Panama Real Estate: Buying an Apartment in Casco Viejo
(http://panamacascoviejo.wordpress.com/) Buying a restored apartment is one of the best investments you can make in Casco Viejo. It is an almost risk free enterprise where your costs are known and very little variation occurs. Also, you can get it rented almost immediately and your big gain is in the appreciation, so you can legally “sit on it” forever. Plus, you can even finance it with a local bank. Someone else carries the risk of building, financing, time, constructions, historical approvals… you just get the key, a title and all you have to do is to go to UNION Fenosa and connect the electricity. Well, perhaps to Idaan to get the water under your name and to Cable and Wireless to connect phone and internet (although other providers are already in town). As complicated as this sounds, it is not even a third of the complications, the risks, the costs and the grey hair you get when restoring a building on your own.
However, there are a few things you should keep in mind, which tend to be different in Panama than in the States and in some parts of Europe. Please read below and take note…
1. Finishes
Traditionally in Panama it is common for apartments to be sold with minimal finishings. As the market has become more international, developers have started to raise finishing levels. Still, in many cases, appliances, light fixtures, air conditioners and other basic items are not included in the price of new apartments. Accordingly, if you are buying in pre sale it is a good idea to get a detailed finish list from the developer. In addition to making sure the basic items are listed, get assurances regarding the quality levels, particularly with respect to windows (double pane helps to cut street noise) and kitchen.
2. Measurements.
The condominium law in Panama provides a very specific method for measuring the area of an apartment, which is quite different from the US and Europe. In essence, Article 74 of the condominium law requires area to be calculated from the middle of the apartment’s perimeter walls in, with interior and exterior space treated equally. There are no reductions made for bathrooms, closets, balconies, etc. This measurement is used in the public deed and in calculating the price. Because the measurement is taken from the middle of the perimeter walls ust about the only way that one can measure an apartment in Panama legally is from the blue prints, with confirmatory measurements in situ.
3. Construction Price Increases.
It is standard in Panama for pre-construction sales contracts to include a provision allowing the developer to raise the sale price by up to 10% if construction cost increase beyond projections. The purpose of this clause is to protect the developer from inflammation, not to allow it to pass mistakes off to the buyers or increase its profit margins. In fact, most reputable developers would rather eat a little inflation in their margins rather than gain a reputation for invoking this clause. While you may not be able to negotiate this clause out of the purchase contract, it is worth investigating the developer’s history to learn whether and under what circumstances it has invoked the clause in the past.
