What You Need to Know About Panama’s Real Estate Boom

(www.costaricapages.com) Panama’s economy is continuing to grow. Panama’s growing economy can only mean good things for foreign investors, right? The country’s Gross Domestic Product increased by eight and a half to nine percent from 2006 to 2007. Much of this growth can be attributed to some major undertakings in Panama including the $5.2 billion canal expansion, the extension of the North and South Corridors, the extension of the Panama-Colon highway and the expansion of the Atlantic and Pacific ports. This growth was also fueled by increased activity in tourism, transport, retail, telecommunications, banking, mining, construction and real estate.
 

The world’s largest commercial real estate group, CB Richard Ellis, released the Panama City Residential Condominium Market Study for the year 2007. Even with the US real estate market being less than stellar (to say the least), the Panama City real estate market continues to grow. In 2007, the amount of new projects under construction or in the pre-sale phase, nearly doubled compared to 2006. Are there enough buyers out there to fill up these units, or when the units are completed, will there be a glut of empty condos on the market? If there is an over-supply, prices will have to adjust accordingly and some people could be out a lot of money.

In 2007, the Panama City square meter sales price for condos averaged $2,180, up 12% from the end of 2006. Some high end projects are even charging $4,800 per square meter. With nearly 40% of Panamanians living below the poverty line, the real estate boom in Panama City is fueled mainly by foreigners. The vast majority of investors in Panama are coming from the United States, Canada, Spain, Colombia and Venezuela. If the US real estate market continues its nosedive, Panama could see a very significant drop in the impressive real estate sales of the past few years.

The international real estate giant, Coldwell Banker released the 2007 Home Price Comparison Index which appeared in Business Week. It lists a number of cities in Europe, Asia, Latin America and the Middle East as having some of the cheapest houses in the world and compares them to US cities in the same price range. This year Bogota, Colombia made the top of the list as the most affordable international market. Panama City made it to the number 5 spot with the average 4 bedroom, single family home coming in at just over $200,000. That price is comparable to what you would pay for a similar house in Erie, Pennsylvania.