Puerto Rico’s housing market is now showing some signs of improvement, after previous house price declines. During the year to end-Q3 2015, the seasonally-adjusted purchase-only house price index rose by 3.97% (4.51% inflation-adjusted), in sharp contrast with the annual decline of 5.7% a year earlier, according to the Federal Housing Finance Agency (FHFA). On a quarterly basis, house prices increased 2.76% (1.88% inflation-adjusted) in Q3 2015.
In fact, the luxury segment is thriving, according to local property experts. This is because Puerto Rico’s high-end market attracts mostly high net worth individuals and foreign investors who are not affected by the debt crisis, and who want to take advantage of tax incentives being offered by the Puerto Rican government.
Puerto Rico’s luxury segment saw a spectacular 105% sales growth in 2013-14, according to Christie’s International Real Estate, after Puerto Rico was established as a tax haven in 2012.
“The luxury market is thriving,” said Roberto Trápaga of the Association of Home Builders of Puerto Rico. “We have a supply shortage.”
“The opportunity to acquire luxury real estate at very low prices is now better than ever, especially for foreign buyers,” said Professor Juan Lara of the University of Puerto Rico.
Demand for luxury beachfront properties in exclusive areas such as Dorado, Palmas del Mar and Rio Grande is expected to outstrip supply in the coming years, according to Carlos Xavier Velez of real estate consulting firm, RE Advisors.
In 2015, Puerto Rico’s real GNP growth was estimated at -0.7%. In 2014 it dropped 0.9%, after a decline of 0.2% in 2013 and growth of 0.5% in 2012, according to the Government Development Bank (GDB).