JW Mariott, Sheraton, and Decameron are the only marquee names that have so far established a foothold on the Gold Coast, Panama’s beaches region west of the city. This, compared to big players like Waldorf Astoria, Ritz Carlton, Trump, Hilton, and Riu all of whom have scrambled to create their presence in Panama City in the last three years.
Strong economic growth across Panama and in particular Panama City is fueling new developments in Panama’s beaches areas as city residents look to buy second homes and tourists seek out new options that are on par with what they are already used to in the city.
Unlike areas in the region like Cancun and the Riviera Mexicana where there are more than 345 hotels to choose from, the Panama beaches region still has long stretches of unimproved beachfront land that’s in prime position for development.
A Commitment and vested interest from the government
Billions of dollars in infrastructure investment have been spent to pave the way for the tourism sector, including a new International airport, a mass transit metro system, as well as a widening of the Interamerican highway and that’s already starting to drive growth outside of the City, most notably in the suburbs just outside of Panama City.
And the beaches area west of Panama City, particularly in Coronado and the surrounding 20 mile radius have in 2014 reached a tipping point, with over 25 new developments planned and/or in construction.
With the addition of two new shopping complexes and nearly a half dozen more in construction, the Coronado Panama area has seen in the last three years a transition from a sleepy weekend “locals only” beach town to a full time community with schools, restaurants, and hotels.
In a country that’s experienced positive GDP for the last 24 consecutive quarters and in 2014 watched revenue from tourism for the first time ever surpass the income generated from the Panama canal, major hotel chains and large scale developers are starting to seriously consider Panama’s beaches areas to plant their flags.
Directors of the International airport at Rio Hato, which just started receiving commercial flights in February of 2014, announced that they are in talks with several major carriers, all of whom plan on bringing in visitors from Canada, the US, and South America. In anticipation of this, existing beach developments like Playa Blanca, which boast “the worlds second largest swimming pool” have been expanding their resort offering for the last five years.
Incoming president Juan Carlos Varela has committed tostrengthening Panama’s tourist sector by continuing incentives put in place by his predecessor Ricardo Martinelli, which include tax breaks against revenue, materials, and property holdings.
Still Comparatively Inexpensive for the region
By international standards, beachfront land for sale in Panama is still cheap, however finding a deal requires patience and a solid on-the-ground presence in a country where foreigners are looked at as having deep pockets.
According to Carlos Camano beaches area manager from Panama Equity Real Estate who has worked with a number of private investment groups to source parcels for development “build costs range from between $900 – $1,300 per meter, depending on the finish quality.”
In a country where skilled labor will cost you less than $50 per day and land can be purchased for less than $50,000 per hectare, there’s still some serious margin for anyone thinking about building.
“What we need out here is houses, some completed inventory” says Tedd Tennis, who runs Panama Equity’s Pedasi office. “There’s a sweet spot in the market right now in Pedasi and the surrounding area, and that’s anything between $150,000 – $250,000. As soon as someone gets that type of inventory out there, it sells.”
A Tipping Point?
Panama City is growing by leaps and bounds, and city residents are starting to get frustrated with the impact this sort of growth can have on city life.
As affluence rises and job commitments become more flexible, city dwellers are looking to spend more time in the easy-to-access beach areas 1-2 hours drive from the city. Gorgona, Coronado, and San Carlos are all destinations that fit the bill.
Panama’s tourism sector is also flourishing.
In the last six months, there has been over $7 million dollars invested in new hotels in the Chiriquí and Los Santos provinces, both of which have been trying to play catch up to the growth in the rest of the country. Major European airlines like Iberia and KLM have committed to more direct flights as demand continues to grow. In 2014, European visitors were up by 20% but the numbers are still tiny: Just over 70,000 tourists came from Europe in the first 5 months of the year. That’s a tiny percentage of overall tourism volume for the region, meaning Panama has plenty of room to grow with this demographic.
Development around the country, most notably the Azuero beach region near Playa Venao is full speed ahead in 2014, on the heels of several new hotels, restaurants, and small shopping centers which were completed in 2013 and have paved the way for more growth in the Pedasi area.
It’s always difficult to identify what stage of a cycle one is in, but driving through the outskirts of Panama City, one cannot deny that a lot of dirt is being moved. And looking at developer price lists and keeping an eye on absorption and new construction projects, we see a lot of project promoters making money in this market right now. What the future holds on that gamble however is anyone’s guess.