La Estancia is offering tokenized shares in real estate assets in paradise, promising tax incentives and painless citizenship in the Dominican Republic.
Could real estate investors and enthusiasts of tokenized, digital properties have found a match made in heaven?
Caribbean-based real estate firm is giving overseas investors an opportunity to buy up to $75 million worth of tokenized shares in oceanfront properties in the Dominican Republic, with some huge incentives accompanying each purchase.
The company, La Estancia Holdings, announced on Tuesday the extension of a security token offering (STO) first unveiled in July. The STO will now run over three stages until the start of 2020 and is giving investors both big and small stakes in townhouses, villas and hotel properties.
“We’re breaking down the traditional barriers to real estate investment,” Laurent Chemla, head of La Estancia’s blockchain strategy, said in a statement. “
“We see leveraging blockchain technology as the best way to make real estate investment more accessible to everyone because of the transparency and automation it brings to fractional ownership and its promise of increased liquidity.”
The first stage of the firm’s STO in July allowed investors to get stakes worth $10 million, which comprised of about 22 separate villas, cottages, townhouses at the La Estancia Gold Resort in La Romana, Dominican Republic.
The second phase, planned for the final quarter of this year, will have 123 residential units worth approximately $20 million at the same resort.
And the final STO will take place in the beginning of 2020 and gives investors a chance to purchase stakes in a new, 240-room hotel development to be managed by an undisclosed “major international hotel chain”.
The deal sounds sweet, but some aspects of the STO might have some investors thinking otherwise, such as the promise of a path to “inexpensive citizenship” in the Dominican Republic, “low-risk, high-return yields”, and “significant tax breaks and benefits on investment income.”
The above promises makes someone wonder the type of clientele La Estancia are targeting.
However, in an email to Decrypt, Chemla made it clear that the company’s proposition to potential investors should not be looked at as a guarantee. Rather, she said “in the context of comparable opportunities, La Estancia Holdings presents relative low-risk and targets high-returns.”
She added the targeted internal rate of return of “+30% is quite ‘high’ for similar investments—especially in the Dominican Republic.”
Chemla further elaborated that an investment of over $200,000 in real estate in the Dominican Republic “qualifies for the Dominican Republic residency application by investment.”
Residency in the island country can be made possible “in a matter of weeks,” she said, provides that the investor passes other application criteria, such as a medical exam, and pays the required fees.
If none of that sounds particularly appealing, however, the La Estancia also offers a more “conservative” alternative for purchasers to instead invest in stake “which can later be converted to tokens without penalty,” according to the announcement made on Tuesday.
The Company additionally hails the Dominican Republic as the most financially stable nation in the Caribbean, boasting on its website of United Nations-based research that shows the island nation is undergoing an economic growth owing largely to tourism and foreign investment.
Be that as it may, the headlines that American investors are likely more familiar with are more distant than complimentary of the country.
And considering the number of American tourists that have lost their lives in the Dominican Republic over the last several months under unknown circumstances, it worries how much longer that economic boom will last.