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.