PANAMA REAL ESTATE with the lid off (1)
A refreshing no-holds-barred look at the Panama Real Estate market that should be read by everyone planning to buy, sell or rent, in the current market has just become available.
In the balmy days of Panama’s real estate boom, when it seemed that every second person you met from cab driver to hairdresser was in the real estate business, it was often hard to to distinguish fact from fantasy, and there are still enough stories circulating of disappointment at best and near fraud at worst to fill an encyclopedia.
In the absence of MLS there is still confusion for many would be purchasers, and if they are entrapped by slick websites backed by even slicker sales personnel, they could still be heading for a fall.
There are still regular seminars running in Panama, where the first piece of equipment handed out is a pair of pink glasses, and where reality is blandly mixed with the coffee and croissants. Just go on line and search out some of the figures thrown out for how little you can live on in Panama, and some of the pitches emanating from those who have arrived post-Cinta Costera. People who wouldn't be sold a spare wheel by a used car salesman, have rushed to buy and are now battling in the courts, or walking away from their deposits.
These are the people who blandly ignored warnings of an upcoming horizon of skeletons in the sky, now clearly visible if you take an evening drive around the city.
But that doesn’t mean that the market is dead only changed. To paraphrase the Grand Old Duke of York , when it is up it is up, and when it it is down it is down, but when it's only half way up, it's neither up nor down.
That’s why it is refreshing to read a lengthy market study produced by Kent Davis, founder of Panama Equity Real Estate that reveals what some would call shocking statistics about the Panama city real estate market.
So hold on to your seat while you check out some of the key findings.
1. Prices on existing waterfront condos will fall by as much as 20% in 2012 as supply surpasses demand. 2012 will see a doubling of existing, move-in-ready oceanfront condo units from 1500 at the beginning of 2012 to 3100 units within a 12 month period.
2. Rents on condo units will decrease between 15-20% based on the 5,000 new hotel units coming online in 2012. As the value of income producing assets falls (rents generated), the price of those assets will also fall (another factor influencing point one),
3. The Developers of Trump Ocean Club, Panama’s most visible new project to date, are at risk of a bondholder default and may be forced to liquidate their remaining units at firesale prices.
The study was based on buyer and seller interviews, physically canvassing the 3KM waterfront section of Balboa Avenue, two year tracking of inventory absorption based on published developer pricing and collaborated sales data among real estate agents based in Panama City, Panama.
It’s a pretty thorough study and in the next day or two Newsroom will publish some lengthy extracts from the 16 page document. It’s not all doom and gloom, and in fact throws light on some viable opportunities in a buyer’s market.
