Most American entrepreneurs spend the majority of their time in locations like Silicon Valley and New York. But a growing cadre is looking overseas at the sun-soaked pastures of Puerto Rico, hoping for a better experience. Many want to take advantage of the tax incentives and lower cost of living, viewing it as an alternative to the conventional path to American prosperity.
The trend has been dubbed the “Puerto Rican exodus” due to the sheer number of people fleeing to the Caribbean island. Many are being lured by the 4% corporate tax rate and the zero capital gains tax, plus a host of other exemptions. These tax rules make the island significantly more appealing than states like California and even Florida.
“The number of entrepreneurs seeking opportunities in Puerto Rico is growing all the time,” explains Dorado Beath, a provider of modern luxury real estate on the island. “Young and older businesspeople are looking for ways to leverage their wealth while enjoying a reasonable standard of living as they grow their businesses.”
Puerto Rico’s Department of Economic Development and Commerce keeps careful records of the territory’s financial outlook and the quality of life its people enjoy. According to data, thousands of people are bringing their businesses to the island every month, putting pressure on real estate prices. Many savvy entrepreneurs are viewing the current trend as an opportunity to take advantage of the growing wealth in the region, seeking higher returns on their initial investment.
Many local officials also support the influx from the mainland. The growing number of wealthy business owners traveling to the region is providing additional public funds for improvements alongside other social benefits, such as the creation of new working spaces and leisure amenities.
“The people living at Dorado Beach can get most of what they need on-site,” says the real estate company. “However, it is notable that more people are traveling further across the island to find other facilities which didn’t exist twenty years ago, before the location became so popular.”
Expectations are that property price appreciation will surge by double digits in the years ahead. Some estimates suggest that it may top 25%, which would be remarkable.
However, not everyone is cheering these changes. The influx of business owners is causing a rise in living costs across the region, something local Puerto Ricans are noticing. The island is well-known for its conventional, laid-back feel. But that could change if it sees a gentrification process. The government on the island will need to invest more in infrastructure and ensure that the facilities people require are in place, ready for the growing population.
Most of the island welcomes growth, but some people are worried about the effects that it might have on local life. There’s a concern that something similar might happen on Puerto Rico as has happened on other wealthy exclaves in the Caribbean. Here, costs have risen sharply as many of these locations focus on exclusivity and only attracting the highest net worth individuals.
However, for entrepreneurs, these costs are part of the process. Many are tired of being on the treadmill in places like San Francisco and Boston, and want locations that enable them to enjoy their wealth. They want to sidestep the high taxes and cost of living so that they can build their wealth faster and get out of the rat race, once and for all.
For many outsiders, Puerto Rico seems to offer that. The territory has a slower pace of life, making living there feel like a permanent trip. There’s less red tape, fewer aggressive people, and a near complete absence of annoying red tape.
Furthermore, the government of Puerto Rico seems to support the idea of people succeeding. It encourages wealth creation and sees it as a way to revitalize the local economy and attract much of the talent from the mainland.
Puerto Rico remains relaxed for numerous reasons because of its slower pace of life. Most of the people on the island have deep Spanish and Caribbean traditions, which prioritize family and community over the hustle and grind. Many locals still greet each other in traditional ways when they meet each other, leading to a friendly environment.
The natural beauty of the island adds to this appeal. Unlike industrial areas in the U.S., many people relocating to the territory can still find pristine beaches and lush forested areas. These provide the ultimate retreat for those seeking adventure and changes to their urban lifestyle. Many entrepreneurs find the natural environment soothing, lowering their cortisol levels significantly.
The warm climate is also a bonus. Again, this engenders a sense of relaxation and allows people to spend more time outside. The warm weather means that it is easy to sit out in the garden and simply enjoy the sunshine and reduced rainfall.
It can occasionally get cold in Puerto Rico, but weather events like that are rare. Most of the year is sunny, except for during storm season.
Whether the island will become an innovative hub like Silicon Valley remains to be seen. It doesn’t quite have the network effects of a location like Dubai. However, that sort of development will take time.
“Puerto Rico’s population is still quite small despite its popularity,” Dorado Beach explains. “More people are likely to call it home in the future, and that may lead to the development of networks, similar to what occurs in locations like St. Barts.”
For now, though, entrepreneurs are viewing Puerto Rico as a base for a better life. Software and tech may not be relocating to the territory just yet, but digital nomads and online entrepreneurs are looking to the island for safety and security. The financial incentives are also significant, and networking is likely to lead more people to want to live in the territory as the situation there changes and the cost of living crisis on the mainland accelerates. There might be a temptation for many business leaders to go to the island to bootstrap and test their ideas.