In March, one of our Panamanian neighbors remarked of the new president, “Someone needs to tell this guy he won.” It was a feeling shared by many Panamanians — that newly-elected President Varela was relatively quiet — especially after watching former President Martinelli voraciously dig in to high profile public works projects the previous 5 years.
Instead of announcing new infrastructure initiatives or ground-breaking immigration reform, incoming President Varela in 2015 focused on social initiatives like launching the renovation of Colon, education reform, hospital construction, and prosecuting the corruption of his predecessors’ administration.
Panama’s funny-money days seem to be coming to an end, and that is a good thing. Varela in 2015 focused on repairing public institutions, signing bilateral tax exchange agreements, cultivating relationships with new trade partners, and trying to clean house. The new budget comes in January 1 and everyone is eagerly awaiting the awarding of income generating projects and initiatives such as an unblocking on the granting of mining concessions, public works projects like line 3 of the Metro, as well as several new multi-billion dollar port developments breaking ground.
Ask anyone in the tourism industry and they will tell you that in 2015 business is DOWN from last year despite government reports that tourism numbers are actually up by 15%. That’s mostly because in 2015, the government, which for the last five years had spent millions on promoting tourism, removed tourism as a list of priorities and basically hoped the industry would grow organically. Hotels were lucky if they had more than 50% occupancy and the cutthroat pricing battles are still raging despite the high season being right around the corner.
Unemployment in Panama remained relatively unchanged at roughly 4.5%. Inflation in 2015 was reduced to 2.6%, in part due to pricing controls enacted by the new administration. The minimum wage was increased by 8.5% and GDP per capita grew to just under $20,000.
The City’s real estate market saw modest appreciation across the board. Hot areas like Costa del Este cooled off a bit from the 10% year over year appreciation seen since 2012, due mainly to pricing pressure from sellers who were looking to move into nearby Santa Maria. Areas such as Punta Pacifica, Balboa Avenue and El Cangrejo saw property values rise between 3-5 % this past year, compared to a similar figure in 2014.
Real estate in Panama’s interior provinces picked up speed in some cases and slowed down in others. A total of 18 homes were sold in the Altos del Maria community, with prices ranging from $250,000 – $850,000. According to the developers of the community, Grupo Melo and based on an informal survey conducted by Panama Equity, buyers reflected the traditional demographic for Panama real estate, with countries such as the US, Canada, Venezuela and Panama represented.
Stiff competition in the Beaches region known as the Gold Coast which stretches from Punta Chame to Rio Hato caused prices to remain relatively stagnant in 2015. Several new beach developments broke ground this year and several more were announced, meaning new supply put pressure on prices. Developers were only able to raise prices by a total of 3%.
The fourth quarter of 2015 has seen a pick-up in sales, particularly in recently completed projects such as the Altamar development by Grupo Corrccione. Fernando Nido, business director for VerdeAzul reported a number of recent closings in their Altamar project.
Single family homes in Panama’s beach communities like Coronado saw pricing declines from 2014 by as much as 10%. This may be due to a strengthening dollar and it’s effect on buyers from places like Canada and Europe or other factors such as rising crime rates.
The area stretching along the Azuero Peninsula from Pedasi to just south of Playa Venao saw mixed results. Overall, prices are in some cases 10-15% below 2014 levels in and around Pedasi. Playa Venao on the other hand appears to be at a tipping point for 2016, due mainly to the announced commencement of construction in the Blue project, which in 2015 was focused heavily on underground development and site work. The developers of Blue and several other smaller-scale projects along the beach of Playa Venao reported stronger sales in the last two quarters of 2015.
Overall, 2015 was a year for Panama to catch it’s breath, clean up shop, and get ready for a voracious 2016. The new president showed that he was still in charge, appointing two new (politically independent) supreme court justices, lighting a fire under his cabinet to prepare bid offers on new projects country-wide, and clearing the path for foreign capital to come back to Panama in a big way.
The foundation of good governance has been laid, the economy is now the fastest growing in Latin America, and the real estate market is the healthiest it has been in years. Mark my words, 2016 will be the best year ever in the history of Panama.