resulted in a significant increase in competition.

Leading Sub-Sectors

Located in a tropical climate, the DR’s construction industry is not subject to seasonal fluctuations.  With lower labor costs, Dominican home building techniques and materials can differ somewhat from those used in United States as Dominican houses in the cities are primarily made of cement.  Metal and prefabricated structures are starting to be more widely used. In rural areas, where incomes can be very low, houses are commonly made of wood and corrugated galvanized zinc sheeting.  It also important to note that, in the past two years, Dominican builders having increasingly been incorporating green building techniques into their projects.

In major cities, interior finishing represents a significant market opportunity for U.S. building products.  Most houses have ceramic tile floors; some may use parquet or even marble floors for upscale building apartments that are popular among the upper-class in Santo Domingo.

Best prospect products include:

• Heavy Construction Equipment (including used)
• High-end aluminum/ wood doors and windows
• Bathroom and kitchen fixtures
• Wood lumber and wood products
• Electrical fixtures
• Lighting products
• Plumbing (metal) and welding products
• Roof products (sealers)
• Asphalt mixtures
• Steel products
• Prefabricated structures
• Hand tools

Opportunities

The local building industry is open to foreign companies interested in selling their products in the Dominican market.  U.S. products generally enjoy a very good reputation for quality and receptivity is high among those able to afford them. 

Domestic Production

The local industry produces cement, cement block, concrete, concrete mixes, tiling, mosaics, paint, and steel rebar.  In addition, there are locally manufactured PVC pipes and connectors, sanitary ware, tanks, wood doors and windows, metal windows and frames, fiber glass products, sanitary and gas installations, and some electrical accessories.

Construction firms targeting the middle- to upper- classes generally prefer imported building products because of the high quality.

Third – Country Imports

According to experts, building products from other countries, especially those from China, Taiwan, and Central/South America, may not meet U.S. or European quality standards.  Nevertheless, imported products from China and South America have the most presence in the market.  Asian building products often have a price advantage for very cost-sensitive projects and are consequently widely used in government-funded projects such as hospitals, schools, and low-cost housing projects.

U.S. Market Position Share

U.S. companies have maintained a good position in the Dominican market, but they have not significantly increased market share in recent years. Many local end-users/importers have expressed concern that that numerous U.S. companies have failed to make themselves available for potential local buyers. Meanwhile, suppliers from other countries are quite aggressive when applying their selling techniques.

Web Resources

• Sheila Diaz de Andujar, Senior Commercial Specialist: sheila.diaz@trade.gov
• Ministerio de Obras Publicas y Comunicaciones – MOPC – (Ministry of Public Works and Communications
• Banco Central de la República Dominicana (National Central Bank)
• Colegio Dominicano de Ingenieros, Arquitectos y Agrimensores – CODIA – (Dominican Association of Engineers and Architects)