Panama real estate: an insider’s game?

This post is also available in: Spanish

By Kent Davis of Panama Equity

I’ve seen boom. It began in 2006, when the real estate market was made up of almost entirely foreign buyers from the U.S., Canada, Venezuela, and Spain. At the time, most were buying up pre-construction condos in areas like Punta Pacifica, Balboa Avenue, and Costa del Este. Inventory was readily available and easy to find, and was being widely promoted by developers via trade expos, magazines, and online campaigns.

Today, accessing the market’s true offering is growing increasingly difficult for foreigners trying to search for high-end real estate, as Panamanians enjoying the economic growth in the country have begun to enter what was once a homogenously foreign playing field. With their inside connections, connected attorneys, and local affiliations, like church and synagogue groups, Panamanians are at a noticeable advantage today.

Many of my clients have commented on Panama’s fragmented real estate listing environment which makes things very difficult for an uninformed buyer to find top properties in upscale locations, because these properties rarely make it on the market. Rather, they are being sold through an elite and oftentimes closed network of real estate agents, attorneys, developers, and private connections. I know of a few buildings and indeed entire neighborhoods which are controlled by a small group of families, and the only way to have access to the best properties in these areas is to “know someone who knows someone.”

While foreign buyers still have the same rights and protections under Panamanian law as their local competition, it’s become increasingly important to become aligned with a trusted, informed, and most importantly connected property agent.

With over eight years in the Panama real estate ecosystem, I’ve had to establish a connected team of agents along with some of the most solid third party relationships in the upper-end of the Panamanian real estate market. And to bring our clients that full range of ultra-luxury properties that the Panamanians have been snatching up now for years, we at Panama Equity are now launching an elite “Luxury Property Mailer.”

Furthering the difficulty for foreigners, I’ve seen a number of luxury property sales of unlisted properties which close via private transactions, meaning there is no transparent system in place to identify a true market value. High-end listings that do make it to the open market usually have very few pictures because the sellers may not necessarily want their neighbors to know the property is for sale, putting the overseas buyer attempting to research online at an even bigger disadvantage.

Local buyers, local trends

Rafael Mas, Commercial Director with Grupo Corcione in a brokers-only sales meeting revealed that over 70% of their 3500 – 4000 square foot units in the ultra-luxury Valery Point development (located in the new Santa Maria Golf Course Community) have already been sold. More than 90% of the buyers have been local, with price points averaging over $900,000 per unit according to Mas.

And in fact, foreigners are still finding their way into the elite end of the Panamanian real estate market, as evidenced by another developer’s comments, who preferred to stay off the record:

 

“Europeans have been interested in our product” which happens to be two-per-floor 500-meter oceanfront condos ranging in the $1-2 million dollar mark. “But this year, it’s been Panamanians who have bought the most. We don’t do much marketing and generally tend to fly below the radar, so they are really finding us. This year, it’s been Panamanians, Italians, French, and Colombian buyers in that order.” According to exclusive figures obtained from the director of CompreAlquile.com, a popular online listing portal, it appears at first glance that there is no lack of published inventory:

In Punta Pacifica alone, there are currently 54 condos for sale listed at over $1,000,000. However because of the nature of the market (one in which sellers who choose to list their properties may use multiple listing agents), many of these listings are either duplicate listings, sold properties, or bait-and-switch units used to bring in captive buyers.

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