Puerto Rico’s Real Estate market can be divided into many sub-markets, mostly independent from each other. What sets aside the winners from the losers are the demographics and economics behind them. Here’s a brief lineup.

Old San Juan; the demand for this sub-market is no longer solely held by the local economy and jobs, since Airbnb entered the Puerto Rican market, it has helped cover a large share of the costs associated with home ownership. This has made it more attractive to both Puerto Ricans and Americans that live in the states who want to own a second home and/or want to hold a little share of the island for retirement.

Newer developments in the city are also winners. There has been no real increment of supply (new construction) in San Juan City during the past decade aside from Ciudadela in Santurce. Simultaneously, Puerto Rico’s population is rapidly aging and the number of boomers leaving the suburbs for smaller units in the city is exponentially increasing.

Also, young professionals have no hurry to get married and/or have kids. Therefore, new developments in the city are their first choice. A stagnant supply combined with an increasing demand will push the prices up.

Luxury Real Estate is a winner of a different kind. This sub-market has been in the rise primarily due to Act 22 and Act 20. Prices will continue to rise as long as these laws remain intact. The challenge is to replace this demand with a more organic one. To do this, the Puerto Rican economy has to rebound and a new class of high net worth Puerto Ricans has to be created.

Unfortunately, there are markets that are going to continue to sink due to the wrong combination of demographics and economics. As younger people and boomers move to the city or leave the island seeking better opportunities, markets that once had job creating industries like pharmaceutical plants will face the most challenges. The lack of new industries and economic activity in the rest of the island will inevitably worsen the migration situation and therefore real estate prices.

In order to reactivate the entire Puerto Rico’s Real Estate market, there needs to be real economic development and population growth, there just no way around it.