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Ten Trends to Watch in the Panama City Property Market

After an upswing in sales activity last year, 2017 is shaping up as another pivotal year for Panama City’s real estate market. Sales and rental growth should continue through the year, even against the backdrop of economic uncertainty around the globe and the volatile political situation in the United States.  

As property investors investigate the opportunities in Panama City, there are several key trends to watch. These trends will serve as indicators of the state of the market.  

New International Buyers: There has been a steady increase in international interest in Panama City in recent years. While North American, Colombian and Venezuelan buyers are a standard part of the market, the trend to watch will be the growing influx of buyers from markets in Europe, China and the Middle East. Panama City is still a relatively new market to investors in many countries.

Focus on Trump Resales: Now that the last of the developer-controlled units have sold in the Trump Ocean Club, the focus will shift to resales in Panama City’s most iconic building. Prices have already started  to rise, especially for the one- and two-bedroom units preferred by investors. This jump in prices is fueled by a natural shift as the remaining motivated Trump sellers are replaced with new investors.

Rental Rates for Prime Property: Investors will be closely watching rental rates in Panama City’s most popular buildings. After seeing rental rates basically flat in 2016 and go down in Class B areas of the city any increase in rates will increase potential yields, making Panama City property an attractive and relatively stable investment. Rates in Trump Ocean Club, where a 2-bedroom averages about $3,000 a month, should provide a barometer to measure other available units. Demand will increase for prime units.

Older Building Deterioration: Buildings constructed from 2005 to 2010 in the boom years were often built by first time developers who were not interested in quality construction. Those buildings are now facing water leaks, tiles cracking and structural issues. A premium is going to be placed on buildings constructed by quality developers.

More Projects Will Launch: After years with very little new construction, the cycle is about to turn. Developers are gauging demand for the long term and seeing an opportunity. Based on current absorption rates, the supply of quality luxury apartments is shrinking. If developers are able to obtain financing, it will be a clear indicator of the future strength of the market.

Preconstruction Competition: As more developers re-enter the market with new projects, pre-construction pricing will increase competition–and uncertainty. Many of those projects may not be properly funded and may never be built, increasing risk to buyers interested in the projects. A sharp contrast will develop between the projects advertised on paper and buildings that have already been built.

The Growth of Panama’s Middle Class: The media tends to focus on international buyers in Panama City, but it’s the growing wealth in Panama that is steadily fueling the market. More and more Panamanians have the economic resources to buy in Panama City, creating a solid foundation for the future market. Data on median income and savings will provide an indicator of the continued growth of the pool of available buyers within the country.

All Eyes on Amador: The government’s $300 million investment into the Amador Causeway is going to start paying off this year. The road expansion will be completed in March and work is moving forward on a new modern and dynamic convention center, as well as an expansion of the Frank Gehry-designed Biomuseum, including a new aquarium, and a highly-anticipated new home cruise port.

Continued Economic Growth: Panama’s economic growth might fall short of the double-digit levels of a few years ago, but GDP expansion is expected to continue at a healthy rate. If the economy grows at 5 to 6 percent a year–well above international averages–it will provide a solid foundation for the parallel growth of the real estate market. 

Learn what every Panama real estate investor needs to know: