The idea for today is to give you guys a bit of an update on what’s going on in the Panama real estate market. First, a bit of context! I’ve been down here since 2007, doing real estate in Panama, and the market has been very interesting in the last 30-60 days because we are getting more inquiries from the US than we’ve gotten in years.
I don’t know if that’s political issues, I don’t know if it’s been a nasty summer but whatever it is, Panama is once again on the forefront. And of course, that’s good for anybody that owns property in Panama or might be selling. However, the market is still what it is. We don’t have a lack of supply, we don’t have rampant appreciation like they have in the US and it is by no means a seller’s market.
First, let’s talk about the market for a bit. As you guys know, we are selling out at the beaches, the mountains, and the city. Our company covers a radius of about let’s call it 150 miles, mostly to the west of Panama city and obviously in Panama city itself. So that includes areas like Coronado, Buenaventura, Altos del Maria, El Valle, and of course, Panama city Panama.
A Building-Specific Market
Now, let’s narrow our focus to the City. Panama has always been a very building-specific market. Avenida Balboa, for example, is our waterfront, Class A area. I’m just getting off of our sales meeting this morning and we’re seeing a huge disparity between buildings. Take Allure, which is about eight years old, it’s very nice, has ocean views, a pool, a great lobby, and all that good stuff. There we’ve got a two-bedroom, unfurnished, 1500 square foot apartment going to get listed for $1600 a month. And then you go two buildings down. I’m not going to tell you which building, but it’s about the same age, same pool, same views, all of that, almost the exact same apartment renting for $1000 a month. Imagine, a $600 disparity. That’s a 46% difference between two identical units in the same area. Why is that?
If you’re thinking about buying and Panama, especially pre-construction, you have to be very sure of the kind of developer or development you’re investing in because some developers go real, real cheap. They don’t put enough elevators in, and they use materials in their lobby and their pool that are going to have to be replaced in a few years. This happens here and I don’t know if it happens in the US or Europe but it certainly happens in Panama. And that’s an issue. You need to know which developers to deal with and obviously we and other agents will tell you. But that’s super important. So building-specifics make a difference.
Side note: We’re seeing a little bit less negotiation on sales from sellers, which means that sellers are seeing more offers coming in. Finally, because for the last couple of years, Panama real estate has been a little flat pricing-wise, at least in the city.
Shortage of Rentals
Transitioning out to the mountains real quick. There is a huge shortage of furnished long-term rentals in places like Altos Del Maria. Our Altos del Maria agent, Catherine is getting a couple of inquiries a day for people that want to rent long-term in Altos Del Maria. If you know the area, it’s about an hour and 45 minutes from the city — you go out to the beach, head north, and then up into the mountains. It’s a vast gated mountain community that has hundreds of homes.
We’ve had homes that have been on the market for three to four years now selling. So that’s obviously telling you something, why is it happening? Plan B! People are looking once again, even people in the city are looking outside towards the mountains. So if you are somebody considering selling mountain property, keep in mind that if you’re open to renting it, we can rent it out. And it’s not because we’re awesome (we are) but it’s because the market is such that a lot of these homeowners either have no interest in renting out their properties.
Short-Term Vacation Rentals On The Rise
El Valle is cranking on vacation rentals. Interesting statistic guys, especially if you’re thinking about coming out here in the next four to five months, most of the vacation owners that we’ve spoken to, at least in the beach and in the mountains are fully booked up for the busy season. That means from about December to about April Panama is going to be cranking. This is because a lot of people give the advice that buyers should come out and take a first look before you buy and generally I would say that’s good advice.
Don’t necessarily buy on your first visit unless you’re that kind of person that knows exactly what you want, maybe a seasoned real estate vet, maybe somebody who’s been following the market. I’m not going to discourage you from doing that because that’s what we do is help people buy and sell and rent. However, if you are in a position to purchase a property and put it on Airbnb or long-term lease outside of the city, look out as it’s been a very good market recently.
Like I said, earlier, short vacation rentals are very interesting. We have a great pipeline for not just us but Panama. This is going to be a full country from January to about April next year. Snowbirds have already said, we’re coming down and a lot of those guys are looking for the first time and some of those guys will buy. So that’s going to put some pressure on the market. Although, rest assured there’s still plenty to choose from out at the beach and up in the mountains, and the same thing could be said for the city.
We did have some overbuilding back five years ago, developer pre-construction sales have also been really good. We just heard about a pre-construction project out at the beach in Buenaventura where all of the frontline ocean units have already been sold before the development even got on the market. I haven’t seen that for 10 years. So it’s too early to call a trend! Rentals in the city, generally have a 60-day vacancy, unless they’re priced aggressively. So that’s still not a tight market per se. That still means that as an owner, it might take you a little bit longer to rent your property.
Wrapping up August 2021
Going back to what I said earlier, building-specific! Panama is so building-specific. In Costa del Este, as an example, if you had a nicely furnished apartment, three bedrooms it would rent for between $2000 and $3000. Right now, it’s almost impossible to find that, and that never happens in Panama. So it’s good news if you’re on the sales side or if you’re an investor considering renting out, but I don’t want to dissuade anybody from looking at rentals because if you’re patient, you can always find something. My main point is that Costa del Este, El Valle, Altos del Maria have a shortage of nice furnished rentals right now, which is a good thing. And that means that a lot of these renters become buyers.
Real estate is not an exact science, and there isn’t a real estate crystal ball. I certainly haven’t found one yet and nobody’s letting me borrow theirs. I’m just a guy telling you what’s going on from our perspective and that includes looking at reports like the MLS, looking at pre-construction property absorption, looking at our portfolio of rental inventory that we manage in-house. So it’s just kind of extrapolating as many different sources as possible to try to not just make some predictions, but make some observations that reflect the market in general. But I tell you what we are busy. We’re not the only ones that are busy. It’s a good thing. It’s exciting for Panama. But still, it represents a significant value compared to hot markets, like the US where people are getting priced out.
Thank you for watching. Thank you for your business and make sure to keep us in mind. All of our agents and employees are professional, hardworking, straight shooters because that is what we are built around. So rest assured if you ever send us business, well, we’ll take good care of them. Thank you guys.