In the News from Panama

Panama Canal to Boost Real Estate Investment Trusts

The expansion of the Panama Canal is providing a tremendous boost to the Panama economy and Panama City real estate, but it is also impacting commercial real estate markets around the region.

A new report from SNL Real Estate, a research group, focuses on how the canal expansion could provide a lift for property investors with positions in real estate investment trusts. The expansion will allow a new generation of supertankers to use the canal, which should increase traffic to many ports in the U.S. and increase demand for industrial and commercial space around those ports.

“With the expected increases in trade volume, industrial-focused REITs with exposure to these ports are likely to benefit from increased cargo flow,” SNL report concludes.

The Wall Street Journal estimates that container traffic in ports that can handle the big ships is expected to increase 5 to 15 percent. Ports in the U.S. with heavy REIT investments that should see an immediate impact when the canal expansion completes in 2016 include Houston, Baltimore and Hampton Roads, Va., SNL reports. (For a list of some of the REITs that may benefit, SNL’s report can be found here.)

So what does this have to do with Panama City real estate? For one, it shows the far-ranging impact the canal expansion will have on real estate investments, not only in Panama but the entire region. The ripple effects from the canal will be far-reaching, in property circles.

In Panama City, multi-national companies are gobbling up industrial space, with mega-developments like Panama Pacifico racing to satisfy demand. Those multi-nationals also mean more buyers and tenants in Panama City, and we are already seeing the impact here in Punta Pacifica, where the growing neighborhood and luxury waterfront apartments are proving very popular with executives from these companies.

To give you an idea of the role multinational players are already playing in Punta Pacifica, here is a list of major international companies we are working with now:

  • Maersk
  • Odebrecht
  • Johnson & Johnson
  • Sony
  • Sony Ericson
  • Samsung
  • Minera Panama
  • Adidas
  • Caterpillar
  • Procter & Gamble
  • Panama Metro
  • Panama Canal
  • US Embassy
  • VF Corp
  • Dell
  • BMW
  • Digicel

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.