In real estate there is a very real phenomenon known as “The Ladder Effect.” Essentially it means that a surge in value in one property leads to prices in nearby properties also climbing the proverbial ladder.
We’ve already seen the Ladder Effect in action here in Punta Pacifica. When the Trump Ocean Club started selling condominiums in 2006, it changed the dynamic of the whole market. Thanks to the stellar brand and state-of-the-art design, Trump was selling apartments at $3,200 a square meter – almost double the asking price for existing projects in Panama City. In hindsight, the prices paid might have been a case of irrational exuberance, but there’s no denying the impact on the market.
Thanks to the Ladder Effect, buildings in Punta Pacifica were able to raise their prices, in some cases as much as $500 a square meter. Nothing had changed in their buildings – they were benefitting from a fancy new neighbor, which raised all boats in the market.
When property investors analyze a market, it’s important to examine the potential for the Ladder Effect. Is there a catalyst on the horizon that will raise values? Is there a project that can be a game changer?
Looking at Punta Pacifica, the answer is a definite, yes. That Ladder Effect candidate is Ocean Reef, the two man-made islands taking shaping off the coast of Punta Pacifica. Both islands are offering luxury residential property at significantly higher price points than the current prices levels in Punta Pacifica. Ocean Reef is also building an extensive marina complex, which will attract a different level of buyers and investors to Punta Pacifica. The yachting crowd will be fine addition to the local market.
While it’s hard to make any long-term prediction, Ocean Reef is not a speculative project. Development is progressing on the first island and work is reportedly set to begin soon on the second island. Ocean Reef is becoming part of the Punta Pacifica – both in a stunning visual sense and in terms of the property market.
Ocean Reef is a very special type of luxury property, the type of development that invokes the Ladder Effect. By setting new price points and luxury standards, and adding an important new marketing effort, Ocean Reef has the potential to lift all the projects in the area and redefine Punta Pacifica as the premier luxury neighborhood in Panama City.
Stay tuned for more updates on the exciting Ocean Reef project.
Duncan McGowan is president of Punta Pacifica Realty, a Panama real estate agency focused on Punta Pacifica, the exclusive neighborhood of 18 towers perched on the edge of the Pacific Ocean.