Idioma 
Panama Equity is pleased to release our JUST RELEASED pricing report on properties for sale along Balboa Avenue, downtown Panama City’s skyscraper-lined oceanfront district known locally as Avenida Balboa.
As anyone researching Panama has found, there is no historic property sale record on hand and therefore no way to compare pricing statistics and general market movement, which is why four years ago we decided to start just such a report.
Here’s what the research thru June 2016 has uncovered:
1. Not all buildings follow the same pricing trend
Buildings with smaller floor plans such as Bayfront and Destiny saw significant price increases, with 12% and 27% gains, respectively.
Some buildings experienced pricing declines over the four-year period. That is because most of the inventory (in buildings such as Yacht Club) were sold at the peak of the market (Q4 2008) in pre-sale at higher prices which the market did not support once those units were delivered. Average asking prices in Yacht Club have declined 33% since their highs in 2012.
Price Movement Avenida Balboa 2012 – 2016
2. Average price per square meter across all properties for sale on Balboa Avenue is just under $2,500/meter and is up by 8%
In buildings less than 6 years old, that number goes up to over $2,600/meter. The two most expensive buildings on Balboa Avenue are YOO, which is averaging a $2,962/meter asking price and Villa del Mar at $3,064/meter.
One of the biggest price gains across the time period we studied was in the Grand Bay building, built by Bern. Prices in Grand Bay were up 35%, which can be partially attributed to a change in building administration and definitely attributed to the high quality build in this nearly 10 year old building.
Trends To Watch For 2016
Condos for sale currently in construction, including Horizon Tower Residences and Costanera are priced in many cases higher (on a per square meter basis) than existing buildings. This is because labor and materials costs have seen significant increases and developers have chosen to pass these costs onto consumers.
3. Watch for the current price disparity between 5-15 year old properties to decrease as tax exonerations start to disappear
Factors like quality of construction, views, and amenities will determine value more than the age of the buildings when tax exoneration is no longer a factor.
There are at least five new pre-construction condo projects either planned or in construction in the Bella Vista district, which is the neighborhood bordering Balboa Avenue. In some cases, new residential developments are going into areas that are currently in transition (Caledonia) and may serve to gentrify the communities and drive values upwards.
The Mayor of Panama has identified Calidonia as the site of a $525 million urban renewal and pedestrian pilot-program. More commercial activity and safer streets may push up prices along neighboring Balboa Avenue if new businesses (catering to the more affluent Balboa Avenue resident) move in.
Headwinds to Growth/What to Keep an Eye Out For
Fallout from the Panama Papers may not have yet run its course. Immediate consequences are fewer buyers for condos in areas like Balboa Avenue. Fewer buyers means more days-on-market for condos for sale, which may put downward pressure on asking prices.
A strong dollar drives up the cost on property in Panama for buyers from Colombia, Brazil, and Canada.
Homeowner’s association fees continue to show increases as costs go up in Panama.
Overall, we feel that prices should continue to appreciate at a moderate pace over the next 12 months, with some short-term correction before the end of the year if sellers start to see fewer buyers. Inventory lists in buildings such as YOO, which still have apartments for sale by the developer, are showing absorption around 2-3 units per month meaning that supply should be depleted by early 2017.
About The Author
Kent: Very informative piece. As you note above, what are the reasons some purchases prefer to buy directly from the developer vs from a private seller? Do they like being the first user of a unit or do they think they can get better pricing from a developer vs a private seller. Thanks
Kenny Volandes
Hi Kenny,
In response to your question, I’d say the type of property buyer who prefers a brand new unit vs a resale may be motivated by the warranties offered, they may perceive it as being an easier transaction (boiler-plate contract, direct negotiating terms, more transparency), and may just be the same kind of person who doesn’t want to purchase something “used.” Same kind of person I’d assume who likes to buy new vs used cars maybe :). In my experience, all things equal you’re better off buying used!
Hello Kent,
Any word on H2O on the Ocean and the new Horizon Tower?
Thanks
Santiago,
This is from Juan Camilo, one of our sales advisors who specializes in Balboa Avenue properties:
Horizon Tower: Presales are going well and they are well advanced on earth-works. I like the project because it will be a new concept in Ave Balboa, there are really no buildings like this yet or even planned.
So far, studios was reserved for areas like el Cangrejo or Obarrio, there some in the Ave Balboa without ocean view. My thought is Horizon Tower will drive prices up, short rentals (6 months) will be the market based on the offices tower next door. As was mentioned on the article Calidonia is being change so it will help to hold the appreciation.
H2O: Is the prefect average building in Ave Balboa, price range is $2,200 to $2,400 it was having the the same appreciation. as told above, H2O will be pushed by same forces as Horizon tower because it location, near from metro station, walking distance from historic district and high demand for tenant, great ocean view and good lay out, will keep this building as an a good investment alternative.
Thanks Ken..
Hi Kent,
Instructive, as always.
Thanks,
Henry
Hey Henry, thanks!
Hi Kent,
What is your view on TOC property values in the coming years? They have been stagnant for the past few years.
Jim
Jim,
Thanks for your question. I’ve seen a few firesales in the Trump Ocean Club over the last 2 months which imply that sellers are waiting alot longer than they are accustomed to and ultimately jumping at low-ball offers. Rentals in the building are also sluggish right now which ultimately has an affect on prices.
We’ve seen the developer willing to come off by more than 10% off of their list pricing which is quite aggressive but to their credit, units are still selling.
My thoughts on the next few years in Trump Ocean Club
-I see rents softening market-wide, especially on the smaller units in Trump and Punta Pacifica/Balboa Avenue areas. That’s correlated to less mid-level managers getting relocated to Panama, probably because the world-wide economy is slowing down.
-There’s a certain market who prefers to purchase directly from the developer (vs from a private seller) and once that inventory dries up, that buyer may look for other “brand new” units. Not sure how that would affect prices on existing units if they weren’t being considered in the case of this particular buyer. (Curious on your thoughts)
-Building administration seems to have tightened up, meaning once management efficiencies start to impact monthly home owners association rates, potential buyers may feel more comfortable with the holding costs and sellers wont be as pressured to unload.
-Canal opening may bring in new demand from the shipping maintenance and logistics industries and many of those folks like Trump
My take: Prices have been stagnant for at least 3 years and may be flat-lined or even down overall by early next year.
My crystal ball’s 50/50 on a good day but overall Panama’s prospects mid-term seem pretty bright and Trump Ocean Club will always occupy an important place in the top end of the real estate market so I still like the building because of the amenity list more than anything.
LONG ANSWER amigo, feel free to shoot me a private message!