Investment and Housing
Panama City continues to see a softening in values and sales in the overbuilt condominium sector. However, there is a silver lining in the grey clouds above. To digress a moment, I would like to share a recent study with you of Miami’s overbuilt condominium market sector for a comparison of the healing cycle that is occurring there and what Panama City has in it’s future for a several more years to come. See After the Condo Crash, Miami market Rebounds .
While I have sought out investments in South Florida for over 30 years, I find that it still does not pay to invest in the condominium market there as the rent will not justify the investment based upon maintenance costs and real estate taxes. As the pricing continues to soften in any market, so follows rents and the spiral continues downward. This will hold true for investors who remain hopeful in buying condominiums in Panama City when the market hits bottom. It may never make a great deal of sense to invest in a condominium unless you are going to live in it. The real beneficiary of this market cycle will be the renter and homeowner who finds a lower cost of living now possible in an otherwise high priced market. Yes, there will be “affordable housing” where one can live and walk or have a short commute to work. The other beneficiary which is good for all of us, is the City in which the market exists. The vibrant downtown market goes 24/7 and the “Manhattanization” allows in this case, Panama City to blossom into a world class metropolitan city that attracts new business from around the globe who want and need to be in Panama City, Capital of the Americas.
As foreign investment in residential development and housing in Panama City has waned, at the same time we have seen an increase in the number of investors and home buyers in the interior. Market areas such as Pedasi and Boquete, traditional markets that attract foreigners, are reporting both an increase in investment land sales as well as housing sales. Maybe not as good as the boom days but better than it has been in a long while, albeit at new market pricing. This should continue as both land owners and home owners address the realities of the market place. The shifting demographic is playing a huge role in the new wave of buyers as well. Foreigners moving to Panama are looking for value, not only in the real estate, but in the cost of living and the overall availability of a good lifestyle. Both Boquete and Pedasi have this to offer. Don’t get me wrong, when the time is right I too will buy an apartment in the City as I go there often for both business and pleasure.
New oceanfront homes under construction in Pedasi.
Villas in Valle Escondido, now sold out in our community of 135 homes in the Hidden Valle.
As a friend of mine Paul McBride told me, the local developers were slow jumping on the Boquete bandwagon (and the overall interior as well) and they’ll be slow getting back on. The market is changing here and is definitely on the upswing. Unlike Panama City there was never any real speculative building going on here.
We also have seen some larger land deals being made in the interior once again and the foreign investor has stepped back into the market. I believe it has in part to do with astute investors diversifying portfolios and those who are hedging their bets by buying outside the US. There are some good buys now and we are seeing a few developments come on the market that are attractive opportunities for the investor/builder as well. Some land owners and developers have come to the realization that they must adjust their pricing expectations. This is normal in any market cycle. The ones that don’t adjust their thinking will get left behind and as the cycle goes from boom to overbuilt again. Never fails, like the sun rising and setting. So to sum it up, look for good solid markets with proven track records and try to get in on the new wave by investing in a development where the owner has a change in business plan and wants to move on. There are also some good boutique hotel buys and investments in small boutique resorts that are being developed in the right markets as well. We can help you find such an investment if you want to move quickly while the opportunities still exist in the upswing in the market. See some our listings and call us to discuss off market opportunities as well. Panama Advisory International Group
Other news from Panama
Panama to Invest $250 Million in Financial Tower
Architecture studio Skidmore, Owings & Merril presented their initial design for the proposed building “Torre Financiera” (Financial Tower). The government will build it in the location of the former U.S. embassy in Balboa Avenue, and it will house all the State’s economic and financial institutions. Its proposed elliptical design is not the first of its kind. The Agbar tower, inaugurated in 2005 in Spain, is very similar. Alberto Vallarino told newspaper Pa-digital.com.pa that “the tower’s conceptual design was entrusted to Skidmore Owings & Merril, and required an investment of $300.000”.
EU-Latin America summit opens with trade deal
The European Union and Central American nations reached their first free trade deal on Tuesday as the EU opened a summit with Latin American leaders focused on expanding economic ties. “In an increasingly globalized world where the source of prosperity lies in uniting efforts, the capacity for economic growth lies in openness and liberalisation” and not in protectionism and closed borders, Spanish Prime Minister Jose Luis Rodriguez Zapatero told the Madrid summit. EU president Herman van Rompuy told the heads of state and government that the two regions have seen an “increasing convergence of interests and values. “EU and Latin America are natural partners and allies. Our countries are linked by strong historical, cultural and economic ties.” Spain, which has close ties with its former colonies in Latin America, hopes the summit will be a high point of its six-month presidency of the European Union, which it holds through June. Hours before the conference formally opened, the EU reached the first ever free trade deal with the Central American nations of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama.
Canada-Panama free trade deal to eliminate tariffs, improve access: Minister
Canada signed a free trade deal with the small Central American economy of Panama on Friday, continuing the country’s trade liberalizing efforts in the hemisphere. Trade Minister Peter Van Loan said the deal will give Canadian businesses opportunities in construction, education, manufacturing, logistics, human resources, distribution, energy and tourism. “This agreement will eliminate tariffs on a range of Canadian products and provide better access for Canadian services providers to Panama’s market,” he said. “It will also secure market access in the area of government procurement, opening more doors for Canadian businesses looking to participate in the Panama Canal expansion and other infrastructure projects.”