Year in Review: Panama Real Estate Roars Back
The COVID pandemic continued to plague the global economy in early 2021, providing challenges and opportunities in Panama real estate. As markets began to reopen, sales and rents in Panama increased as buyers saw the country’s established market as a safe haven in turbulent times.
As the year draws to a close, let’s take a step back and highlight the big news of 2021.
The American Alternative.
With home prices rising in the U.S., investors were looking for property investments that could provide real growth in the coming years. Panama was once again seen as a great alternative, providing stability, a dollar economy and high-quality properties below their market value and replacement cost.
The Rise of Crypt.
Cryptocurrencies have begun to play a role in sales as more owners have expressed a willingness to accept bitcoin and other forms of crypto. It is no longer a theoretical concept, it is clear that crypto will play a more important role in the future. The government is also investigating legislation that would make cryptocurrency an accepted currency and create a regulatory framework for transactions.
Ocean Reef thrives.
This was the year when the man-made islands in the Gulf of Panama took their place among the most successful in the world. Sales were on fire, with Beach Club Residences, Seascape, Almar, Waterfront 21, and Casa del Mar joining the list of sold-out developments. Construction has also advanced on the key infrastructure, with Panama City’s marina and the largest water sports club opening for business.
Rental Bounce.
Vacancy rates jumped and rates slipped at the height of the pandemic. That all changed in 2021. PPR’s property management department has seen occupancy rates rise to more than 95% and rental rates have steadily increased. There was a clear flight to quality, as apartments in upper buildings attracted competition. During the year, PPR’s property management department added 75 units under management as more investors turned to our trusted professional team to take care of their investment property.
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Declining Stock.
The pandemic has promoted the cancellation or postponement of an unprecedented number of developments. In 2021, there were almost no new projects launched and banks were reluctant to finance new construction loans. As a result, there was an increase in sales and absorption of unsold developer inventory, plus resale apartments that were long on the market ultimately sold. The decline in supply will have a profound impact on the market – and prices – going forward.
Wholesale Sales Soar.
Investors have increasingly focused on already rented condominium portfolios in the buildings with the highest rental demand, such as Ocean Club in Punta Pacifica, Yoo Panama on Avenida Balboa, and the Regent in Costa del Este. Investors usually bought packages of 5 to 15 units of rented apartments in these popular buildings, generating cash flow from day one. These wholesale buyers focused on buildings with unique amenities and high demand from multinational executives.
Main Developments Near End.
Construction has continued on some of the most widely anticipated developments in Panama City. The list includes the Wanders & Yoo downtown, the La Maison de Fendi Casa in Santa Maria, and the Beach Club Residences on Ocean Reef. In many cases, buyers who have purchased units at pre-construction prices are about to realize significant increases when the buildings are finished and relocations begin.
New Visa Rules.
Panama has established a new “Golden Visa” rule providing a way to housing for property buyers, a huge advantage in the international market. The visa was a big step forward and was one of the most discussed topics among PPR clients. The government has also implemented a new “digital nomadic” visa making it easier for remote workers to set up operations in Panama. Both policies have strengthened Panama’s image as one of the most welcoming countries in the world for international real estate buyers.
All these trends of 2021 should cross into the new year. If anything, they are likely to grow as the pandemic continues to fade and markets return to normal. With all these factors in place – and the economy expected to grow significantly – next year is set to be one of the best in the history of the Panama market.
Watch this space for more information on that. Stay tuned to Feeta Blog for the latest updates about Pakistan Real estate.
Year in Review: Panama Real Estate Roars Back
Panama Market Report: Prices Jump in Q2
When Panama reopens, property buyers seize major properties around Panama City. In the second quarter, Punta Pacifica Realty continued to see unprecedented sales and rental activities, particularly in luxury real estate offering comfortable styles.
According to our latest data, sales prices in the second quarter grew 5 to 7 percent in top buildings from the last quarter of 2020. It becomes harder to find motivated sellers and buyers begin to compete for major real estate. With the low prices of quarantine in the past, FOMO – fear of missing out – is becoming a reality, with lower-quality resale homes on the market and many of the city’s major developments selling out their best prefabricated units.
In the second quarter, we saw many of the same trends we identified in the first quarter continue as more countries around the world relaxed restrictions. We posted record sales in the first quarter and we surpassed those numbers in the second quarter. Although rental prices are still declining from their pre-coveted numbers, occupancy has grown significantly across the PPR portfolio of more than 300 properties, with occupancy levels steadily above 90 percent.
Again, we see the huge performance in the high-level developments, especially the few developments that offer an aquatic lifestyle. Sales on Ocean Reef, the man-made islands in the Gulf of Panama, are on fire. The first phase of Seascape, the charity community on the second island of Ocean Reef, is now completely exhausted. The second phase Seascape was recently released by advertising “family and friends” and nearly 70% sold, even before the official launch, with 11 sales in recent weeks.
Construction began on Seascape, which usually signals the next phase in prebuilding prices. But with such a limited supply available, we doubt that the remaining units will last very long.
Across Panama City, we have seen a focus on high-quality units with superior amenities. With many buyers worried about the changes in the global economy, this is a classic “flight to quality.” While many buildings in Panama City see little or no sales, the main buildings are very busy.
Marquises are still in high demand. During the second, two marquees in Seascape sold, for $ 1.9 million and $ 1.2 million, respectively. The last apartments on Waterfront 21 sold for close to $ 2 million. In Almar, the last units were also sold for $ 2 million and construction has begun, another sign that Panamanian real estate is in the middle of a healthy cycle.
Investors continue to focus on resort accommodations with the highest quality amenities. In the second quarter, PPR signed 14 sales contracts in the Yoo Panama at Balboa Avenue and 11 contracts in The Ocean Club, the waterfront tower that remains the icon of Panama City.
Wanders and Yoo, the much-discussed designer-centered downtown tower, continue to attract investor attention. The tower touches on many of the recent trends, including a holiday lifestyle, main amenities and main location. PPR’s sales team put together six new sales contracts for the Wanders and Yoo in the second quarter.
Similarly interested in Santa Maria, the gateway golf course community minutes from downtown. The House of Fendi House – another international designer name – and the Reserve were particularly popular, largely due to a drastic increase in buyers from Peru looking for a home with more political stability.
In the second half of the year, we expect continued investment flow from Peru and other regions experiencing political turmoil in South America as travel borders begin to relax. We also expect increased activity from Canada, which saw nearly zero trips during the pandemic. As active as it was through the first half of the year, we expect to see growth in interest as more markets open up to travel; we are still a long way from “normal”.
As we return to a fully open status, we will continue to follow many of the trends that propelled the Panamanian market ahead of the pandemic. Economists predict solid growth in Panama over the next two years, led by commercial, mining and infrastructure projects that have always made Panama a solid investment.
In addition, the international community is just beginning to absorb the recent changes to the housing programs in Panama, including a new form of “Golden Visa” launched last November. The new Visa Investor of Panama provides an easy way to housing to invest even just $ 300,000 in real estate.
Meanwhile, if you want to read more such exciting lifestyle guides and informative property updates, stay tuned to Feeta Blog — Pakistan’s best real estate blog.
Panama Market Report: Prices Jump in Q2
- Published in International, panama, panama real estate, Real Estate Investments