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nice breakdown - i work in the biz and can substantiate all these claims. i too think a burst will be good for panama in the long haul. in the mean time, touching on your last sentance...this may hurt a bit

Matt,

Nice article as you've clearly done your research or at least fair share of snooping around to foresee these events. I agree that Panama is not immune. What percentage market correct do you think someone like me who purchased on Avenida Balboa in Panama City can expect if I still plan to sell?

Tina

Tina I think you can expect about a 25-30% market correction when the storm hits.

Ouch! I might be losing some money, but in the long run, this correction is good and there might come a time when this correction will be corrected upwards on a reasonable basis. These apartments, including mine, are simply not worth their current price on the market. I think they will appreciate IF the city goes in the right direction. Yeah, they're ocean front in a city surrounded by the ocean but...what else is there now in Panama City? No matter what the adds say, this city is a far cry from an European or a cultural center in the States. Panama City may be cool, but as of now, lacks infrastructure and high end (and by that, I mean really well organized and uptodate) cultural and educational venues. Ok, it has a few malls, but that's not what I meant. It sure has a rich 'underground' life but how much can we all count on those sparks with such massive poverty on one side and so much consumerism for consumerism's sake on the other? I trust that the rapid local and global changes pushed individuals to learn faster what works and what doesn't. Foreigners like Matt are vital mirrors for this society. With so much going on ini your face, out there and on the internet, I must trust that the government is on a learning curve as well. Otherwise, to hell, we're all in the same bucket.

And I appreciate so much the way Matt put it in the last two paragraphs. I can smell the truth from the other side of the world, where I am currently residing.

The global economic crisis might be a blessing in disguise, especially when it comes to Panama City.

As we predicted in our http://www.thinkpanama.com/panama-weekly/thinkpanama-forecast-for-20092009 real estate forecast that Panama is still a great place to invest Why? We see speculators trying to unload units at almost half the market value this represents tremendous savings. All this due to the international financial recession.
As for the high end market 1M and up these buyers for the most part are recession proof they exist and are still buying luxury residences.
Great article i can not dispute what you have stated this shake up or reality check is much needed.

Best article I've seen about the market in a while. Should make some skeptics realize that bad news may in fact be good for Panama. Refreshing piece Matt. Keep up the great work.

I think Matt sees what's happening but doesn't point out the full economic consequences. Panama's booming consumer market (low income housing, cars, credit card purchases etc) is being driven by high employment and increasing wages. As the true nature of the real estate market is revealed, residential construction is likely to come to an abrupt halt. Just look at what's happening in the Boquete area as well as many markets in the US that have lost buyers. What Matt doesn't point out is the scale at which Panama City has been massively overbuilt. Prices can not drop far enough to absorb all of the excess capacity.

When the construction train stops (likely in 2010) what is going to takes it's place to provide employment for the several hundred thousand workers building these towers (and companies providing materials and services to the builders)? This will ultimately lead to much higher unemployment, debt defaults and general unpleasantness.

Matt is looking at the real estate picture from just one side of the equation – the investor/speculator point of view. The social costs of this misallocation of capital will be much more devastating.

I liven in the US and will be retiring in a couple of years, so I have tried to acquire a loan to purchase a condo; however, the banks are not lending money to panamanians who want to retire in Panama. Due to their inefficiency and lack of knowledge regarding our credit bureau, they are considering debts paid several years ago not understanding the credit report is our file, our dossier. Another issue I am not in agreement with is the fact there is no considering you are a panamanian citizen intending to buy a residence for your retire, so they require a 25% or 30% down payment instead of the normal 10% for those residing in Panama. This is discrimination and stupidity in their part, eliminating the possibilities for these citizens.

Paul,
Only Punta Paitilla and areas that are very close to it are overbuilt. 5 or so years ago, the tallest building in Panama City had 7 stories. By and large Panama City is still full of low rise buildings, houses, small shops and..slums (unfortunately). And thanks to the economic crisis, the high-rise frenzy will very soon stop. Hopefully, the need for other needs in the future ;-) has been created already. Maybe there will be a switch from construction of high-rise buildings into construction of roads, development of other towns and beach resorts that have already started. Maybe there will be an increase in the demand for people working in the tourism industry once the new resorts will be finished? Maybe attractive laws for investment will stay in place and even better, balanced, socially responsible solutions will have to be devised in light of this critical situation? Other possibilities for business and employment are about to rise. Sure, it can all collapse, but chances are it won't. I've seen newly found democracies blooming in Eastern Europe. With problems, slowly, but surely. Why not Panama?

Matt,

As always, a very insightful and well written article that's elicited a number of responses from your readers. If I could add my two cents and comment on your article as well as the comments from the community:

The increased pricing pressure from speculators looking to flip investments made a few years ago will definitely bring down the overall pricing level in Panama. It's supply and demand, and if we see more sellers looking to unload at below-market pricing, then prices across the board has to decline.

However, I believe that we will see a correction and not a complete fall out as Mr. Mcbride suggests. However I dont think it's going to be across the board. Why? Because not all of these new units will be put back on the market. I know for a fact that many investors have invested in Panama over the last few years simply because it was a realitively inexpensive and private place to park some cash and protect their assets. It's the whole " city lights of Panama " theory- drive around Panama City and you'll find alot of the buildings ( both new and old ) half dark. Why? My answer is that the owners reside primarily outside of Panama and only use the apartments from time to time, and they have no intention of selling and they arent on the rental market either.

As to the mass of unemployed construction workers that a few have predicted once the boom has slowed- I agree, and it makes me nervous. Some quick back of the napkin math: 100 projects in construction and an average of about 100 workers per project is 10,000, not 100,000. Perhaps the Panama Canal expansion will absorb some of this work force? Or an increase in public works projects and tourist related business?

This huge " bust " that everyone seems to be predicting is largely based on the fact that Panama City is overbuilt, or at least will be overbuilt by 2010. What about the beach areas? The Caribbean is virtually untapped, and the new road that's opening this year will open up that region by making it more accessible. And has anyone been to Coronado in the last three months? It's a whole new town, and every time I go out there I see hoards of people ( mostly locals ) spending their money in all of the ( much needed )new shops and restaurants that seem to have appeared over night.

And what about the Panamanian economy? While we are not 100% dependent on tourism like neighboring Costa Rica, I think that this relatively new tourism sector will continue to see growth in the range of 20-30% over the next two years. I'd put money on it. Why? Because the Cinta Costera is going to kick ass, and that highway to the Caribbean is going to be great for all of the cruisers starting their voyages in Colon. And with the global economic downturn, US travelers will certainly reduce their money spent on vacations, but will now more than ever consider inexpensive exotic travel destinations like Panama.

Is that refinery project still a go near the border of C.R.? That'll be good for the economy too, right? Digicel just brought 1000 jobs to Panama. Catepillar hasnt completed their headquarters here yet, but are due to be operational by Q3 of 2009. That's another 300 jobs and an investment of about $25MM. And the list goes on...

Traffic sucks, but ask anyone thats ever lived in Panama and they can tell you that traffic has always sucked! Maybe not so much downtown, but what about the days before the Corredores Norte y Sur?

Maybe I drank too much of the Kool Aid and have my blinders on, but I think the economy of Panama will weather the economic storm and we will continue to see an increase in businesses and individuals investing in Panama.

That's my take, but Im a Realtor for God's sake so take it with a grain of salt...Kent Davis, Panama Equity, This e-mail address is being protected from spam bots, you need JavaScript enabled to view it , 6700-1037

Kent, your projections for the number of constructions workers is way off the mark. According to an article in the today's la Estrella (by Manuel Luna) the total number of construction workers as of August 2008 was 149,875 (or 11% of the employed workforce). Panama's economy is closely linked to the construction sector and the effects of building slowdown will greatly impact the number of construction workers. As most people who follow the residential and commercial real estate market in Panama City know, the number of buildings currently under construction represents only a fraction of the total number of projects that are being marketed. The article in la Estrella points out that real estate sales have dropped by over 70% in 2008. The likely outcome will be widespread cancellations of residential and commercial real estate buildings. From an investor/speculator perspective, this is actually good news since it will reduce the amount of available inventory in the market. However, the cancellation of these projects will result in significantly higher unemployment. This, in turn, will ripple through the economy and effect other service sectors.

The point I'm making is that the Panamanian economy is not immune from the currently global economic problems and investors and retirees should be aware of this and prepare accordingly.

Paul,

I just went to La Estrella's website and you are right on. Guess I should throw away that napkin...One question I do have for the community is how many of those guys are working on the residential projects that we are all referring to? We also have to consider road construction and general government construction projects and assume that those workers will stay employed as long as the government is building.

As far as the crisis keeping some projects that have been in the planning stages from going up- I agree with you completely. It will certainly help to cool what at one point looked like rampant oversupply in certain areas of the city. The obvious implications is that the guys that are scrambling to finish up the buildings that they are currently working on may not have another project to move on to.

Kent, that's exactly my point. There won't be a lot of new buildings coming on line once the current stock is completed. From a real estate economic point of view, this is positive.

You are correct in recognizing that the construction sector includes workers in many areas other than commercial and residential construction. However, the commercial and residential sectors are responsible for bringing a significant amount of foreign direct investment (FDI)into Panama. This is what will be significantly impacted in late 2009 and 2010. Panama's economy is highly dependent on FDI in order to grow. As FDI decreases, due in large part to the global economic slowdown, there won't be many ways for the Panamanian economy to grow. The rapid rises in GDP over the past 4 years can easily be reversed just as rapidly if money stops flowing into Panama.

On the positive side, Panama's favorable tax treatment of foreign income will still attract capital into the local banking system. However, it's questionable as to whether this money will flow into the economy.

One concern is the huge amount of debt that the public and private sectors are taking on. The borowing necessary for the expansion of the canal will strain the national budget if tolls don't grow. Given the extraordinary slow down in international trade, the number of transits will likely decrease greatly over the next several years. The chief economist of the ACP is on record as saying that any decrease in canal traffic will be offset by increasing tolls. What he fails to recognize is the economic principal of substitution. Once tolls increase to the point where intermodal transportation makes sense (ie - sending goods across the US by truck and rail) then you may see a downward spiraling of canal traffic. In addition, personal debt is growing to historic levels and this will put strains on the consumers if unemployement begins to rise.

My concern is the local perception that somehow Panama "is different" and the economic conditions around the world will not affect us here. I suggest that just the opposite is true - that Panama is extremeluy vulnerable to world events and we are just seeing a delaying effect as money currently in the system continues to circulate. Once new money stops coming in, the effects will be felt.

At this point, rather than to deny that the economy in Panama is at risk, steps should be taken to reduce public and private debt and prepare for the inevitable economic slow down.

Interesting article and comments by all.

@ Think Panama - Ah, I get your angle. You tell everyone to "buy - buy" when things are going UP because...well, things are going up even a fool can make money...

Then, when things are going DOWN you scream "buy -buy" because...well, you are getting such a great deal and even a fool can make money.

Is that from the Robert Allen real estate school of "don't wait to buy real estate - buy real estate and wait?"

I would like to - if I may, revisit the basics of this big grand scheme of is it a real estate bubble or not - question.

It's a simple one really...but, I have only seen a few people touch on it in comments or articles - I see Penny did above.

HOW are people going to buy these apartments, condos, houses, homes, casa's, fincas, farms, lands, islands, and my Moms house?

When the Panama real estate "boom" started...it was because people were flush with their own fiat currency from their own countries because of easy money that was being thrown at people to borrow-borrow-borrow from the international banking cartels known as the Central banks.

People could borrow money at ridiculously low rates - with low to no down payments, and make investments - most notably real estate.

Because of this - real estate values all over the globe increased in value and everyone was a real estate investor. People bought 2, 3, and 4 houses. Real estate values kept going up - people took out second mortgages and lines of credit, times were good.

They started to read about, travel to, and invest in places outside their home country, such as Panama. They read all of these news publications that told them how great Panama is, how cheap it is, and how everyone and their Mom are moving to Panama to LIVE.

So, they took cash that they had "made" on their in country home (appreciation taken out by a second mortgage or heloc) - to invest in an out of country home. Of course, they were now self described real estate experts who wanted to buy off-plan or pre construction apartments in the "booming" city of Panama city. So, they made DEPOSITS (partial payments - not full payments) on these apartments in 2004, 2005, 2006, and less in 2007 and 2008.

Of course, since they were self described real estate experts...their end game was that they would assign their contracts before completion to another buyer (the old real estate hot potato) at hefty profits. Since everyone was told that Panama is booming and everyone is rushing down to LIVE here...selling it wouldn't be a problem. I mean...who wouldn't want to LIVE in Panama, duh. (Of course these people didn't...but, they assumed everyone else did. Publications wouldn't lie, right?)

(continued below...)

As time went on and these developments got delayed in construction...more buildings were planned. You couldn't open a real estate magazine without seeing "just launched" or "newly released." So, more people bought. Then, more developers launched. Did they have a plan? No, but who needs a plan when real estate is booming and people buy (oops, I mean leave deposits) for buildings with cool pictures and pretty sales agents with big boobs.

Sure enough, when a few of these buildings started to issue Occupancy Permits (I would say complete - but I have bought in Panama and know the difference) in 2006 something funny happened. By then, the World wide real estate bubble was starting to pop. Slowly at first...but, definently starting. People couldn't tap into their equity in their house anymore because they already tapped it. They couldn't touch their second largest investment until retirement, 401k or other retirement account. So, since they really didn't intend on LIVING in Panama, it was just an investment, they decided to sell.

Ah, now comes the fun part. They need to close on their apartment since they can't assign it in pre construction. So, they can either pay cash OR get financing. Granted at this time getting a loan in Panama WAS a little easier than now AND the prices per square meter were cheaper...so, loans were definently a possibility IF they qualified. No cashizle in their in- country home or "investment" properties to tap (already did that for the boat, new cars, trip, and foreign real estate purchase).

So, already at this time - 2006, we are seeing apartments given back to the developers because buyers couldn't close. They thought they were going to have enough cash to close OR worst case scenario get a loan. Of course, they never bothered to check with Panama banks beforehand. I mean, who knew? You need to show tax returns, bank statements, job letters, health inspection - boy, I only want a $300,000 loan with 80% loan to value. Geez, all I have to do in the States is lie about my income and sign on the dotted line. Besides, real estate values always go up. Man, these Panama banks are dumb they tell themselves. And...to top it off, they are telling me that they will only lend up to $1500 a square meter? What does that mean? I bought a 100 square meter apartment for only $250,000 (the developers are selling other units like mine for $400,000)...where does the extra money for the down payment come from?

Hmmm, right about this time they are also noticing that it's really hard dealing with real estate agents (oops, I mean promoters.) You see, back home agents actually visited the properties they had for sale. Put together marketing plans for each house, helped staged, made fliers, updated websites...you know, work. Here, the agents (oops, I mean promoters) want YOU to send THEM all of the information. Wait, so I take pictures...I write up the promotion...and I send it all to you AND pay you to sell...they think to themselves.

Okay...so, I couldn't sell in pre construction, was finally able to get a mortgage loan at $1500 a square meter...but, I used up all my cash. I mean...my apartment was ONLY $250,000....geez, the developers keep telling me its worth $400,000. Its was only 100 square meters, so...$2500 a meter. Wow, means I put down 60%, $145,000 in CASH to get this place. *&^% I need to sell, bad.

(continued below...)

About this time you realize that trying to sell your completed apartment is tough. As a matter of fact, most agents never email you or return any calls. Wierd you think...since everyone is moving to Panama to LIVE, and not very much is completed yet (2006)...there should be plenty of people. Besides, I am only selling mine for $300,000 and the developers are now selling theirs for $400,000. The buyers get to walk into $100,000 in "equity."

Then on a trip you start to notice. You see that all of the completed buildings are mostly black. No lights on. Not thinking of it...you do some more research. You go to the buildings and ask the security guards how many people live their. After they laugh...they tell you "poco."

You start to take notice. You go new building by new building. The same. All of them have less than 30% of their lights on at night. Of course, everyone tells you that you are crazy, telling lies, the bedrooms lights are on but dim, the apartments are rented out, the owners only visit a few times a year, Panamanians don't like to rent out their apartments...you know, the usual Panama lies.

Then it starts to make sense. The reason why no one is living in these apartments, the reason why it will be tough to sell my resale unit (since speculators or investors buy pre construction and end users by re sales) - and at prices drastically less than what developers are - is because NO ONE IS MOVING TO PANAMA TO LIVE.

Ah, now its all starting to make sense. Thats the reason for all of the completed buildings with no lights on, that is the reason why there is such a huge difference in prices between pre construction apartments and comparable resales, that is why its so hard trying to sell my completed apartment.

You take it a step further and check out how many foreigners have gotten Residency Visas in Panama. No, you tell yourself. It cant be only a FEW THOUSAND TOTAL IN THE LAST 5 YEARS.

What, a few thousand? I was told by leading publications that everyone was flocking down to Panama to LIVE. I saw numbers in the range of 50,000. Where are they?

Welcome to The Great Panama Hoax.

The hoax put out by the Panama propaganda machines giving out bogus information about how many people are actually moving down to Panama to LIVE.

Well, now its obvious. The banks are lending out at $1300 a square meter MAX (and qualifying now is much harder...so, the banks are already telling you that THEY believe fair values are $1300 a meter)), if you bought several years ago and your development is just now getting completed and you never intended on living there or renting it out - you may have to liquidate your re sale (referring to Think Panama's link), selling resale units at all is tough because very few people are MOVING down to Panama versus the amount of completed units, many people simply can't close on their units because they lost all of their money in the recent real estate and stock market crashes - if they can close, it might make more sense to simply walk away because the values have gone down.

Again, it comes back to the original question. HOW are people going to be able to come up with the rest of their monies owed - about 60-80% to the developers if they have NO money and they cant qualify for a loan because the banks requirements are much tougher now? And, even if they can...who do they sell it to if NO ONE IS MOVING HERE?

Viva Panama!

(Matt, help a brotha' out with the blog posting lengths, eh?)

Hoax, we've been trying to tell this exact thing to people for nearly 2 years. There is no "end use" market for luxury condos in Panama City. The fact is, there's never been a foreign market of any size for city condos. The actual number of people moving to Panama is very, very small. My company commissioned a study by Ruben Lachman back in 2005 and we calculated the total foreign market to be around 15,000 homes...... over a 20 year period! In retrospect, those look like pretty accurate numbers. Subsequent research showed that less than 12% of the people considering a real estate purchase in Panama would buy in the city. Most people moving or buying here will purchase along the coast or in the mountains. And even then, the number is relatively small. The incredible number of condos being built along the Coronado to Farallon corridor is the next market to blow up.

However, people will believe what they want to believe and now that there are billions of dollars invested in Panama City residential real estate, the story will continue until it can't continue any longer.

For those who purchased a condo in the city (and soon for those along the beach) and you're not planning to live there, all I can say is good luck.

Very informative, Hoax and McBride. Yours is the worse case scenario.
I might live in lala land and I only know my side of the story - but my side is nothing like what Hoax descibes. I am not retiring now but I wanted two things: to invest my dollar savings (that were getting thiner and thiner because of inflation) and to obtain a place in the sun, a place where I could eventually stay during those freezing winters, a place that I would ideally put on the renting market for when I am not there. Since I work so far from Panama City, I did no want to buy a house - a condo is easier to maintain from a distance. Maintenance fees are pretty low now ($1a meter), and I got a 20 year tax extemption as well. I paid $1700 per square meter for a spacious apartment with full sea view and it is now ready - only 6 months late. I chose a condo in the the city for the reasons mentioned above, and because it is so close to beaches that I could go daily if I wanted and come back at night. I bought it with my own money and I am debt free. I have a few friends who did the same. One couple is older and wantes to retire. They are highly educated people who worked in international enviroments over the past 20 years. They will not just sit on their bums. They want to get involved in good causes. Others want to start small businesses. I assume that there are more like us out there?

sorry for the typos above

Lamer, just for fun...write down the names of The Great Panama Hoax and Paul McBride. Jot down what has been said here (I am in no way saying Paul agrees with everything I say - just our last comments run close together) and the date.

Once you DO come to Panama - try and rent out OR try and sell your place - OR you feel the air from the Panama real estate bubble all the way in Dubai or the UAE - or, your $1700 a meter "ocean view" apartment in San Francisco devalues down to about $1000 a square meter...think of us.

And, because we are such kind amigos, we wont even say "told you."

Now, what was Homes Panama web site again? I hear they have a great pre construction project called "Frozen Ice Tower Margarita With Lime."

I hear you. I could have done better than buying in Panama, right? Should have bought gold, not houses. But go on, give me an example of a good real estate buy in 2007 that would have been close enough to Canada where my daughter will soon go to university, warm year round and with breathtaking natural beauty. Show me a place where the price has appreciated since 2007 and where there is no chance for a bubble-bust phenomenon. Show me a place that is not hit by the global economic crisis.
I do not intend to sell my apartment and can afford to wait. I've just put it on the rental market and expect to either wait for ... a year for a tenant and perhaps rent it for a lot less than the sales person said it was worth renting. But guess what? I've heard worse scenarios in the states.

Jack Martin Miller I am the leading authority in the world on collateral value, a collateral expert, a person who has the natural ability of finding TRUE VALUE in today's market or any market. I have a mortgage banking background dealing in real estate loans and the purchase and resale of undervalued properties. I am also is an expert in marketing.That is why I am in the Republic Of Panama. I also have a website republicofpanama.net where you can find true value properties.
At Your Service
Jack in Panama

I can't relate too much to $1500 a meter prices. I have built a couple houses here in Volcan, Chiriqui for about $250 a meter ($100 a meter for labor and $150 for materials). Lots here run about $15 per meter, but sold for $5 per meter a few years ago. Panama City is not a very attractive place to live and very over-priced plus it takes forever to drive from one side of the city to the other. From my bedroom window I have a great view of Volcan Baru, the highest point in Panama. The negative thing is that retirees from the US and Canada might have a hard time selling their houses back home in order to choose Panama as a place to retire. With the economic crisis the price of lots may decline but I can't see how the cost of construction is going to change much. Perhaps the cost of building materials will decline a little. Here there doesn't seem to be a large number of unsold homes but there are quite a few lots for sale. In the US there will be a large number of people reaching retirement age but we don't know how the present economic crisis will play out. Panama could do a better job of promoting itself as a retirement destination especially since many older people want to escape the cold winters up north.

Perhaps thinkpanama can enlighten everyone to how their strong recommendation for their clients to buy into the Plaza Costa del Este from the A2SN development company turned out?

http://www.A2SN.com

They have a whole slew of 'projects' that won't be materialising, unfortunately, neither will the deposits that they have collected.

The Plaza Pyramid Condo Hotel range....

These places will drop 70%. From the shoeboxes in rows which market to locals for $60k, all the way up to the useless condos (exactly where t.f. are the beaches?). There is no end-use and the inherent value is that in laundering any funds used in building them. 70%.

Lamer: "I paid $1700 per square meter for a spacious apartment with full sea view and it is now ready - only 6 months late. I chose a condo in the the city for the reasons mentioned above, and because it is so close to beaches that I could go daily if I wanted and come back at night"

WTF? What beaches? Next you will tell me that Bananas is a Resort and World Class. You are dillusional. Certifiable. At least you can type because I doubt I could read your writing given that you must only be allowed to use crayons.

This is my last message on this site or on any other having to do with Panama related frustrations. Silverfox-WTF, I was simply referring to beaches like Coronado or Santa Clara. If I remember correctly they are both about 90-120 minutes drive from Panama City. I consider that a short drive.

Settle down man...what's with the hostility?

I generally find that those who are overly negative (or in the cases above, downright angry) about the Panama real estate market, seem to be that way out of frustration, having made an unfortunate investment decision and now feeling the effects. They either bought at the wrong time or got shafted on a deal and missed out on big reward - finding now the time to take it out in hindsight. Seriously, who gets that worked up about the topic of real estate unless some big $$$ is involved?

Thanks for the informative article and follow on comments. I was looking for information on whether Panama real estate had substantially corrected from its huge bubble yet and I was fortunate to find this site.

I know a LOT about residential real estate investment from a US grounding and have been developing my international perspective for the last 6 years. I have been EXPECTING both the global real estate bubble burst AND the derivatives/banking system crisis since about 2003. They took a while to materialize, and there were times I wondered if I was crazy and my analysis was somehow fundamentally wrong, but ... obviously ... I was not mistaken. This is collapse is going to be the defining economic event of a lifetime for many countries. I know Panama has seen really, really hard times so hopefully even a global Great Depression won't be as bad as what the country has already survived.

The credit bubble -- induced by Central Banksters around the world -- drove pretty much everyone into one mania or another. I told a Panama broker in 2005 that Panama, too, was in a bubble and ... of course ... he didn't want to think it, much less hear it... Ponzi schemes are like that.

I am sincerely interested in buying property in Panama AFTER the bubble fully deflates. In general, prices around the world should probably retrace ALL the gains since at least 2000. What did a nice, ocean front condo cost in 2000? That is probably a reasonable target. (Although Panama's relative improvement in the world in terms of basic poverty, corruption, and banking may affect the final base).

Question: How can I best track that ... especially from outside the country?

Thanks!

back to 2000. about right. but heresy on here. to answer your question there is no way to track it. why? there is no market in panama. a market requires trades and there so few trades that there is no market pricing. it is entirely a mix of speculation and a few foreigner trades (un, us embassy, few expats for expansion and other industrial activity). this is the biggest problem. no trades = no market = no substantive pricing information.

...hostility? People on here are the funniest ever! I come on here and a few other sites to cheer myself up. The stories are complete whacko. That guy I am just reading (steve_usa) is probably nearer the mark than my 70% off headline rate. Year 2000 pricing (before the markets started shovelling money to keep the USA out of severe recession) is probably nearer the mark.

And you are wrong Matt, I have zero financial interest in Panama real estate. I am here short term/fixed term. Housing costs are not my problem - is all my employers problem. It's what makes it even funnier listening to everyone saying ooooh...buy a property and it's like your employer paying. Yep, just like it.

Lameass....I have to go now. I need to pack for an expedition to the beach. World class beach. Nothing better than finding a good spot to take a dump. Nothing worse than standing in someone else's (after dodging the broken glass).

Mind you...Dubai. Jajajajajaj (stops to breath) jajajajajajajaja.

....I did not add enough laugh marks for Dubai.....

Dubai! Jajajajajajajajajajajajajajajajajajajajajajaj (wets meeself) jajajajajajajajajajajajajaj.

@ Jack,

Wow, we are honored with your being here. After all, you are the "leading authority in the world on collateral value, a collateral expert, a person who has the natural ability of finding TRUE VALUE in today's market or any market" - if you don't mind saying so yourself.

What is that exactly?

Since you claim to "I also have a website republicofpanama.net where you can find true value properties"...

I wanted to take a look and see.

Lets see...I see Templar Panama (you mean, besides them being crooks?)...plenty of girls in bathing suits (are they the true value hookers?)...Megopolis (true value no build and keep the deposit)...Veraguas mine (true value granite mining for ONLY $50 mill)...

And that's just on the Home Page...

Yes, you are a true value alright...typical true value schmuck.

Maybe you should work for Homes Panama or T.O.C?

It is funny and sad. It is funny because I can afford to laugh at Silverfox's lame jokes directed at Lamer (La Mer is French for The Sea). There is nothing wrong with Panama beaches, they are beautiful and not that populated -- and I hope they will stay clear of silver foxes and their polluted minds. Well, that's the sad part...
From where I am standing (and from where I was standing when I last visited), Panama still looks OK, but the talk about it lately is so bitter, so degrading, that it makes me wonder what kind of expats end up there, why they go there in the first place, what business they conduct (other than pure speculation, how they relate to others around them and what results they are hoping to get out of such relationships. Anyway, If I were a Panamanian, I would feel offended. No wonder Panamanians act overly patriotic, perhaps in denfense. Oh well, but I'm just a woman and this is "men's talk". So, I'd better go knitting ;-))) If this site is accurately mirroring the business atmosphere in Panama, then I will be knitting for a long time outside Panama on healthier shores...

Hi everybody, I am a Panamanian that lived in Florida for 10 years, before I moved to Panama to sell Real estate two years ago. I don't think posts here are being overly negative, I think they are realistic. It's easy and comfortable to be naive. It's hard to analyze and research and see the truth. Nobody doubts Panama has a lot to offer, but the problem is how exaggerated everything has become in the last 3 years. Panama is not a country that can justify or sustain 2,000 a m2 prices. A good salary for Panamanian is around 1,000 a month. Panama's infrastructure, cultural and educational offerings are light years away from U.S. European and even South American offerings. Panama is alright, Panama is nice, you can love Panama, but don't think for a second you have Mexican riviera Beaches and service. Don't think you have the cultural offerings you find in NY or in Bogota. Don't expect a justice system like in Canada or The Neatherlands. Remember if your are retiring here or investing Panama is an attractive third world country with a good currency in the region. Don't believe any other hype, come, visit and make up your mind.
I will be moving to Europe at the end of the year, I plan on giving my children the best education possible and maybe one day retire in Panama.

Mr. Realtor please tell me how can survive on 1000 month! My good heart-warming and helpful lawyer tell me wages here for professional is very good. Panama not a third world truly you come to my country and see third world!!!!!!

@M'Bosa: Which third world country are you comparing Panama with ?!

I have never been to another third world country besides Panama. I believe that the Panama city slum and many poor local communities scattered throuought the country are very much "third world", while Panama's banking system along with the Canal and some nice residential areas are much more developed. I would also assume that such contrasts happen in third world and in developing countries.They happen in developed countries to a smaller extent... look at the Bronx... I wonder just how "third world" is Panama...

Mr. La Mer. Please I upset with questions of your type of person. You survive on $1000 month in this the city and country of Panama!!!!!! Please in my country $1000 is money from above. Panama not is third world!!! I am assured of assistance in this matter from seafarer passengers on Interstate 10. Many trips on this route and I make $1000 month.

What is importance of the demolition of Panama name? Why would it run up falseness? This one is an admirable city which never had before such high buildings. It becomes next that of the skies and with of 10 of the thousands of the people working much here with expansion of canal holds it to raise higher

Thanks for your genuine replies, Mr. N'Bosa, I didn't mean to offend you. There's nothing to add other than,
"Take A LOT of care!"

La(dy) Mer

Oh, praise thank you! Life is full of joys with one of comment of you. Tell me about you home country. It is a wonderful country, no? It is not is Panama I fear from your messages.

You English is very much better mine! They teach you much English when you are a young lady in Saudi Arabia?

Seems you have admirer!!

What third world country is he comparing? No idea but it does sound a lot like the land that time forgot aka Land'o'Mullets, Land'o'80sMusic, Land'o'Ay. Yes, the glorious land that is Alberta in Canadaland. No wonder the Brits dumped it. La Mer, I think You Are A Canadian (Shatner anyone?). No wonder you are escaping to Panama.

Sheeze....Canadaland to Repressedland to Paradiseland.

Fingal, some of your remarks are interesting in that they provide a different and somewhat honest angle on the real estate situation in Panama. Are you Panamanian? Have you traveled extensively? What do you do for a living? What is your background for providing your insights?

That being said, I will also venture to observe that, when it comes to people, you tend to make all sorts of unfounded assumptions that are offensive and narrow sided. This only shows how little you value youself deep down inside since you must put others down so you can feel better or "taller" so to speak. You create a toxic environment for yourself and for others. Can't you say what you have to say in a more neutral, less hateful way?

As for Alberta, you might know more than I do. I have never been there. I am very much Romanian and very much Canadian but my place is called Montreal. Well, now it's called Riyadh -- I've worked here for the past 10 years. Others should forgive me for stating the obvious, but I can attest to the fact that people from very different cultures can value each other and can get along well. It takes some brains and a commitment to understanding individual contexts in the larger cultural context, as opposed to just judge people in bulk (Panamanians, Americans, Albertans, "foreigners, whatever).

You seem to be on a mission (that of hearing your own fixations?). I am on a mission to learn by listening to different views and by sharing my own "Panamanian" experiences. So, thank you for contributing here and please turn down the hate buzz because I can't hear well what you are actually trying to say.

Do you support Romania or Canada with the payment of taxes (or other monetary input)? Or do you avoid doing so as you have finished with their services? And Panama can expect the same pattern in the future?

Do you not feel guilty about taking money from one of the most repressive regimes in the world? Are you allowed to teach about the House of Saud in your International School? Better watch your emails are not being checked!!!

Let's see:
I support Romania by helping financially my relatives who paid taxes all their lives and now aren't properly supported by their own government.
I support Canada by preparing international HS students to apply for and to get accepted into Canadian universities every year.
I also support both Romania and Canada by being a decent human being who doesn't get into trouble anywhere as a citizen.
As for Saudi, it is not my duty, nor am I capable or expected to change things here. It is the Saudis who must do this in their own way, that is, very slowly and without giving up completely their traditions for a Western model. I met a lot of wonderful people here, so don't rush into judging individuals based on ready-made scenarios.
As for Panama, I've already contributed by spending money there and continue to do it whenever I go.

So you follow a strictly individualistic capitalist model of funding back to those that funded you when you decide to rather than when and how that country needs you to. Very noble. How very noble indeed.

Given your background I am surprised of your support for the Saudi regime. You are supporting the very style of dictatorship with limited freedoms you would condemn in another context, another place and another era. Of course, if you did not do your job then someone else would. I agree, but cannot expand on it now as I am off to supply AK47s to a child army.

Fingal is a waste of time

Romania very beatiful full country of life. Remember often times when stationed in your country. Women very pretty and accomodating much full of life. Fall of our world was not good for many countries and I am thoughts that one day will be the great country of Russia time again.

In same as Saudi we have much oil. More oil from ground than even your hot country of Arabia. This will help our greatness one more time and show former colonies of our new direction.

Maybe, growing up without freedoms, I see like a little different to you.

Some recent numbers from the Latin American Monitor:
"Panamanian real GDP growth came in at 9.2% (slightly above our 9.2% target) in 2008, after the Q408 data revealed that the pace of expansion cooled to 7.3% y-o-y. We are still penciling in growth of 4.6% in 2009, which will, in large part, be driven by the continued expansion of the Panama canal."

"Inflation is unlikely to be a major economic headache for Panama in 2009, as recent deflationary trends start to take hold. Panama's headline rate of consumer inflation came in at 6.8% y-o-y in December, just beneath our projection of 7.2%, on the back of deflating raw material prices and a slowdown in economic activity. As economic growth cools to 4.6% in 2009 from over 9.0% in 2008, and global commodity prices remains subdued, inflationary pressures will continue to recede in 2009. We see inflation finishing the 2009 at 4.0%, with risks to the downside given the precarious global outlook."
Latin American Monitor February ...

Yep, suck it up. Boomtime is still here. Seems like you did not buy to live in but are an investor trying to make money after all. See.....my portfolio is worth more as Panama is still booming.

Panama will end this year down on last year. Employment will rocket in the 2nd and 3rd quarters. The canal expansion will not stop this. From my office I sit and watch a lesser number of boats carrying a lesser number of containers. Capacity (tonnage not boats) is probably 80% of a year ago.

La Mer, it looks like you very nice person. Why bother to argue with someone like Fingal.In Russian "Fingal" means "Black Eye" and that what he or she is. His spiteful and disrespectful remarks show only one thing- he is intellectual dwarf and very primitive creature .Let this imbecile talk, who cares.

We've collected comps from Panama, Nicaragua, Belize and Costa Rica and put them online. For most real estate categories Panama comes in at the lower end of the scale, often only just above Nicaragua. But, in many ways it's a more mature market. This gap represents the opportunity.

@Gaetano:
There actually is such a thing as Fingal's Cave, ahem.

Fingal is an old appelative for the county of Dublin in Ireland.
There once was a Lord Fingal and there was a fingaelic language. Originally, Fingal had to do with the Vikings and their boats.

But in this case, it is just a mispelled word: the correct spelling is "Fungal", not Fingal. You know, from "fungus". A fungal infection is pretty nasty and very hard to cure. Old Irish believe it is devil's work and that it is best to ignore it.

Looks like we have a few more Monkees. Keep on taking the pills. Daydream believers. Panama is riding high, unaffected by the storm going around the world. Makes me laugh.

Yeah, and fungal is about right.

Fingal,

I do not understand your constant annoyance of La Mer. La Mer has invested wisely in a thriving and rapidly growing expatriate community within Panama City. It is her decision and she will spend a happy retirement here in a few years time, just like clients of mine.

Inflation is low and falling. Growth is still high and forecast to be so. The canal expansion will inject more money into this economy than any government is investing into their economy. We will grow and the investors will reap the rewards.

Regards

Gee, thanks George, but I don't feel a need for support from people who work in the sales department. Not now, at least. Please do not use La Mer's comments and her personal experiences in your selling agenda because then you would have to pay her dividents from any sale you make. ;-)))

Here's an advice from sales guru Jeffrey Gitomer: How many times should you (the salesman) use the word ? The answer is ZERO.
And another advice from Gitomer, that puts Matt's friend (sorry I forgot his name, the one who wrote blood on the streets) in a better position: "I always deal truthfully with them - even if it is not to my sales advantage." (118 Little Teal Book of Trust). I hope it helps.

As always sincerely,

Nostalgia....you are aware that many nations helped in the original canal construction and liberation struggles? Some of us have origins from a long ago time and place. Occasionally our families recover lost names.

As for "Fingal": go down Las Bovedas. Read the inscriptions on the wall. Look around and see what you see. Man made but still there.

Nozzie: I'd get your thrush seen to. You would not want to go passing it around.

Gaetano: I still think you are an idiot. Wow! It was just as easy that time again! I think you are a Panamanian Realtor whose only hope is to sucker foreigners in. You give Panamanian a bad name.

La Mer,

I will only refer to you in the roundabout way as one of many well educated, overseas investors satisfied with their portfolio in Panama. You were not a client of mine. However, I have satisfied clients of your building some of them retired, some vacationers, some simply investors. All of you made a great choice in making a future home in Panama.

Regards,

George,
Sorry, my little Gitomer quote came out chopped, so it doesn't make sense and it sounds really blunt. He talks about the word "we". He advises not to use, nor think the word "we" in sales. We, as in we the organization or the company selling something. Anyway, you must know better. I don't because I do not sell, I just read about selling sometimes because it is a domain that puzzles me. I could never ever sell something that I do not know in depth and that I do not endorse 100%. That's why I am in education not in business.

I think I do understand the story of origins.

But I also understand that those without any privileges who work under smart , well organized, highly educated leaders, be those foreign or local leaders, have a chance to learn from them and grow smarter themselves. If they want. And if they know when to say "thank you" and when to say "no thanks".

Rather than constantly circling the wound, one can opt for a foreign brand of band-aid, IF it works, recognize that it works and finally, heal.

Mr. Fingal! I am not a Panamanian Realtor as you mistakenly assumed but I will forgive you for that. I have to confess though that people like you make me extremely angry. In your posts (instead of creating civilized discussion) you discourteously attacking the other people, who have different opinion from your own. You need to get some manners boy, as soon as possible. Otherwise you condemned to stay what you are now forever: lone, narrow-minded and annoyed by the rest of the world.

Yes, manners....we inherited those from the Brits. And we inherited democracy and free speech from the Americans (the Founding fathers) and the French (Revolution), we inherited a healthy natural environment from the native populations, etc., etc. For these, we say "thanks", for other things we can't say "thanks" but we can't blame others (i.e. Americans) in bulk for unfair treatment that has happened in Panama or anywhere else. It would be childish and self-detructive. Every nation, every identity, every self is made up of others, it's eclectic. A nation is made up of individuals. You cannot incriminate, nor endorse a nation without incriminating innocent individuals or without endorsing the crooks.
From wha I understand, F. is practicing free speech and a form of oppositional democracy on an uncensored site run by a young American who does business in Panama.

No, I just have fun. It is fun to have fune with every single person I see that wears rose tinted spectacles when walking around Panama, craning their necks to see the construction during the day and wondering what all the shadows are during the night.

Fungal is a dangerous waste of time.

A waste of time? Yes, I would agree 100%. I have no problem with that.

But why dangerous? That my comments may show that some are cynical of the explosion? Why would that be dangerous? Is it not helpful to have an extraordinarily cynical view to offset that by those selling the dream (such as our American "overlord" George?)

The Problem is that Panama is scaling back. When you scale back, you reduce enthusiasm. Enthusiasm is what drives real estate... that belief that the property will be worth more tomorrow. You must maintain enthusiasm to maintain the market. Panama should not scale back on developments. That will lead to a self fulfilling prophecy. Panama needs to push ahead with all the development projects and try to encourage development into as many new and exciting projects that can be funded. You have to keep the drive alive. By building as many new projects as we can, we will prevent real estate from going down in value. But that is the only way to do it. You really can't have too many projects, as long as you don't stop building them.

Derek: "You really can't have too many projects, as long as you don't stop building them."

Yes, you can. Look at Paitilla. Some of those buildings have dropped in value simply because they are suffocated by others. Build, keep the enthusiasm up, but base it on more serious urban planning and on real need (build the need as well).

You are yet another idiot. So, just keep building and this will all work out. And, La Mer, "serious urban planning" and "real need"? Real need results in $30,000 properties. Serious urban planning results in $30,000 apartments. I think you meant to say "real Westerners aspirations" and "urban planning for developed world standards". Sorry, that is not going to help Panama.

I think most all of you that have posted comments here forget that the US Dollar you use in your country will spell the future pain in which you will soon see in the next 18 months. You all had damn well better plan accordingly with some asset preservation. Emerging countries from the Soviet Block as well as seasoned ones like Greece and Ireland are on the precipice of pure default like the ways of Iceland. Your bickering here about real estate values is something of little value for the shocks headed your way.

Can you please clarify "asset preservation" in the context you mentioned above (the fall of the US dollar) ? What assets you think one should preserve (and where) to prepare for the US dollar fall?

Don´t you know that Panama is immune to global contagions? Wake up! Nothing will harm the growth of Panama. All the real estate is an effect, not a cause. The effect (positive) of such a massively booming economy.

Travelled extensively and lived throughout S.A. Never been to Panama but moving there for business in the fall. You don't have to visit the place to know the city R.E. market is about to collapse. $3000 for a decent but realy not all that nice furnished 100 meter furnished apartment in El Cangrejo? What a joke. They are all over the place. as if that market should really be supporting prices on par with Prime South Beach or L.A...

40-50% drop. Easy. 9 months.

Things are going to get worse in the U.S. Dummy money will be coming home. UAE junior won't be able to give 'em away...

As you say yourself, you are not infact living here. You need to reserve judgement.

You have yet to experience the culture and lifestyle choice that is Panama Panama (so unbelievable it makes you stutter). Once you are here you will see that this place is worth every penny, rent or buy. It is immune to external factors and the banks are awash with funds. Strong fundamentals. Or maybe just strongly mental. Maybe. Maybe.

Unlike others you are simply moving in the fall. Others moved for a fall. Cue La Mer, our local supporter of despotic regimes and screwing of the locals.

The panama real estate market will correct, likely back to 2002 levels. Panama has participated in the same real estate bubble that has manifested globally, from US to Europe, Middle East and Asia. I own panamanian real estate and take no pleasure from price deflation, yet I cannot blind myself to what is, rather than what I want things to be.

As of this writing, in Miami, you can purchase condominiums for 50-75% less than 2006 purchase prices. For example, a good friend is renting a condo with an option to buy at $295,000. The same condo sold for $780,000 in Oct. 2006. The condo has 3 levels, 3200 Square Feet, 2 parking spots, fully finished, no cracks, no defective toilets, roofs or fixtures, and is located in Coconut Grove. By comparison, many recently completed condos in Panama are poorly built, with leaky toilets, lousy fixtures, surrounded by constant noise and pollution in a badly designed city.

Why would any speculator buy a condo for $300 a square foot in Panama, when they can purchase a far better quality unit, in a real world class city (Miami), for much less. The panamanian market will decline, and decline more quickly than most of us could imagine.

Panama is Panama. I think everyone who has commented has a least gotten part of it right. It's a little of this and a little of that. The fact is Panama is a little country that has a great tourist appeal with a business side seperate from this and a mix of cultures being that it is the center of the world. In other words a lot packed into a small country. Everyone is trying to compare or contrast Panama to their own country. One can not fairly compare their larger more diversified country with Panama. If you are Panamanian you are trying to defend or explain you side of the picture. The lady that was saying Panama's culture centers don't campare with NY and Europe is right. Nor does it have the population or the wealth of these. I'm not Panamanian but my wife is. I've been a couple of times staying for over a month total. I'm no expert and don't claim to be one, but I do have the benefit of seeing things from more than one side. It is true that when you fly in at night or drive in from Tocumen the high rise condos have very few lights on. The one remark that I haven't seen on here yet is "Everyone's out partying!". Not sure who is starting all of these condo developments but there has been an increase of Columbian presence in Panama. It's not only high rise condos going up into the air, there are banks stretching into the sky on nearly every corner in this same area. There may not be an immediant need for these condos to be filled, just a place to invest some dirty money. The Dollar and the World Economy are the two things that will effect Panama. The Canal will be greatly effected by this. The Canal Expansion is only part of the government project. They are taking the dirt they are digging out of the canal and dumping it into the ocean in the same area as the condo high rises and planning for more development along with a park area and another major corridor highway. If you have ever been stuck in this area in rush hour you will know that the road is needed. Panama is a small country but has a lot of potental. Panama has the appeal and the location to be more than what it is now. Panama could easily become a meeting grounds of the the rich and powerful of the Americas or even the world. Seems like there is not enough development centered on drawing these types other than the condos and the natural enviroment. Don't get a wrong picture of me from the comments. I am by no means rich or powerful, but we are talking about economics and that is the people that make things happen not some retirees. I don't know about you but the only people I see retiring are the one's that all ready are. No one I know can efford to retire. If they have a 401k they are more than likely waiting on it to go back up some. For me I hope that the housing market does drop a little so I can at least buy a spot of land even though I want be able to build that retirement house for a long time.

Hi All,

This project is to be ready next august 2010. I know prices have gone down , however I think this project could be still of interest to the right client as it is closed to Panama City and it has many extras and ammenities. Of course I am also being flexible price wise. Any comment will be kindly appreciated.

Regards,

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Congratulations of being one o the lucky sods that managed to buy something in Panama. There are so few actual properties here that to get one is difficult. Hold on to that baby. Property inflation is so high here that you'll be the proud owner of a 700bed mansion soon.