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"Panama’s real estate celebration is over"

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  • Tue, 07/25/2017 - 17:20
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The real estate market is reinvented in Panama. Ten years ago, it was an industry that speedily prospered with the construction of the expanded Canal (inaugurated in 2016), but today it has experienced a slowdown. Due to oversupply, hotel and commercial sectors should opt for more competitive fees to attract tourists and investors, respectively.

Kent Davis is a Hawaiian who has been resident in Panama for 10 years and since that period he has been focused on the real estate market. He is director and founder of the Panama Equity firm. Upon arrival to canal soil in 2007, the US citizen said, "it was a party, there was growth in every side, in every sector, real estate business was easy. Despite price increase in the sector there are people who continue to buy". The opening of Panama-China diplomatic relations and the role of Asians in the world is an additional ingredient that must be considered, since he thinks the Chinese will be the new property investors in the region.

The capital of the Isthmus has been the spearhead for the market in recent years, particularly in areas such as Avenida Balboa, Punta Pacífica, El Cangrejo, Santa María and the Old Town, which is undergoing a revitalization process. Without excluding Panamanians, Canadians, Americans, Colombians and Venezuelans have been the largest investors in the residential sector in these places.

There is no limit for residential projects; however, hotel and commercial situation is different "Panama City does not need more hotels, occupancy is less than 50%; for that reason I do not see movements in this type of investment," according to Davis. The monthly economic indicators of the Comptroller General of the Republic of Panama confirm the perception of the real estate representative: In 2013 hotel occupancy was 60.1%, in 2014, 58.3%, by 2015, 55.4% of the rooms were covered, in 2016 it dropped to 49.7% while this year it remains below 50%.

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In the commercial area there is also an offer "in type A offices. Investors are always going to look for attractive properties that can be rented quickly and that will maintain or increase their value," said the Hawaiian who considers that the largest investments are being directed to projects within the country, specifically in beach areas. This process has been slow since Panama has external competition with Costa Rica and even Cuba.

Investment

Kent explains that when it comes to buying a property for private use people can take advantage of the financing options that can cover between 60% and 70% of the property value. This implies that the buyer must have between $ 60,000 and $ 80,000 available for the transaction if the final price is $ 200,000.

Recommendations

According to the expert, the first step when it comes to investing is research. The experiences of other buyers, expert opinion (brokers, lawyers), getting information from the people who build, knowing the area, knowing how many people have bought into the project. It is fundamental not to buy blindly and ask as much as possible.

Data

Below is the data published by the General Comptroller of the Republic and that have as source the Tourism Authority of Panama, which shows the decrease in the occupancy rate of hotels between 2013 and the first five months of 2017.

By Oscar Sulbarán

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