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The Panama investment market has cooled off and settled into what would be a normal mode elsewhere while the worldwide recession slowly rights itself. Panama City has been a real estate boomtown for nearly ten years since the US left the Panama Canal to Panama. When will the boom re-ignite?

As many North American buyers are currently staying home (licking their wounds). The high end of Panama real estate market is short on buyers and long on would be sellers. Those who are moving here and are purchasing their condo on the Bay of Panama, for example, do not have a problem. They are walking into property at the price they agreed to pay. If they wanted to sell immediately they would take a loss but since they intend to live here the market will catch up with and surpass their price in a year or so.

The problem lies with speculators who purchased one, two, and three units planning to resell after their building is finished and they have signed their contract. These folks typically put 30% down and expected to earn multiples of that investment with market appreciation. In some case these folks will likely walk away from their 30% down because they bought late in the game and are looking at a more than 30% drop in the high end market since a year or so ago.

For the speculator this is a world of hurt. For the buyer with cash this is the best of all possible worlds. Panama has a strong economy and is growing economically despite the recession elsewhere.

There has been concern about a slow down in shipping affecting the Panama Canal and it monthly donation (of $1 per ton of cargo transiting the canal) to the national treasury. However, most recent figures show only a 3.3% downturn over a year ago.

Thus ACP (Autoridad del Canal de Panama), which runs the Panama Canal is going ahead with its multibillion dollar expansion project. This project will double shipping capacity and will allow substantially larger ships to pass once the new locks, dredging, and widening of the Culebra Cut are all complete in 2014.

In the meantime ACP passes half a billion dollars a year into Panama’s national treasury ($5 Billion in ten years).

Panama retains the unique position of having the highest foreign investment per capita in all of Latin America. Unlike the USA where banks are being bailed out Panama’s two largest banks made nice profits last year.

Near Term Panama Real Estate

There has been and there will be no real estate market crash in Panama. There will be great deals for individuals with cash in the coming months. As usual the best deals will go first. ABPanama expects there to be a number of excellent opportunities throughout the country but especially in Panama City through the end of the year.

The factors that supported the Panama real estate boom are largely intact. Panama has a first world infrastructure, transportation, and communications in a tropical setting. Panama has two seacoasts with property waiting for building. Even with a reshuffling of property prices throughout the world Panama remains an inexpensive place to buy property and an inexpensive place to live.

Contact us at ABPanama if you are interested in an update on Panama’s real estate market.