The global recession has without doubt hit everyone, Panama is not an exception however the full impact of the recession has not been felt hard in Panama as of yet. During the Christmas shopping season, malls in Panama City are swarmed with thousands and thousands of people shopping; the economy felt vibrant, good times are still rolling. A layer below what seems like a booming economy still in full force up swing of the good times a breeze of the coming storm can be felt as businesses begin to prepare for what could be one of the toughest years in the last decade. The highs and booming growths in the last 6 years have been steep and steady so now the pendulum will swing downward with this upward impulse -
The Panama real estate market is preparing for the shock of first wave of hundreds of new City condominiums units that will be coming into the market. Occupancy permits to be issued and the buyers mostly, speculators that purchased two years ago with as little as 10% down are now responsible for meeting the full impact of the remainder 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 do not have many options and the clock is running, their options are either to re-sell those units quickly at cost with little or no capital gains, or losing the units back to the developer for defaulting on the promise to purchase agreement.
These “distressed Sellers" - and this scenario are likely to be abundant in 2009. This scenario will affect the economies of supply and demand mostly the City condo market will shift from what has been up to now a seller's market with prices rising steadily in period of months to by up to 100% without rhyme or reason to a BUYERS MARKET. This will create a price adjustment that will bring another wave of buyers seeking deals in Panama City. This price adjustment will also allow for younger local buyers to be able to afford the price of City condos that up to now had been out of their reach and exclusively for foreign investors. This possible surplus in condo units can create a shift to lowering pricing strategies and many developers may have to re-consider their pricing strategies to compete, this may bring about the cancelling of several residential developments in the city.
This negative spin offset by several phenomenons.
- New buyers coming into the market deriving from political instability in countries like Venezuela and Ecuador, seeking shelter and a plan B in Panama.
- Companies coming into Panama to set up their global operations.
- A new wave of new-found investors coming into Panama seeking 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 be moving forward in 2009. The Panama Canal expansion, the Howard- London Regional residential and commercial development zone, and the cinta costera road expansion, along with sustained growth in tourism, business travel, telecommunications, and other key sectors and commercial activities will serve to absorb some of the economic impact, allowing Panama to deliver a solid 3% to 4% economic growth in 2009.
I am confident that in 2009 Panama blessed with its prime location, two oceans (Pacific and Atlantic oceans), beautiful nature and landscapes, and the globalized city ideal for international business will compensate the slowdown of a few sectors, construction, real estate, transportation, and offset with small-sustained growth in others to deliver balanced growth in 2009. Panama is still a very HOT place to invest in 2009- Now more than ever with prices going down the market conditions are favorable for finding Excellent DEALS & Great BUYS in oceanfront real estate property. Check out PANAMA properties listings at ThinkPanama.com, search properties by lifestyle: city condo, beaches, land, or contact me at dchoy@ThinkPanama.com
Douglas Choy is the owner of ThinkPanama.com a Panama real estate company. Check out PANAMA properties listings at ThinkPanama.com, search properties by lifestyle: city condo, beaches, land, or contact me at dchoy@ThinkPanama.com