By Jeff Barton
Panama was an island in the storm in 2017, as political and economic turmoil gripped North America and Europe.
It was a much different story in Panama, where global investments expanded and the economy continued to surge, providing strong drivers for the real estate market. The list of most influential stories in Panama in 2017 reflects a growing market, with several new initiatives launched that will impact the property market for years to come.
In June, Panama formally launched a diplomatic relationship with China, in a move that will have major ramifications for the Panama economy. The government moved quickly to demonstrate the move wasn’t simply symbolic. Pres. Varela visited China and a blizzard of agreements was signed, including a feasibility of a train to David, direct flights from China, free trade zones and new tourism initiatives. The relationship will directly impact every aspect of business in China, including the property market.
Buyers displayed their confidence in Panama’s property market by snatching up pre-construction units in new projects, especially in developments around the Santa Maria golf course in Costa del Este. Pre-construction sales are always a strong leading indicator of a market. By definition, it means developers are bringing new projects to the market, backed by financial institutions that believe in the markets stability, and then, ultimately, buyers who see an opportunity for a solid investment.
The Amador Causeway was a beehive of activity in 2017. The expansion of the main highway was completed, along with improvements to the hike and bike trails. Construction restarted on the convention center and it will likely open in 2018 as the biggest convention center in Panama City. Construction also started on a new cruise ship terminal on Amador, which will make Amador the first point of contact in Panama for thousands of tourists a year.
Panama is proving that its economy is not a one-trick pony tied to the Panama Canal. Several government infrastructure projects and the expansion of mining, trade and financial institutions have the economy humming along. International agencies continues to forecast annual GDP growth of 5-6 percent, providing the property business with a solid foundation.
The expansion of international conglomerates in Panama is old news, in a sense. But the multinational presence continues to grow in Panama City, creating a key driver for sales and rentals. Government data shows that far from abating, more and more companies are taking advantage of Panama’s relocation programs to set up new operations and expand their regional bases in Panama.
After years of missteps and delays, the Panama government recommitted to promoting Panama in international markets. New campaigns focused on Panama’s different attributes, raising awareness of areas that don’t always make it on the tourism radar, including central Panama. The efforts will pay dividends for years to come, raising the profile of the Panama brand around the globe.
New owners have helped spark interest in Pearl Island, which is very close to becoming a global luxury travel destination. Anchored by a Ritz Carlton, the island, reached by ferry from Punta Pacifica, will have the type of exclusivity and ultra-high-end amenities usually found in the Caribbean and places like the Seychelles. As Pearl grows, more and more high-net-worth-individuals will be learning about all of Panama’s attributes.
The government issued a tender to build the fourth bridge over the Panama Canal, sending a clear signal the project is a top priority. The new bridge will provide an important new connection to the west, including a metro line that will make it easier than ever to travel from Panama City to the beach communities.
The surging economy was most evident in the growth of the rental market, especially in the high-end towers along the waterfront, including Punta Pacifica, Avenida Balboa, and Costa del Este. Top apartments were in demand, as more executives relocated to Panama. Not all landlords saw the benefit, but professionally-managed, mid-size units in the top buildings provided top yields for investors. PPR saw a 15 percent increase in successfully completed rentals, tied mostly to expansion of multinationals in Panama
An investment group bought the hotel units in the Trump Ocean Club and the last developer-controlled units were sold, ending the original developer’s ownership role in Panama’s most iconic tower. One immediate beneficiary was homeowners, who received a $2.1 million capital infusion from the sale. The deal came only a few weeks after homeowner fees in the Trump were slashed by almost 13 percent after the owners took control of the homeowners association.
Jeff Barton is managing director of Punta Pacifica Realty, the top sales and property management company in the waterfront skyscraper community of Punta Pacifica.