Developers in Panama City have started offering pre-construction real estate sales on projects again, sending a clear signal that the property market in the Panama capital is entering a new growth phase. This is the first time in four years developers have tested the so-called off-plan sales market, suggesting that a new level of confidence has returned to the market.
Construction has already started on two different projects, the Residences, a cluster of three eight-story buildings on the Punta Pacifica waterfront, and Sea Point Paitilla, a group of three towers ranging from 37 to 47 stories tall in Paitilla, Punta Pacifica’s neighbor community. Both projects are targeting the luxury market, with prices starting at more than $1 million in Sea Point Paitilla.
Now that projects started before the crisis have completed, the industry is starting to see a shortage in the supply of high-end apartments in Punta Pacifica, particularly larger, 3 and 4 bedroom units. Prices for well-positioned, high-floor apartments in Punta Pacifica have increased 10 percent in the last year, as the supply of quality apartments dwindles, according to Punta Pacifica Realty research.
Part of the price increase can be attributed to a growth in international interest, which has steadily grown since the low of the market in 2012. Many of the international buyers are investors, looking to rent apartments to Panama City’s growing population of multi-national executives.
For veterans of the property industry, pre-construction sales are a leading indicator of the health of a second home and investment market. Off-plan sales disappeared from most international markets when the global market collapsed in 2008. In markets like Spain, Costa Rica and Mexico, the development industry remains stalled, after buyers were burned by projects that were never completed.
In Panama City, many developments were delayed, but most developers completed their projects, which led to a surge in supply. But buyers have snatched up the best apartments, with little new construction in the pipeline.
The backers of the current projects pre-selling are veterans of the Panama City market. The Residences is from Habitats, which marketed Yoo Panama, Q Tower, Bahia del Golf and Pearl at the Sea to Panama; Sea Point Paitilla is being developed by Pacific Developers, which delivered the successful Grand Tower, and the Pacific Point Complex. Other projects at various stages of planning and development by Pacific Developers include King’s Park and The Towers @ Calle 50.
Both projects are offering large floor plans and the type of high-end amenities expected in Punta Pacifica, which is anchored by the Trump Ocean Club. In the Residences, each unit will occupy an entire floor; floor plans in Sea Point start at 385 square meters.
Pre-construction prices in Panama City typically run about 10 to 15 percent lower than prices during the final construction phase. Developers tend to incrementally raise prices by about 5 percent as sales increase and construction enters its final phases. Both the Punta Pacifica projects are scheduled to complete within two years, which means the choice units may not last very long, given the shrinking supply in the market.
Jeff Barton is managing director 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.