Panama Equity Balboa Avenue Report: August, 2010
This quarter, we have focused the Panama Equity magnifying glass on Panama’s bourgeoning
waterfront strip Avenida Balboa. Find inventory statistics that show where the opportunities can
be found and what you should be cautious of. Also in this groundbreaking report, compiled
buyers data and average rental prices, along with a special disclosure on who’s getting duped and
for just how much!
I. Report Highlights:
– An estimated 2,087 new units are to be completed by 2013, bringing the grand total of
completed condominium units on Avenida Balboa to 3,396
– In the last 12 months, a total of three new buildings have been delivered on Avenida
Balboa which represent 556 new units
– Furnished two-bedroom rentals for an industry standard, high-floor condominium on Avenida Balboa are fetching
a 15-30% premium versus unfurnished units on the same floor. These furnished units are currently in very short
stretch includes a high-end residential/commercial district, the Cinta Costera costal boardwalk, the Calle Uruguay nightlife district, as well as MultiCentro mall and arterial access to almost any
neighborhood in Panama City. Future development here includes the metro line due to be
completed by 2013 and a massive new government city to be housed in the former US Embassy.
There’s no secret Avenida Balboa has been, and will continue to be both the literal and figurative
center of Panama City but as our report shows, seeking out the newest and hottest deals now
takes some cautious old-fashioned finesse.
The Data: Over the last four months, we have been tracking sales figures and physically
canvassing every building on Avenida Balboa. We partnered with developers, property
managers, and sales agents to gather sales data, organize and compile developer published price
lists, and dissect selected property listings.
Chart of Price Per Square Meter averages (in USD) since March 2010
|March 2010||August 2010||Change|
Our research indicates that for an existing 150 meter (1605 square foot), two-bedroom apartment along Avenida Balboa, today’s average asking price hovers around $2,190 per square meter.
This reflects a relatively small drop in price of approximately 5% over the last four months, and
we believe that this trend will continue well into the next year as supply will continue to outpace demand.
Rents have corrected significantly, with average rental price on a new, unfurnished condo on
Avenida Balboa coming in at right around $14.50 per square meter. Furnished rentals for a high
floor condominium on Avenida Balboa are fetching a 15-30% premium versus an unfurnished
unit, and are currently in very short supply.
Over the last six months, we’ve seen three new buildings delivered on Avenida Balboa: H20,
Sky, and Destiny. This represents new inventory equivalent to 556 new units, and we saw fairly
precipitous drops in resale price points about 60 days before delivery up to 30 days after
delivery of each building, mostly from investors who were not able to close on their contracts
and forced to resale at old prices. This did have some short term effect on overall Avenida
Balboa sales pricing, however, prices have corrected upwards slightly as most of the deals are off
of the market and the remaining units are through resellers who purchased at the peak of the
market in 2008-2009.
Developers are clearly still out of touch with the reality of the resale market, with their average published price at $3,394 per
square meter. Over the past year, Panama Equity has found that most developers’ sales offices generally will approve a
20-30% discount with little negotiation. We have seen discounts offered as high as 40-50% in some cases, depending
on the size of the purchase and the down payment offered.
Advantages: Obvious advantages of living on Avenida Balboa include ocean views,
generally smooth traffic flow, and a location within Panama City that has multiple entry and exit
points. The extending of the Cinta Costera beltway into Panama’s historic District of Casco
Viejo will also improve accessibility into this trendy nightlife district. Travel time to Tocumen
airport is approximately 20 minutes from Avenida Balboa and a trip to the Gold Coast beach
areas or the Caribbean coast will run about 45 minutes.
Disadvantages: Noise! Avenida Balboa is one of the prime arteries of Panama City, so bus
traffic noise is quite intense around rush hour which in Panama starts around 7:30 am and ends by
about 6pm. Until the government decides to outlaw airbrakes and make mufflers mandatory, traffic noise will continue to be a
problem along Avenida Balboa. Crime, while relatively under control, could also become a problem as residents from
neighboring Curundu and Caledonia spill over into the area.
Observations and Conclusions: As the graphs indicate, an expected 2,087 new units are to be
completed by 2013, bringing the grand total of constructed condominium units on Avenida
Balboa to 3,396. While this doesn’t necessarily bode well for those who purchased expecting a
quick flip, it does create a niche for buyers looking to take distressed assets off of willing sellers.
As a result, Panama Equity has begun to focus on finding these types of firesales through
motivated sellers, in particular units that will fetch a relatively high net cash flow return.