Research

Puerto Rico Residential Report, H1 2021

The Puerto Rican residential real estate market has proven to be strong, despite the pandemic and extended recession. The second half of 2020 was one of monumental growth for the Class A residential real estate market. While overall growth has slowed down during the first half of 2021, Class A NPV and GAR values are higher now than during the first half of 2020. These numbers are expected to continue in this direction thanks to population and economic growth. 

As one of the most dynamic and competitive economies in Latin America and the Caribbean, Puerto Rico has a population of 3.2 million people and 1.5 million housing units spread throughout the Island.  The average monthly rent for non-luxury housing in Puerto Rico is approximately $500 USD. However, this number does not acknowledge the island’s dynamic and multi-dimensional housing landscape that is best delineated by zip code.

With a favorable business environment for investors, Puerto Rico is home to some of the most attractive and noteworthy incentives for those relocating from the mainland United States.  In 2020, alongside efforts to expand the benefits of Puerto Rico’s economy, the government expanded the opportunities of several arenas within the corporate tax incentives code by consolidating laws 20 and 22. These laws, which were recently combined into a single broader more robust law now entitled Act 60, established a 4% corporate income tax rate, 0% rate on dividends distribution, 75% property tax exemption, 75% construction tax exemption, and 50% exemption on other municipal taxes..  Eligible activities include manufacturing, R&D, Finance, Advertising, Technology, Medical Tourism and general exports of goods and services.  To learn more on these and other current business incentives, interested parties should look to JLL’s Puerto Rico Real Estate Investment Guide, 2020.

Puerto Rico has long been known to be a U.S territory, as it is both part of the United States and an autonomous government. However, since Puerto Rico is not a state in the union, Puerto Ricans do not qualify to participate in federal elections and have a non-voting representative in the House. On the upside, residents are not required to pay U.S. federal taxes.  Unlike other Caribbean, Latin American and global markets, Puerto Rico has prevalent investment advantages such as the  U.S. Dollar, U.S. citizen status, assets and businesses under U.S. legal jurisdiction, and the island’s GAAP accounting practices under the supervision of the Federal Bureau of Investigation.  The attractiveness of the island both esthetically and economically has been drawing new residents for years. The COVID-19 global pandemic has only increased this demand for Class A residential real estate, as former city dwellers seek alternatives amidst unprecedented changes to how we work and live.

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