The Panama real estate market posted strong sales and rentals in the first half of 2022, as supply tightened and demand increased for units in top projects. Even as markets slowed around the world, we saw continued growth in the luxury market and key properties as investors and Plan B buyers searched for new opportunities outside their home areas.
As we enter the second half of 2022, there is a mix of optimism and caution, with a global recession a possibility. We’re finding that some elements of the bad news have been good for Panama. In recent months, Panama has benefitted from foreign investment from South American countries such as Peru, Chile, and, most recently, Colombia, which is experiencing major political shifts resulting in an exodus of capital.
Panama’s welcoming visa structure is also having an impact. Panama was recently featured as one of the top residency application locations in the world in 2021, surpassing Australia and Spain, according to a recent analysis by Investment Migration Insider. The number of applications for Panama’s two-year-old Red Carpet Visa is increasing daily, as buyers move to take advantage of the minimum $300,000 investment before it is raised to $500,000 later this year.
In many areas of Panama City’s real estate market, we’re seeing positive trends, based on strong fundamentals. Here are a few of the highlights from the first half.
Luxury Sector Sales Rising
The luxury sector is tightening with sales continuing to rise and sellers growing less flexible. We’re seeing fewer discounts or distressed sales. While performance varies from building to building, there have been notable year-over-year increases noticeable increases
- In The Ocean Club, there have been significant price increases in high-floor units, as inventory grows scarce. Prices are up 5% to 7% for coveted 1- and 2-bedroom units with unobstructed views. PPR has tracked about 30 transactions in The Ocean Club in the first half of 2022 with average prices for 1- and 2-bedroom apartments ranging from $330,000 to $550,000.
- In developer sales, Ocean Reef is still dominating the luxury market. Almost all the new projects on the islands sold out prior to construction, including the select developments in the Ocean Reef Signature Resort Collection, which is considered the most successful group of luxury developments in Panama history. Recent projects Skyhomes and Casa Del Mar were 100% sold out prior to the start of construction.
- Interest in Ocean Reef continues to rise with the recent launch of Palms Beach Resort, the largest and last project in the Ocean Reef Signature Resort Collection, featuring 120 meters of private waterfront and a park-like setting. More than 75% of the first phase sold in 60 days during the first half.
At PPR, we saw strong activity in several bellwether properties in the first half of the year.
- The hotly anticipated Wanders and Yoo, as well as the existing Yoo tower on Ave Balbo, saw a significant uptick in sales to investors, who are banking on the strong rental yields. Wanders and Yoo, with its resort style and designer look, is expected to generate excellent ROI when the first tower is delivered in early 2023.
- The Regent in Costa del Este, which offers one of the best packages of amenities in Panama City, has become the rental and sales darling for 2022. Sales have been on fire; PPR has been involved in or aware of over 75 sales in the project so far this year. PPR’s portfolio of 45 rental apartments in the gated resort is currently running at 99% occupied. Most of the apartments are filled with multinational tenants seeking great amenities within walking distance of their offices.
- We have seen an uptick in sales to end users from the U.S., Colombia, Peru, and Chile at the almost-completed Pacific Point Tower 400. It will soon become the newest building in Punta Pacifica. PPR has been involved in several sales of three and four-bedroom apartments, including a breathtaking 7,000-square-foot, two-story penthouse, which sold for more than $2 million.
- The luxury golf course community of Santa Maria is another area seeing a resurgence of demand across the spectrum, from large free-standing homes and luxury highrise options like La Maison by Fendi Casa to smaller ones such as the boutique development of Ocean House, which offers a wide array of amenities at prices in the $300,000 to $400,000 range.
The Rental Market is Tightening
PPR’s Property Management team is busy these days. Rental activity has been steadily rising for the past year, with occupancy levels hitting record marks in many buildings and rental rates on the rise.
- There has been a significant increase in rental prices in The Ocean Club, with record occupancy in the building. PPR is averaging more than 90% occupancy for our Ocean Club portfolio. It’s a similar story in Yoo Panama, where it is getting increasingly difficult to find top-level units, with vacancy rates at the lowest level in years.
- PPR’s executive 45-day rental program is proving popular, especially with prospective buyers who want to spend 45 to 90 days researching the market before pulling the trigger. The program offers all-inclusive stays in furnished 1- and 2-bedroom apartments in the Yoo.
Looking forward, the trends of the first half seem poised to continue. While uncertainty exists in economies around the world, Panama continues to grow, based on a strong foundation of major projects and the logistics industry. Panama’s real estate market is a major beneficiary.
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