Real Estate

Is this a Bubble?

Everywhere you look cranes stand out against the sky and new towers are started daily. In Costa Del Este, one of Panama’s planned communities close to Panama City the first 100 Story condo tower reaches higher and higher and higher.

When we first moved to Panama, January 1, 2005, our Townhouse and Villa project at Decameron was expected to be 450 units by the time they were done. I think that number has now doubled the demand has been so high and it gets stronger everyday. In Panama City there were some high-rises under construction and people were paying up to $450,000 for a penthouse overlooking Panama Bay.

Sometime later I read an article about there being more than 100 high-rises over 15 stories in height that were already under construction, then I started noticing the cranes on top of buildings that seemed to progressively grow higher and higher.

By early in 2007 there were reported to be more than 400 projects under construction, this time with over 100 or them 50 stories or more. This in Panama City alone; never mind all the new projects that were showing up as signs along the freeway and then driveways, then signs of construction began to be apparent.

Now, a year later, and the number has jumped again. Wait for it… 1,087 new projects. Prices continue to rise, demand remains solid, and foreign investors continue to buy property in Panama. All through out this time, as the US market tanked, people kept asking…can this last? Maybe I should wait until prices drop, before I buy and the prices rose again, and the projects were all sold out.

The happy developers, complete one project, get the occupancy permits and collect the remainder of the payments due on the units and plow their profits back into more projects. No longer content with one project many now have two or three or four on the go. Apparently the Panamanians too have heard the adage, “Strike while the iron’s hot!”

So how many additional units are really in the pipeline? Rumor has it that it is more than 100,000 units. /so who is buying them. Well there are of course some Canadians and some Americans, But there are also the Venezuelans who are anxious to get their money out and away from Chavez and whatever problems that may bring, then there are the Columbians and even the notoriously “cheap” Europeans find their wallets when they see these apparent bargains. With the euro at nearly 1.5 dollars and everything in Europe 10-20 times this price, things seem cheap indeed. The Russians are coming and even the Brits who have been wakened by the story of the Darwins, two of their own, who risked everything, even faking drowning at sea to collect the life insurance, and even now are going to jail for their shenanigans, just to “retire in Panama”.

So can this keep going? Don’t forget – in the next ten years more than 175 million people will be reaching retirement age worldwide. If only a tiny fraction of those people come to Panama, then all 100,000 apartments will easily be sold to foreigners and we will need twice that many besides.

To support all these newly arrived investors new financing options are surfacing daily, such as PA Pan-American Mortgage Corporation, which offers Mortgages for Foreigners.

Need income? Buy a condo and rent it out. The rental market is hot. There are lots of tiny condos that were renting for $400 a month and are now renting for $800 a month. Try to find a rental condo under $1000 a month. Generally condos that have three bed rooms and an equal number of baths rent for $3000 a month and above. There are no hotel rooms to be had during the high season in Panama, mid Dec to mid April so if you have a room in your house you are willing to rent contact one of many rental services and they will be glad to give you a hand. Daily rental income is good income, $100 a night. You don’t even have to pay the agency fees if you do-it-yourself, on-line.

Undoubtedly the doubting Toms will continue to look for that drop in real estate prices but you may want to go to Florida if you want a drop in prices. Another hurricane and they will likely come down again. Here there are no hurricanes and there seems to be no end in sight for real estate.

Many people who bought two years ago have seen their investment double and still the Developers line up to get their permits and the Buyers keep coming.

A beautiful city on a Bay can apply to Vancouver, Canada or Sydney, Australia or Panama, Republic of Panama. The difference is price. In Panama the prices for a penthouse overlooking this beautiful bay is still 1/10 of the cost in similar world class cities.

Don’t wait too long to claim your piece of Paradise. It is affordable now, but the secret is out!

Check back often for more information on Panama real estate. You’ll see it here first

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