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Panama Market Report

Article by Thomas H. Brymer II

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 its future for a several more years to come. 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, aAlbeit 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. Villas in Valle Escondido, now sold out in our community of 135 homes in the Hidden Valle. New oceanfront homes under construction in Pedasi. 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.