Update From Panama—How Has The Pandemic Affected Property Values In My Favorite Market?
Seven months into this pandemic, and we still don’t know what the “new normal” might be. Here in Panama we’ve already seen both positive and unfortunate effects…
Panama was one of the most aggressive countries in the world in its approach to COVID-19. In March, the government shut the doors on businesses, restaurants, schools, hotels, retail, and homes. But this has worked out. Restrictions are now being lifted, and Tocumen International Airport will fully reopen on Oct. 12.
Embracing A New Focus
These restrictions weren’t all bad. The lockdown made us slow down and figure out what’s really important. Before the pandemic, I’d become used to the fast pace many of my North American clients worked at. Today, people are more thoughtful about where they want to invest their money and what will bring them happiness. They’ve had time to study the residential and investment opportunities open in Panama and the rest of the world.
We’re seeing a lot of pent-up desire to come to Panama, so I expect things to get busy over the coming months when the international visitor is welcomed back.
For a long time, foreign buyers have chosen Panama for reasons that include: access to top-of-the-line construction; the familiarity and safety of working in a U.S. dollar environment; a stable government; and its ideal location as the hub of the Americas.
Now, buyers are especially eager to come here because the pandemic has changed the way property is being sold…
The Good—Rent-To-Own Your Panamanian Property
Before the pandemic, it was unheard of that Panama’s developers would offer rent-to-own deals. Today, it’s an attractive option on the table for buyers. To give an example of how it works… in a number of high-end residential properties in Costa del Este, all rent paid for your apartment over the first year will be credited 100% toward the purchase price. In the second year, 75% will be counted toward your purchase… and 60% of the third year’s rent.
This makes it easier for you to come to Panama and see whether it’s the right fit for you. If it is, you’ve built up a substantial credit for your down payment.
Costa del Este is one of Panama City’s most sought-after business and residential addresses. Just off the main highway that takes you into Panama City from the international airport, the neighborhood is equidistant from the airport and downtown Panama.
Here are three top developments on the market in this neighborhood that offer you the option of renting to buy:
- Mirador offers three-bed units overlooking Central Park and the Pacific Ocean. Units have approximately 200 square meters (2,160 square feet) of space and the building is full of amenities.
- In one of the best locations in Costa del Este, Matisse is a stunning tower with only two units per floor—each with around 370 square meters (almost 4,000 square feet), including maid’s quarters, high-end furnishings, a gourmet kitchen, and a balcony overlooking the Pacific Ocean. Pools, social areas, and concierge services are all part of the package.
- Casa Bianca stands out for its low-density design, set in a private community that embraces the flora and fauna of Panama. Three- and four-floor units offer about 280 square meters (3,000 square feet) with ground-level pools and recreation areas. From here, you’re just steps away from Town Center Mall.
Each of these developments is nearing completion, so now is the time to make your inquiries. If you’re interested in more information on any of these rent-to-own properties, please drop me a line here.
The Bad—Foreclosed Property
When the pandemic hit, many North Americans lost their jobs and could no longer maintain a second home in Panama. Unfortunately, some of these properties were eventually foreclosed.
At the same time, visitors that had been coming to Panama for years couldn’t travel, so the rental market took a hit, putting other foreign owners in financial jeopardy. This difficult outcome left properties in default, even though every effort was made to provide as much forbearance as possible. Consequently, these property prices have been lowered—incredible prices reflect the fact these were default units.
Reduced Prices In Coronado
During the pandemic, everyone had a little more time to organize and evaluate. In some cases, new pricing was applied to residential units that had not sold for whatever reason. Coronado Bay and Coronado Golf—located in the popular expat beach community of Coronado, about 50 miles from Panama City—are perfect examples.
A fully furnished, ocean-facing, one-bed unit in Coronado Bay is now listed for US$201,000. A four-bed unit in the same building is also available.
Coronado Golf, a development that sits on a golf course and overlooks the Pacific Ocean, has a few one-bedroom units remaining, too. The larger units sold out quickly when the developer reduced the price and offered a better financing deal than what was on offer from the local banks.
Meanwhile, units at Casa Bonita—situated just over the Panama Canal and adjacent to the business corridor of Panama Pacifico—are also selling fast. This residential building features many amenities of its own, as well as sharing everything offered at the five-star Westin Playa Bonita Resort (a three-minute walk away), including pools, a spa, and a variety of restaurants. Casa Bonita is situated directly on the Pacific Ocean and has panoramic views of the Panama Canal. From here, it’s just 15 minutes to the city center. Once the subway line is built in conjunction with the fourth bridge (currently under construction), residents out here can also connect to the city by Metro. Prices start from US$320,000, and financing is available.
Again, for more information on any of these properties, please get in touch with me here.
Lower Interest Rates
Of course, the pandemic didn’t just impact individuals. It’s had an effect on the economy and almost every kind of business. Banks were no exception—in Panama, they literally froze everything from credit cards to mortgages. In pre-pandemic times, banks offered a better rate than developers. Now we’re seeing the opposite…
For residences in Royal Palm—a two-tower complex sitting directly on the Pacific Ocean and in the booming expat community of Gorgona—two-bed units with wrap-around balconies are being offered with interest rates from below 1%.
This gives buyers the chance to secure low financing for up to 10 years. With this program, the economy and banks are better equipped to recover quickly. The philosophy among some of Panama’s top real estate developers is that everyone needs to make accommodations so the world can become whole again.
Panamanians Stick Together
Panamanians are a family-oriented society. Generations live together—or at least very close to each other—and celebrations are big and boisterous with lots of food, hugs, dancing, and music. The pandemic has only sharpened that commitment. Now, more than ever, locals are buying property to keep family close and safe.
Panama has one of the strongest economies in Central America, and its growing middle class wants property on the beach. They’re buying real estate on the coast in record numbers… but there’s also a huge demand among this demographic for rental property. This makes a beachfront unit in Panama a great investment today—especially when you can get a good deal, lower financing, and a location that appeals to this middle-class market.
We Have A Plan
One of the best things to come out of the pandemic is that it has allowed time for the administration of president Laurentino “Nito” Cortizo to evaluate where Panama needs to go and how the country can maximize its strength.
In April, Panama went to the International Monetary Fund for emergency financial assistance under the Rapid Financing Instrument (RFI), which has been used by countries worldwide to stabilize their economies from the effects of COVID-19. Not only was the request for US$515 million granted, but the IMF offered to provide three times that amount. Because Panama is generally conservative when it comes to finance, it thanked the IMF for its confidence but only took the required US$515 million.
The Panama Canal has continued to operate normally during the pandemic, and that has meant solid income for the country. Panama’s robust services sector has managed to keep going by moving to a virtual format. Like many countries, the tourism and hospitality sector has taken a hard hit. Hotels have either been shut down or endured occupancy rates of less than 10%. Some of the best hotels were loaned, without charge, to the government, and turned into hospitals and dorms for health care workers. It’s going to take a while to recover, but Panamanians take care of their people.
Ahead of the reopening of tourism, the Cortizo administration set up programs for Panamanians involved in the tourism industry to learn English through a free virtual program. These employees have also been educated on Panama’s many eco-tourism offerings, as well as how to improve a guest’s overall experience. It’s projected that tourism will provide up to five times more income than the Panama Canal when the new convention center and dual cruise pier terminal is opened.
In late July, Canadian First Quantum Minerals restarted production at the copper mine in Panama. The mine, one of the largest in the world, is expected to run at 85% production by the end of 2020. With a lifespan of 40 years, it will be a huge contributor to the government of Panama, as well as providing thousands of well-paying jobs.
Strong Economy... Great Real Estate Opportunities
Panama has a solid plan for moving forward. That path is certainly economic… but it is also focused on taking care of its citizens—particularly the elderly and disadvantaged. It’s unfortunate that there have been foreclosures, but that spells opportunity for investors who can capitalize.
And, one of the best things that has come about during this pandemic is the way developers have given thoughtful consideration to providing opportunities like the rent-to-buy program and low interest rates.
If you’re interested in finding out more about these rent-to-own opportunities… or any of the other projects mentioned above, please get in touch with me for more details.