I usually don’t toot other blogger’s horns but Kent Davis at Panama Equity brings true professionalism to the Panama City market and not only reports statistics, but he creates them. Here is a great report on the condo market in the City where money can still be made and nice apartments can be had for under $175,000 and you can get a bargain in Trumps project that is nearing completion. Good read Kent. Click on the picture to see Kent’s site and if you call, tell him I said hello.
The market for 80 -120m2 condos under $1,300/m2 continues to show exceptional movement in the real estate market in Panama City. Days on market are short for a well located, well priced property that meet the criteria above. We attribute this to Venezuelan buyers who are continuing their mass exodus as well as value focused North American buyers. I would say that Venezuelan buyers account for well over 50% of the total volume of real estate purchases in Panama this year.
Banks continue to aggressively lend to foreigners and Panamanians alike, with the average 30 year mortgage rate coming in at around 6.25% and average LTV of 65%.
In 2010, Panamanians have continued to enjoy unprecedented growth and upward social mobility, meaning they are leaving the bedroom communities of Tocumen and Don Bosco to relocate into areas such as San Francisco and El Dorado. Not only are locals shortening their commutes, but many are in fact changing their entire lifestyles. Young couples are purchasing first homes and those that aren’t ready to buy yet can now afford to move out of their parent’s houses and rent for a few years while saving up for their first purchase.
As an investor looking for cash flow and appreciation, we’ve been saying this for the last two years: Plaza Edison, El Cangrejo, El Dorado, and Hato Pintado. Keep it under $150,000, two to three bedrooms, don’t pay more than $1400 per meter. The areas mentioned above continue to experience growth and not coincidentally, ALL will be covered by the new metro transportation overhaul. Investing in these areas means not only being in the path of progress, but being in a position to enjoy solid rental revenue for the long term. Why? Because Panamanians and Venezuelans for the most part are not renting the $3,000/month apartments.
If you are still considering the idea of investing in Panama, here’s a real life example of a property we have been managing for the last two years:
Purchase price: $135,000
Monthly Condo Fees: $140.00
Monthly Land Tax: $16.05
Monthly Rent: $1,200
Monthly Property Management fees: $120
Monthly Property Tax: 0
Net monthly income: $924.00
Approx yearly repairs: $200.00
Net Yearly income: $10,888
The figures above reflect an 8% return on investment, not accounting for appreciation.
What’s going to happen when they finish the new subway stop less than a five-minute walk away? Or what about the three new restaurants that are opening up just around the corner and the planned hotel opening up next year: don’t you wonder how that will affect property values in the area?
If you are an investor looking for long-term growth, you have to come down here and see what’s going on. The Panama Canal expansion project only this year really got going, and the other major projects have yet to even begin (Metro, road expansions, Casco Viejo Overhaul). As much as Panama City has changed over the past four years, THIS WILL BE A COMPLTELY REVITALIZED CITY IN FOUR YEARS TIME.
Property values this last year have taken a bit of a hit because the high end of the real estate market has always been pitched to foreigners, most of whom have come from either North America or Europe. Many of these potential buyers have been forced to reconsider investments due to the poor state of their local economies, which means there are less buyers for an increasing amount of high end inventory. The under $150,000 market remains relatively flat and we expect it to stay that way through 2011, after which time it should start to appreciate along with the rest of the property market.