Thread: Buying a condo made simple

Here is one of my latest articles, tell me what you think:

Buying Condos in Panama City Made Simple | Eye on Panama

Transparency in Panama’s real estate market does not exist. Panama does not have an MLS Listing Service that allows buyers and sellers to evaluate real-time market prices. Nor does it have a newspaper that publishes monthly real estate statistics with a great level of accuracy. There is almost nothing except word of month and a recommendation from your real estate agent to rely upon. This lack of transparency is similar to the situation in the vast majority of developing world countries, especially Latin America; yet it is still frustrating. So, the purpose of this article is to make buying condos in Panama City easy. With the formula you are about to learn, calculating the price of a condo will be easy and allow you to compare different prices around the city with much more confidence.

There is a simple mathematical formula to calculate the price of a condo unit to determine if you are getting ripped off or not. You must find out the square meter price of the unit. Here is how to calculate the square meter price:

Purchase Price / Square Meters = Price Per Square Meter
I.E. $200,000 / 100 square meters = $2000 per square meter



For Americas who prefer square feet, here is the formula to convert square feet into square meters:

Square Feet / 10.8
I.E. 1500 square feet / 10.8 = 139 square meters

Once you know how to calculate the square meter price, it’s time to apply this information effectively. The following list of square meter prices is a fairly accurate approximation of what Panama’s current condo market is. My evaluation comes from working as both a real estate agent and within real estate development in Panama, combined with the opinions of other real estate agents and observers in Panama. Here’s our collective estimation of the appraisal value for the condo market in Panama City.

Direct ocean view, new construction buildings in Punta Pacifica, Punta Patilla, Costal Del Este, Avienda Balboa

Per Square Meter Pricing
Worst Price: $3000-above
Bad Price: $2100-$2700
Good price: $1800-$2100
Great Price: $1400-$1700
Best Price: $1300-below

Any building that was constructed more than 15 years ago in the aforementioned areas should not sell for more than $1100 per square meter.

New construction in El Cangrejo, Obarrio, San Francisco or other areas that are not directly in front of the ocean:

Per Square Meter Pricing:
Worst Price: $2200-above
Bad Price: $1700-$2100
Good Price: $1400-$1600
Great Price: $1150-1300
Best Price: $1100-below

Once again, older buildings should not go for over $900-$1000 per square meter.

Some people say that prices in Panama’s unique colonial district in Casco Viejo are not falling and have stabilized at $2500. However, nothing is selling out there and the market price should be closer to $1500-$2000. This is due to multiple factors, but first among them are the massive amount of luxury units currently on the market, in conjunction with Casco’s lack of security and basic amenities.

Buyers would also have to take into consideration the condo’s appliances, upgrades, furniture, etc. These will add additional charges to the condo, but should not be too significant.

The market synopsis takes into consideration the financial crisis and massive amount of inventory coming into the market in Panama City. You would be hard pressed to find properties in the good-best prices in the real estate market currently, but they are out there, you just need to know where to look.

The only thing (I think) you left out: The rental market in PC is very strong, because the international work force has not changed, and, second, lots of ex-pats who were hoping to buy don't have the cash until their home back in US/Canada/Sweden/wherever sells.

This means (imho), that rentability is a big value right now. E.g., if you've got something that follows the "sales-rent ratio" rule, it's a good deal. I.e., if you divide the purchase price by the monthly rent you could get, what's the number? The magic ratio, most agree, is around 150, and the lower the better.

There's still good demand for 2-3 bedroom apartments that rent for $1,000-1,200 per month, and there's very high demand for 2-3 bedroom apartments that rent for less -- like around $700-900.

So, for example, I know of a 2-bedroom, 2-bath apartment in a great building (with social area), just off Via Argentina, that's for sale for $120K. I know other apartments in that building are renting for $1,000 to $1,200. So, if you bought that place and rented it for $900/month, you'd have immediate takers. Your ratio would be 133, and you'd be earning 9% on your money.

(No, I am not an agent, and I am not trying to sell the apartment cited above; I just gave that for the sake of example. But I am selling my own apartment, and its ratios work out pretty good, too. <g> )▼
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Exlio, can you send me more information about this apartment?

Originally Posted by exilio

The only thing (I think) you left out: The rental market in PC is very strong, because the international work force has not changed, and, second, lots of ex-pats who were hoping to buy don't have the cash until their home back in US/Canada/Sweden/wherever sells.

This means (imho), that rentability is a big value right now. E.g., if you've got something that follows the "sales-rent ratio" rule, it's a good deal. I.e., if you divide the purchase price by the monthly rent you could get, what's the number? The magic ratio, most agree, is around 150, and the lower the better.

There's still good demand for 2-3 bedroom apartments that rent for $1,000-1,200 per month, and there's very high demand for 2-3 bedroom apartments that rent for less -- like around $700-900.

So, for example, I know of a 2-bedroom, 2-bath apartment in a great building (with social area), just off Via Argentina, that's for sale for $120K. I know other apartments in that building are renting for $1,000 to $1,200. So, if you bought that place and rented it for $900/month, you'd have immediate takers. Your ratio would be 133, and you'd be earning 9% on your money.

(No, I am not an agent, and I am not trying to sell the apartment cited above; I just gave that for the sake of example. But I am selling my own apartment, and its ratios work out pretty good, too. <g> )▼
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Which one? Mine, or the one off Via Argentina?
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Forbes, are you in the real estate business at the present time .I'm so impessed with your comments and your expertice and honesty .

I'll be looking real strong in November to look for a condo on the gold coast as I will be finalizing my pensionado .An hour to 2 hours from Panama city would be perfect for me .

Some people are going to disagree if they have an interest to sell property in one resperect or another .

Again, if you are in the real estate business in Panama, please give me your e-mail .

toss me an email at eyeonpanama@gmail.com

exilio do you have the information on that condo. I have someone interested in buying it. Email me ASAP at eyeonpanama@gmail.com

Forbes, you still haven't told me WHICH condo you want info on.

If you mean the one off Via Argentina, I already passed that along to a friend, and I won't share it until he decides yes or no.

If you mean mine, you can read the details here: Obarrio apartment for sale (Panama City)

What is the specs on the Via Argentina?

As I said, I'll send you what I know about that apartment AFTER my friend decides he doesn't want it, or if his offer is rejected. I am not an agent -- just looking out for my friend. In the meantime, that is not the only good deal in town... :-)▼
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What else do you have? Please email me at eyeonpanama@gmail.com

Hey Forbes, this was a great article on price per M2. Can anyone give an update on how the real estate market stands at this point in April, 2010?