The world recession has undoubtedly affected everyone, Panama is no exception, however, the full impact of the recession has not been strongly felt in Panama so far. During the Christmas shopping season, the shopping centers of Panama City are filled with thousands and thousands of people shopping; the economy felt vibrant, the good times keep rolling. A layer beneath what appears to be a booming economy still in full swing of the good times, a breeze can be felt from the oncoming storm as businesses begin to prepare for what could be one of the biggest years yet. difficult in the last decade. The highs and booms in the last 6 years have been steep and steady, so now the pendulum will swing down with this upward momentum:
Panama’s real estate market is bracing for the shock of the first wave of hundreds of new city condominium units coming onto the market. Occupancy permits will be issued and buyers, mostly speculators who bought two years ago with as little as a 10% down payment, are now responsible for covering the full impact of the rest of their debt on these units. The economic outlook for most of these buyers has changed; they face a different economic reality than they expected 2 years ago. Now, they don’t have many options and time is running out, their options are to resell those units quickly at cost with little or no capital gain, or lose the units back to the developer for not honoring the promise to purchase agreement. .
thesis”Distressed Sellers“- and this scenario is likely to be abundant in 2009. This scenario will affect the economics of supply and demand, primarily the city’s condo market will change from what has heretofore been a seller’s market with prices rising steadily by a period of months to by up to 100% without rhythm or reason to a BUYERS MARKET. This will create a price adjustment that will bring another wave of buyers looking for bargains in Panama City. This price adjustment will also allow younger local buyers to afford City condominium prices that until now have been out of reach and exclusively for foreign investors. This potential surplus in condominium units may create a shift towards lower pricing strategies and many developers may have to reconsider their pricing strategies to compete, which may lead to the cancellation of several residential developments in the city.
This negative spin offset by several phenomena.
- New buyers enter the market driven by political instability in countries like Venezuela and Ecuador, seeking refuge and a plan B in Panama.
- Companies that come to Panama to establish their global operations.
- A new wave of newly discovered investors arriving in Panama looking to invest in this warm tropical paradise.
Panama stands out as one of the most globalized countries in Latin America and a leader in attracting foreign investment and several key projects guaranteed to advance in 2009. The expansion of the Panama Canal, the residential and commercial development zone of the Howard- London and the The expansion of the coastal beltway, along with sustained growth in tourism, business travel, telecommunications and other key sectors and commercial activities will serve to absorb some of the economic shock, allowing Panama will deliver solid economic growth of 3% to 4% in 2009.
I am confident that in 2009 Panama blessed with its privileged location, two oceans (Pacific and Atlantic), beautiful nature and landscapes, and the ideal globalized city for international business will offset the slowdown in some sectors, construction, real estate, transportation, and offset with little sustained growth in others to generate balanced growth in 2009. Panama continues to be a very HOT place to invest in 2009. Now more than ever, with prices going down, market conditions are favorable for finding Great DEALS and GREAT BUYS on beachfront real estate. Check PANAMA property listings at ThinkPanama.com, search properties by lifestyle: city condo, beaches, land, or contact me at [email protected]