The sunny side of the distressed asset crises in Panama
(primapanama.blogs.com) There are some positive aspects of the economic troubles that will soon be facing Panama and Jesse Levin at Archer Group Investments here in Panama shares his insights.
As wild as the financial “crises” is in the states there are plenty of independent and institutional investors who saw it coming and who have leveraged themselves into positions to capitalize on the current distressed asset buying opportunities. In massive restructuring of markets the two most critical elements are preservation of assets held, and purchasing power (cash).
It is going to be interesting to see how this all plays out in Panama. Are the international investors with wounded portfolios going to try and fire-sale their investments in Panama for a cash injection? On the flip side, is there sufficient capital out there, and strong enough current demand for the potential distressed assets that may be coming online in Panama shortly?
I have received calls from various individuals who, only months ago thought their Costa Del Este and Punta Pacifica apartments were gold, and now are eager to sell as a result of the “uncertainty in the markets.” This situation is not uncommon for the Panamanian condo market as a result of all of the speculators and the impending bubble, however the bottoming out of the US market is going to further exacerbate the need and urgency to liquidate prior to closing for many market participants.
There is no 700 billion dollar bail out plan insight for Panamanian speculators, which may make some opportunistic investors excited. Its happening in the states, and I can see it happening in Panama; distressed asset and turnaround funds are in vogue! Panama is as insulated as it gets against the financial turmoil, but there is no doubt it will be felt in the isthmus. There are going to be investors looking for a hasty exit, which will create tremendous opportunity for those with cash to spend and a medium to long-term investment horizon.
Opportunities will appear across the board from residential to logistics, but the apartment market will be hit first and the hardest. If buying apartments in buildings without a lick of steel is your thing, the questions become when to pounce, and how long will it take to see your returns.
I recently read that 60% of all of Empresa Bern’s clients in Costa del Este were Venezuelan. The Europeans are still buying, and things aren’t getting any better in the US. While there are those who will be more then motivated sellers in this market I also foresee an increasing number of buyers. People fleeing from political instability in the Southern Cone, or from destroyed 401ks in the US need an affordable alternative, and Panama is still convenient.
Conclusion: For those with the fortitude and resilience required to day trade residential and commercial assets, potentially decent spreads could be made buying from the eager US sellers one day and flipping to the relocating Venezuelans the next (a higher then risky proposition, especially in these times)! A more sane approach; if you have liquidity, and you believe in the long-term viability of Panama, keep an eye on the banks foreclosure lists, and an open ear at the normal expatriate watering holes, because there will be some incredible buying opportunities in the near future.
