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Panama
real estate market:
When it comes to understanding the economics of Panama,
you have to first understand the demographics. There
are mainly 2 groups in Panama, the very rich, and the
very poor. While, middle class does exist in Panama,
it is too small of a group to make a difference.
The one thing you are sure to notice in Panama, is the
many fancy cars and the abundance of expensive apartment
buildings.
Interesting enough, the demographics of Panama, create a
very interesting economy, and opportunities as well. Take
for example a rich guy who buys a fancy SUV, or a Lexus for
$70.000. After driving the car for only 2-3 years, our rich
friend will generally trade his car for a new one. However,
because middle class is such a small group, and all other
rich people only buy new cars, used cars in great
conditions are cheap in Panama.
The
same story repeats itself in the real estate market, and
especially when it comes to apartments. Apartments in Panama
are the number one choice for most Panamanians who prefer to
live in the city close to where the action is. Like cars,
rich folks, always move into newer, bigger, better, and
fancier apartments. However, because the upscale resale
market is limited, there are generally very few people who
can afford to buy a $300-600k apartments, or pay $3000-$6000
in rent. Aside from a small number of top paid foreign
executives, few can afford
such high rent apartments. So, depending on where you are, it is often
a lot cheaper to rent an apartment than to buy it. In fact,
I personally paid $1000 a month rent on a huge 3000 SF $400K
house.
Now,
the above is not always the case, and depends on the
building and the area. Some building are hot, and some are
not. Some areas are better than others, and as a rule, the
older the building, the cheapest it is going to be.
Another important aspect of the Panamanian economy is the
fact that historically, apartments have not been a good
investment in Panama. Regardless of what your local real
estate agent is likely to tell you. Know this, historically, luxury apartments have been selling for an
average of $1000 a meter, and currently with the new real
estate boom, Punta Pacifica is going as high as $1700.
However, go and check older buildings, and you will discover
that 7-10 year old apartments go for an average of $750 a
meter, and continue to lose value with age falling to as low as $500
for really old apartments.
Now, I
do not know if the real estate market will change,
considering the influx of new Expats coming into Panama.
The fact however is that currently new buildings are selling well, but
the old buildings are not. In fact, while no one seem to
have reliable statistics, the general consensus is that
Panama city older high rises are about 30% vacant. So, it
appears that the new Expats are generally buying the
new buildings. |