Here is a great article that appeared in the New York Times about the continued growth of the real estate market in Panama City. Kevin Brass did a great job reporting the story.
PANAMA — At the tip of Punta Pacífica, a neighborhood in Panama covered with skyscrapers, a narrow bridge leads to a new 25-acre artificial island.
The island, which covers 10 hectares, is the first part of a residential and marina development called Ocean Reef, originally announced in 1998 by Empresas ICA, a Mexican conglomerate. Today, Grupo Los Pueblos, a Panamanian company hired by Empresas ICA to develop the project, is handing over the first lots to buyers planning to build homes there.
The project, with a marina and resort-style amenities, has all the elements of a development designed for international buyers seeking a second home. But of the 63 buyers so far, 56 are from Panama, said Alfredo Alemán, executive vice president of Grupo Los Pueblos.
Sales to foreign buyers dried up here after the 2008 global economic crisis. But developers like Mr. Alemán are reviving their global marketing efforts amid signs of renewed interest from international buyers in a city that is often called the Miami of Latin America.
Such optimism in the residential market is fueled by the continued strength of the local economy, analysts say. The $5.2 billion expansion of the Panama Canal is scheduled for completion in 2015, although it has been mired in dispute and work suspensions. And First Quantum Minerals, a Canadian company, is planning a $6 billion copper mining operation in western Panama.
In the residential market, “a lot of the growth will come from existing multinationals that already have moved here,” said Justin Boyar, who tracks the market for Jones Lang LaSalle, a property consulting firm.
There is no central source of reliable real estate data in Panama. But agents say that prices increased 10 percent or more in the last year, with a jump in buyers from Venezuela, Colombia and North America.
For example, apartments selling for $186 a square foot six months ago now are selling for $205 to $214 a square foot, said Duncan McGowan president of Punta Pacifica Realty, a local estate agent (Panama real estate is typically transacted in dollars.)
The price increase is a contrast to the steady declines of recent years. After a building boom in which dozens of residential towers were completed, prices in many projects dropped 30 percent to 50 percent from 2008 to 2012, according to industry estimates. At the time, more than 300 towers were in the planning stages, under construction or recently completed in the city.
More than 50 percent of the buyers in Trump Ocean Club — which opened in 2011 as the tallest building in Central America at 932 feet — forfeited their deposits rather than complete the purchase of units that had significantly dropped in value.
Even as the global economy recovered, prices in the city were slow to rebound. And projects completed after the downturn have added more than 4,000 apartments to the market over the past three years, according to data tracked by Panama Equity, a local estate agency.
Yet many say that they believe that the canal and mining projects will attract more buyers.
“I think there will be two Panamas: the Panama before the expansion of the canal and the Panama afterward,” said José Bern, president of Empresas Bern, one of the most prolific residential builders in the city along Avenida Balboa, the main road on the central city’s waterfront.
Industry supporters and local residents also hope that the completion of a long list of infrastructure projects will help ease the city’s longstanding problems with sewage and traffic. A citywide subway system, the first in Central America, is scheduled to open this spring.
“The biggest hope is that it will release us from the massive amount of cars on the road here,” said Sandie Davis, a Seattle native who invested in real estate even before she moved to the city five years ago.
In 2006, Ms. Davis paid a preconstruction price of $117,000 for a three-bedroom, 1,100-square-foot apartment in the Costa del Este, a fast-growing master-planned, 310-acre development a few miles outside the city center. She rented it out for $1,800 to $2,000 a month, finally selling it in 2012 for $180,000.
Ms. Davis now lives in a 2,368-square-foot, two-bedroom apartment in an older building in Obarrio, the city’s banking district, about a block from a new metro station. She paid $240,000 for the apartment, including the furniture, in 2009.
With the market in decline at the time, “it was a little bit of an emotional play,” she said, adding, “I’d seen the apartment a year before and fell in love with it.”
Most of the new residential activity in the city has come from Costa del Este. Empresas Bern is shifting its emphasis to the newer area, said Mr. Bern, the company president.
“We’ve completed delivery of our last building on Avenida Balboa,” he said.
Development is also increasing in Panamá Pacífico, a 3,450-acre project at the former Howard Air Force Base, on the west side of the Panama Canal. Developed by the British company London & Regional Properties, the project plans for more than 20,000 residential units as well as office and commercial space.
So far, about 800 homes have been sold, most in the past two years, said Marco Ruiz, London & Regional’s director of residential development. As for construction, 270 homes were built in 2013, with 600 scheduled for completion this year, he said.
Eric Carrasco, a Panamanian who runs a tour company, recently purchased a four-bedroom, 3,330-square-foot home being built in Panamá Pacífico. He says the new house will give his family a different life than what they now have in a congested Panama neighborhood.
“Now I drive my kids to school and it takes 45 minutes,” Mr. Carrasco said. “There, they will be able to ride their bicycles to school.”
About 80 percent of the buyers in Panamá Pacífico are Panamanian, but the developers expects international sales to account for a larger percentage in the future.
“We know it’s going to turn around,” Mr. Ruiz said. “The demographics are there. They’ve always been there.”