Improved security and a menu of tax incentives have sparked an unprecedented construction spree in the capital city and beyond.
In the construction business, the hardest thing to build is confidence. Investing millions just for the chance that someone may buy a place to live is risky.
Salvadorans know this better than perhaps anyone else. For 40 years, their real estate market and skyline were equally flat.
When a decades-long civil war ended in 1992, peace brought hope for rebuilding. Sadly, less than 10 years later, an earthquake ruled out most vertical housing. The following two decades of gang violence saw El Salvador rise to the status of “Murder Capital of the World.” That depressing reality made it seem the country was destined for a soul-crushing architecture that hid people safely in fortresslike homes.
Five years ago, the landscape started to change, both physically and metaphorically. An iron-fist approach to crime led by President Nayib Bukele, and fiscal incentives like tax-free status for high rises and tax exemptions for real estate transfers and machinery imports have helped launch an unprecedented construction boom. Last year alone, official statistics reported over $5 billion in investment: an incredible sum for the country, attesting to confidence in the market for a country of nearly 6.4 million people categorized as lower-middle income.
“In terms of legal and territorial security, projects are now developing in areas of the San Salvador metropolitan region that were historically considered unviable,” says Toribio Solís, executive director of PMO El Salvador, a construction project management company engaged in residential, commercial, and logistical projects. “The country has expanded its footprint beyond the capital, promoting horizontal housing projects and incipiently paving the way for vertical development in underdeveloped regions. For the international investor, the appeal lies not only in an agile and competitive business climate, but also in a modern framework that enables a wide range of financial instruments.”
‘Buyers Want More Luxury’
The improvement in the business climate has also raised the potential for luxury-property construction. Developers are taking advantage of the Pacific-facing country’s natural scenery to build beachfront property targeting the higher-end market.
Landmark projects like Surf City and Surf City II are leading the way for more development and tourism. Much like nearby Costa Rica, El Salvador has outlined a strategy that mixes high-end real estate and tourism. Visits have skyrocketed; last year alone saw the country breach the 4 million-visitor milestone.
While the flashiest projects are beachside, the bulk of the transformation is taking place in the capital. The once “flat” city of San Salvador is flat no more. Now that the entire city is considered safe, new projects are rising in all districts. Since April 2025, The US State department travel advisory ranks El Salvador as “Level 1” in terms of security, ahead of all Central American countries and even the UK and France.
Alongside the improved security situation, fiscal incentives are playing a role. Vertical projects over 25 stories have tax-free status, which has prompted a stampede of sleek high rises that are quickly changing the Salvadoran skyline.
“Demand for luxury in El Salvador has led developers to improve the quality of their work, because prices have increased,” says Sebastián Safie, CEO of Conrede, which is currently developing Aura 360, a complex inspired by the Brickell luxury towers in downtown Miami. “Buyers want more luxury in their homes, given the high price they’re paying,” Safie adds.
A final trend driving the boom is the Salvadoran diaspora. A Special Transitory Law of Incentives and Preferential Treatments Aimed at Facilitating the Repatriation of Salvadorans, enacted in 2023, provides tax breaks for the over 2 million citizens abroad who want to invest back home.
“The impact of the diaspora on housing is significant,” says Safie, “simply because they are the first willing to invest in their country. Developers should take the diaspora into account.”
Despite a troubled history, the optimism of a national transformation seems likely to last.
If construction is a business built on confidence, the public and private efforts to build a new El Salvador show there is a deep trust in this new phase of the country.
