In Panama City a reduction of almost 20% in the prices of residential rents has been reported, particularly in areas that five years ago registered the highest prices in the capital.
The high supply of apartments and houses in residential areas has pushed down prices, especially in areas such as Paitilla, Balboa Avenue and Costa del Este, where in 2013 2 and 3 bedroom apartments were rented at prices above $2,000 and $3,000 a month.
Martesfinanciero.com reports that “…According to the construction guilds, prices of residential real estate have plummeted by an average of 18%. Aldo Stagnaro, president of the Panamanian Association of Brokers and Developers of Real Estate (Acobir), explained that ‘There is a lot of real estate supply and that is good and ideal for investing by buying and then renting it out. The property can pay for itself from the rent’.“
Eileen Chévez, market research coordinator at Cbre Panama, explains that “… the residential rental market in 2017 and the first half of 2018 was sluggish, however, in July it started to become more dynamic …Chévez indicates that, given the oversupply, the terms of negotiation of rents are greater and tenants obtain great benefits. The main cause of the fall in prices is attributed to an excess supply of real estate.“
In the medium term it does not seem that the supply of residential real estate will decrease. As of May, the environmental impact studies that were submitted in Panama represent an estimated investment of $235 million. See “Construction: $235 million in residential projects“
Any clues of why the deflation?