Balboa Avenue Panama Real Estate Report

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

 

supply

Avenida Balboa has, for some time, been the hallmark Panama City property hotspot. It’s iconic

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
Resales	2320	2190	-5%
Preconstruction	3400	3394	-1%
Rentals	2400	2175	-9%

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.