Panama has been a nation of considerable interest to Northern American retirees for many years; it is a dollar based economy, English is widely spoken, it’s a country that’s easily accessible and the cost of living and real estate have always been so much more affordable than in much of America. But for the first time British and European interest in Panama has been raised and a battle is on among investors and property hunters to bag real estate in Panama.
British and European buyers currently have an advantage over American purchasers because the dollar is in quite a weak position compared to the pound and the euro and so Brits and Europeans can actually get more for their money because property in Panama is priced in US dollars. Even so, real estate is still far more affordable in Panama than it is in much of America and so US buyers are still rolling up in increasing numbers.
But you see, it’s not just the affordability of real estate that’s attracting all this interest in Panama. No, indeed – since the referendum relating to the expansion of the Panama Canal was successfully conducted last year with 78% of the Panamanian people voting in favour of the expansion, Panama has been awash with speculators convinced that when the Canal extension is complete in ten years time and Panama’s toll generated income has doubled, the nation will become an economic success story and anyone seeking a sure fire investment opportunity should buy into real estate today and hold for the medium term when the value of the property assets will have shot up.
So – what are we all waiting for? Let’s get on the next plane to Panama and join the gold rush…or perhaps we should just stop for a moment and look at the viability of this investment plan.
According to local opinion, currently for every one hundred units of real estate owned by an investor in Panama City there is just one potential buyer or one potential tenant for the property. Add to this the fact that some 11,000 units of real estate are due to be completed in the city in the next four years and over 100 high rise condominium developments are in the planning and initial construction stages, and you start to get the feeling that Panama is facing a severe surplus of supply in real estate terms!
When calculating whether an investment into property makes sense an investor has to be sure that someone is going to come along at some point and either buy, rent, lease or let his property – how else will the investor generate an income or realise a capital gain? It doesn’t seem as though there is sufficient property consumer interest in Panama at the moment for investors to make money from their property assets.
In addition to this concern there is the very real fact that the building boom underway in Panama today is built on poor infrastructure foundations. There is too much traffic for the road and too much waste for the drainage system and Panama City is creaking under the weight of construction progress. The government is aware of at least some of the issues it is about to face and it has committed to sorting out the most pressing infrastructure issues. But what about investors considering Panama…can it make a good investment choice considering there is more supply than demand? Well, there is much to be positive about – Panama will benefit substantially in economic terms from the expansion of the Canal and this will translate into the country becoming more affluent and a more desirable place to live, work, invest and retire – so anyone who is prepared to buy well located land or real estate and hold it for the long term could well reap financial dividends if they buy investment real estate in Panama today.
Rhiannon Williamson researches and writes about real estate property investment potential on a nation by nation basis providing property investors with a central website for their profitability investigations and due diligence analysis. To learn more about property in Panama visit her site http://www.amberlamb.com