Thread: Real Estate in Panama City Will Soon Be Cheap Again

Real Estate in Panama City Will Soon Be Cheap Again

January 28, 2009 by: Gordon Owen

http://www.eyeonpanama.com/real-esta...e-cheap-again/


Real Estate in the City of Panama is not cheap. Luxury 3 bedroom condos sell above $500,000, houses in the suburbs are listed at $800,000, and city flats rent for over $2000 per month. Don’t believe me- check craigslist.com. Granted, this segment of the real estate market is directed towards Westerners because we love craigslist.com, but still, real estate here is expensive. However, this will not be the case for much longer.



Currently the condo real estate market in the city is collapsing. We all knew it would. Anyone who spent significant time in the city, and had a half-a-brain, knew that the building more than 10,000 units all within a 5 year period was going to over-saturate the market. This market was not driven by local Panamanians; their mere $500-$900 monthly salary excluded them from most of the development in the city. All of us saw this coming, but no one thought that the collapse would happen so soon.

Enter the financial crisis of late 2008. All of a sudden, the whole world doesn’t have the money they thought. Not the Americans, not the Canadians, not the Russians, not the Europeans, and not the Chinese… no one. Here we are in the start of 2009 and the first wave of new luxury condos is coming on the market. Nobody can pay for them and no bank will lend their required mortgages. The individuals who still have money and are looking to buy these luxury condos, they know they have money, and more importantly, that the current owners are cash-strapped, and want the deal of the lifetime. As a result, owners are starting to drop their prices… and fast.

I believe this bursting market is the best thing that could happen for Panama City. Panama was getting too expensive and needed this market correction to be cheap again. The major draw to Panama City is its quality cosmopolitan lifestyle for half or a third of the price than in most other developed world cities. But your cheap cosmopolitan lifestyle is soon ruined when you’re paying Miami/Buenos Aires sized housing payments. The market correction will take months to a year to complete and real estate shoppers will be able to purchase luxury condos at bargain prices, making Panama cheap again.


So if you are shopping for real estate in Panama City, instruct your agent only to show you condos selling for under developer prices. You take the square meter pricing of the condo and verify it to the developer and other comparable units in the area. If your agent says that he can not find any below developers pricing, find a new agent because you would be foolish to pay sticker price right now in Panama City.

For more information on distressed units in Panama City please contact eyeonpanama@gmail.com


I would like to buy, but not until prices fall 50 to 60% or back to developing countries prices again.


What you all think? Comments please?

What else is there to say...

If you buy now, you risk losing 20% of the value in the next few months or years.

That's why I'm personally waiting until late 2009 or even 2010.

The downward spiral in Panama is JUST GETTING STARTED.

People (including me) have no idea how bad it COULD get. It might not... However, it doesn't take a genius to look at the basics of economic realities:
DEMAND AND SUPPLY AND ACTUAL SALES.

There's ALREADY too much supply and there's TONS more coming -- And the demand has already dropped. And sales have dropped 80% from their peak

However, everyone here is still in denial (even in spite of the newspapers so it's going to take a little awhile).

The fact is too many people bought at sky high prices. So, they are unwilling to take the loss. HOWEVER -- those that NEED MONEY NOW are selling it for what they paid for. I'm already seeing that more and more. So, if you are on the ball -- and hunt deep... you can find deal. However, you will NOT find them in magazines or with real estate agents (they're still knee deep in denial).

Good luck,
Matt

Over speculation is the same no matter where you go. At night you see all of these large condo buildings with no lights on because nobody lives there. Also, since the city has gotten so expensive (and crime increasing) people are starting to go out to the interior to live. Chitre seems to be a serious alternative to Panama City. I was surprised to see at the Albrook bus terminal the amount of retirees getting off the bus from Chitre.

For investors, there is good news in all of this. The rental market in Panama City remains strong, even for higher-end properties, because PC attracts many, many non-tourist, long-term visitors -- e.g., business people who are assigned to Panama for a year -- and will continue to do so.

(Added to this, we'll see more renters among the ranks of potential property buyers who find themselves short of the cash needed for an outright purchase.)

A standard measure of value is price-to-rent ratio: the purchase price divided by the monthly rent. And, there's something called the "150-200 Rule": viz., a ratio of 150 means the sales price is very good, while at 200 it's starting to get unreasonable (or the rent is too low).

E.g., my own apartment is for sale at $217,000 (a year ago, I probably would have asked for $235,000). Other apartments in my building -- same size and floor plan -- rent for $1,300 to $1,800 per month; that produces a price/rent ratio of to 121 to 166.

My cousin just bought a condo in this complex for $40,000... comes with pool and all.

8250 N Grand Canyon Dr, Las Vegas, NV, 89166 - MLS ID#886343 - Condo/Townhome/Row Home/Co-Op real estate - REALTOR.com®



If you look at the price of the place and what it all came with it, it is amazing..... One would think it is in Panama or Costa Rica.... But no... It is in Las Vegas Nevada USA....

No matter were you look prices are like a fraction of the price of Panama city.... Las Vegas, Phoenix, many cites in Texas, Reno, Atlanta, Detroit, Scotsdale, Houston.. etc etc....

Soon people {Panamanians} will be selling there homes to retire in America it will be so cheap.....

So if prices are this small for so much in America, {A develpoed country}what should houses cost in Panama?

Maybe one like this might go for $250,000, to $300,000? It is like this huge bubble looking for a pin.

Even a 50% fall might not be near enough...

You should see the huge houses you can buy in some cites in Texas for $300,000 range, like mini mansions on 3 acres, these would easily be in the $1 mill range in Panama city...


Here is a house in Houston Texas...

4,300sq loaded with spiral staircase, brick exterior for only $399,000...

http://www.realtor.com/realestateand...044_1106614381

Another huge house asking $335.000

http://www.realtor.com/realestateand...336_1106571213


Here's a brand new house for $86,000..

http://www.realtor.com/realestateand...047_1106791127





Some incredible deals out there. Plus in many cases you can offer 10 to 20% less, and still get the house. how much lower can prices go? another 20% and they would have to be rock bottom....

I am sure there will be a good real estate market correction in Panama. What I see as different from the US or many other places is the Panama market is pretty diverse, 2nd largest banking center in the world, international trade 2nd most important canal in the world, tourism, single largest cocaine distribution point in the world, money laundering, etc. All of these factors create a country that will probably rebound quicker than anything else in Latin America and much better than anything in the Caribbean. This country as well as Costa Rica are turning into refugee countries for people from the US, Canada, Europe, Australia, etc. People are still coming but they will be broke.

"This country as well as Costa Rica are turning into refugee countries for people from the US, Canada, Europe, Australia, etc. People are still coming but they will be broke."


This is interesting... Martin...

I knew many people are coming from the west to Panama, just never heard it as a refugee country for the west, really is a new twist in this world we live in...

It is like almost becoming the new America, or land of the more free, only for westerners and Americans...

I also feel the reasons you gave will help Panama to a certain degree...

It is also a small country with alot of people going to it.... still the prices are so high, but I guess time will tell, and it is all supply and demand.

I like to hear more about this from you, if you ever get the chance about this being a refugee countries for the west....

Really well put...


Darryl

Thanks Darryl, you do see it with the new people that are showing up in Panama. It is not so much the retired military type anymore. It is younger people in their 20's and 30's that are coming and staying. Let's face it, between the job market, taxes, and inflation what type of future does this generation have to look forward to? The immigrant tide has shifted to Latin America. I do truly feel more free and that there are more opportunities in Panama than in the US. Obviously I am not alone.

Sir Martin

It is really amazing to hear about this all. It is like the new land of the free.

I am happy to hear that you feel more free in Panama compared to the the USA, I to hope I will feel more free in Latin America compared to Canada.

It is really amazing to here that young people are now coming to Panama and not just the retired and old ones. I guess with all the hurt in the west it is kind of understandable.

It also seems to me that Panama is the least and also last to be effected by this world down turn, they might not be immune, and might suffer a bit to, but so far so good, or least what I read.

---------- Post added at 10:34 PM ---------- Previous post was at 10:21 PM ----------



---------- Post added at 10:35 PM ---------- Previous post was at 10:21 PM ----------



---------- Post added at 10:36 PM ---------- Previous post was at 10:21 PM ----------

I getting a little of my original post guys sorry... But I just went to Colombia lately, and wanted to share this with you all.

House and rental prices are cheap cheap......

You can buy a new town house row house for as little as $15,000, and an apartment condo for as little as $24,000... Now these are brand new and in the city of Medellin... This is a nice modern city of about 2.6 million people.....

You can view these new condo's here...

Constructora Capital

You can buy similar condo's much cheaper in other cities, and seen some new town houses for as little as $10,000... These were in not in some hick town, but cites with populations over 250,000... Mind you they are smaller for this price, starting at about 500sq.. Still what a bargain..

The best deal I came across was a 2500sq brand new executive condo, with an amazing city view for $90,000, that is like $38 a foot. Came with granite counter tops and pretty much loaded, with an amazing entrance and lobby.

I had a great time there, except some of my friends got robbed, but I think it was perhaps the company they kept there.

Learning Spanish everyday now so I can go back in the next few months.

Then there is the girls, but I can't say much about that here, as I better save it for mrwoohoo knows the girl post.... But is is amazing...

Back to my Spanish lessons..

Take care all.

If we're into "comparing the world" -- Argentina is another place that's worth a big mention.

I went down last year -- infrastructure is 20 years ahead of Panama (roads and services), and cost of living is HALF of Panama. Apartments are literally 75% cheaper than here. People are friendlier, no "quega vivo" B.S.,

Honestly, if I was starting over for a place to stay -- Argentina would be top of my list.

Biggest downside if you are single is that "being white" is NOT a "big thing" like it is here since almost everyone's white. LOL

Now that have a serious girlfriend and a boat load of possessions in Panama, it doesn't make sense for me to move. This is my home. However, if things get too side-ways here: Argentina here I come.

Matt

Matt

I started reading about Argentina after your post, and it to looks like a good place....

Gonna do some research sometimes on rent and climate sometime..

Thank for your post and info on Argentina....

Just to answer a couple of private messages about the girls (for everyone).

Yes, they are MORE beautiful face wise than Panamanians. The only downside is they don't have quite the crazy curves the girls here have (few places do).

As far as picking them up, I was there on business and did not try. However, we did go to a few bars and I didn't feel the "power" I do here just making eye contact. In Panama, if you look into a girls eyes for 5 seconds -- it's GAME ON.

There, you would actually have to "talk to them" or something. lol...

Hope this helps a tad,
Matheo

"In Panama, if you look into a girls eyes for 5 seconds -- it's GAME ON.

There, you would actually have to "talk to them" or something. lol..."

hehehehehe.... Now that was funny...

I guess I better add Argentina to my to do list now to, I been to so many countries, but I got so many more I want to see and things to do...

Someday's, I wish I could just teleport or something...

Thank for your info Matt, I appreciate it...

Darryl

Kavi, what is the purpose of your post?
You've copied and pasted my text from earlier in the thread, and supplied two broken links (that don't appear to have anything to do with Panama).
I don't get it...

Exilio: it's called SPAM and it's not the crap you eat.

Hopefully the moderators will clean up the boards and ban these bums.

Of course no one has the answer to this question however it seems clear that Panama real estate is due for a correction.

I'm thinking about making an offer right now for a unit in El Cangejo for $175,000.00 that I rented in 2004 for $650.00 per month that the owner begged me to buy for $75,000.00. Too bad I didn't have the money back then because now I'll be lucky if they accept my offer since the unit now rents for $2,000.00 per month.

So here are my choices, I can rent the unit for a year at $2,000.00 per month and wait for the price to drop, or I can buy the place now for maybe $175,000.00 and watch the value drop.

If we knew for sure that the price would drop 50% in a year then clearly eating $24,000.00 for a year's rent would appear to be the wise option, but we don't know that to be true and we also don't know where interest rates will be in a year.

Since it doesn't seem likely that interest rates will be dropping anytine soon we may find that higher interest rates in a year offset the lower prices so why add insult to injury and eat $24,000.00 in rent.

I've decided to to this. Banco General has indicated that they'll finance a loan for me at up to $1,200.00 per M2 so that's the max I will offer for any place I try to buy even though I'm told the current rate for new construction in El Cangrejo is over $1,700.00 per M2. I'll wait for an owner to accept this price for a unit in a 10 year old building rather than get screwed again in a new project like Procasa screwed me with Kubik/Pine Hills deal that went bad.

It's possible to find new condos in PC for $1200/m2 -- but maybe not in the area you want. And for 10-year-old construction, it's easily possible. E.g., I looked at one yesterday, in a 3-year-old building, for $981/m2 -- in Bethania. It all depends on what you need (social area, parking, etc.) and where you want to be in PC; certain neighborhoods are double or 4X the price of others.

Banco General has indicated that they'll finance a loan for me at up to $1,200.00 per M2 so that's the max I will offer for any place I try to buy even though I'm told the current rate for new construction in El Cangrejo is over $1,700.00 per M2.

Hi Mikes,

Can you elaborate more on your experience securing a loan with Banco General? How much are you required to put down? What interest rate did you recieve? What documents are required in order for them to determine if you are qualified to receive a loan? How long does the application process take?

I'm currently renting here in Panama but I have a job and would like to buy a place in about a year.

Roger,

I hope this helps.

My situation is somewhat unique because of several factors. I have duel citizenship from Panama and the United States and I am also self employed. I currently live in the US and all of my income is derived from the US. I have good credit in the US but no credit in Panama. In order to get qualified for a loan I was required to fill out Banco General's standard loan application along with copy of my US credit report and three year's worth of US tax returns. I know that Banco General verified my credit report and that the tax returns I submitted to them were the same as what I filed with the IRS. I'm required to make a 20% down payment on anything up to $1,200.00 per M2. Anything above $1,200 per M2 would require I add the entire difference to my down payment. I don't recall off hand the exact interest rate, but I want to say it's about 5.5% or 6%. I also plan on getting a 10 year or max 15 year mortgage so the interest is a little higher than if I was going to do a 30 year mortgage.

If you're living and working in Panama you may be able to qualify for a better deal with a smaller down payment etc. depending on whether or not you're paying taxes in Panama and have established credit there.

Great info., Mikes! Thanks for sharing. Yes, I have a job here in panama but only have credit in the States. I'll definitely be paying a visit to Banco General in the near future!

Glad I can help. When you're ready, give this lady a call. She is who helped me.

Yahely Vásquez | Asistente de Negocios | Hipotecas
Teléfono: 209-2520 | e-mail: yvasquez@bgeneral.com | www.bgeneral.com

Let us know what you find out, Roger -- because someone down here told me that Banco General is no longer doing loans to foreigners. (Mikes has a Panamanian passport and cedula, so he is not a foreigner in their eyes.)
▼
▲

I hope the prices come down. The only other real downside I can see to Buenos Aries is the flight time... Panama isn't really too bad all things considered flight wise...

You are not kidding that Panamanians will be retiring in the US. It's so bad that I might look at Puerto Rico as an investment place, since condo prices here are so expensive. Let's hope that they come down!

Real Estate is not much cheaper in Buenos Aires. I lived there, and rents where high as well. Panama, rents are high, but you can find them for cheap if you know how to look.

Argentina is cool, but like Matt said, picking up is much much much harder.

Argentina apartments are expensive to RENT -- however they are AMAZINGLY CHEAP to BUY. At least they were when I went 8 months ago. You could buy a beautiful 3 bedroom in a nice area for $80,000. I was shocked. So, it's a great place to rent and buy. And it's a bad place to just show up and rent.

So I just got back from the Auzero and I find every time I go out there I like it better. I did have an interesting conversation with an owner of a nice hotel on the beach. He mentioned that he personally thought that the huge casino development near Pedasi may wind up being a lot of fluff. The Pedasi area is nice but there really is not much of a town there whatsoever. Unless people are looking to get locked up in there gated community in the middle of nowhere I am not sure what else you would do. Quite literally I believe that the nearest (real) grocery store (not a super mini Chino) is Las Tablas. That makes for a long freaking drive to get stuff. Is there even a restaurant in Pedasi?

I still looking for my next Latin America trip....

And it seems that if you want infrastructure or facilities you must pick Panama city... For lower costs you can live in the country, or a small town, it is more quiet, and has many pluses, but then you must make many sacrifices to, like stores etc....

Seems Panama does not have a happy medium, a city of maybe 200,000 etc... So not many options, it is like one or the other..... Unless I am wrong....

What you think my mrwoohoo?

By the way, how far is Auzero from Panama city?

I also gonna check out Colombia more closely next trip.

Will consider it there as well.


Darryl

Another small article in "Visitors" weekly magazine this week (The Colon issue) about real estate it says that: loans are tighter, demand for big expensive units is down big time and sales are down big time. "But they aren't in the red" was the last line. LOL...

The fact is: IT'S GAME OVER. The problem is: they are in DENIAL. How long will they stay in denial and drop the prices accordingly is now the million dollar question?

I'm guessing: late 2009, early 2010.

Place your bets!
Matt

Not that I know much about Panama, but I imagine the uniqueness of Panama City for people doing business in Panama still will keep some pressure on the market there. So my guess is that the outlying areas will suffer much more than the City proper in terms of falling market value. The question is how much of the City market has been driven by wealthy immigrants, and how much by growth in Panama City as a safe place to do import/export business.

Originally Posted by rikjoh

So my guess is that the outlying areas will suffer much more than the City proper in terms of falling market value.

Actually this depends on what type of real estate you are looking at in the outlying areas. There are homes in Chitre and Las Tablas that are nice, decent, access to highspeed internet and start at $20-$30K (no kidding). Low priced homes sell very well and are appreciating rapidly. It's the $150K plus market that will have issues. You can live EXTREMELY cheap if you so choose. My girlfriend and I are renting in Las Tablas a 3Bdr, 2bath, house with access to high-speed for LITERALLY $200 per month. This is not a crack district, no drive-by shootings, nice house, nice terrace, nice neighborhood, $200/mo. The new grocery store in Las Tablas is very nice as well and is within walking distance.