In Panama, Are Foreigner Investors At A Disadvantage?
I saw the boom for high-end luxury real estate in Panama begin (in earnest) in 2006, when the market was made up of almost entirely foreign buyers from the US, Canada, Venezuela, and Spain. At the time, most were buying up pre-construction condos in areas like Punta Pacifica, Balboa Avenue, and Costa del Este. Inventory was readily available, easy to find, and was being widely promoted by developers via trade expos, magazines, and online campaigns. This period is now widely known as Panama’s boom period and agents like me were selling properties to everyone and their sister.
But today, accessing the market’s true offering is growing increasingly difficult for foreigners trying to search on their own for high-end real estate.
Because Panamanians have begun to re-establish this place as a very closed and homogenous playing field. As challenging as it is to say, local Panamanians with their inside connections, high-level government contacts, connected attorneys, and local affiliations like church and synagogue groups are at a noticeable advantage in 2013 when it comes to getting access to what is truly on the market.
Many of my clients have commented on Panama’s fragmented real estate listing environment which makes things very difficult for an uninformed buyer to find top properties in upscale locations.
Because these properties rarely make it on the market. Rather, they are being sold through an elite and oftentimes closed network of real estate agents, attorneys, developers, and private connections. Nowadays I canvas buildings (and in fact entire neighborhoods) which are controlled by a small group of families. It’s in these circles that the only way to have access to the best properties in these areas is to “know someone who knows someone.” In this sense, most foreigners are out of luck.
Furthering the difficulty for foreigners, I’ve seen a number of luxury property sales of unlisted properties close via private transactions, meaning there is no transparent system in place to identify a true market value. Going along with the theme, high-end listings that do make it to the open market usually have very few pictures because the sellers don’t want their neighbors to know the property is for sale, putting the overseas buyer attempting to research online at an even bigger disadvantage.
Nonetheless, properties are still moving under the current conditions. It isn’t so much that investing in real estate in Panama is difficult. But to get the special stuff — the real estate that’s usually sold below the radar — what’s clear is that you need to be working with the right team.
Rafael Mas, Commercial Director with Grupo Corcione in a brokers-only sales meeting revealed that over 70% of their 3500 – 4000 square foot units in the ultra-luxury Valery Point development (located in the new Santa Maria Golf Course Community) have already been sold. More than 90% of the buyers have been local, with price points averaging over $900,000 per unit according to Mas. This is amazing!
Some foreigners are still wiggling their way into the elite end of the Panamanian real estate market, as evidenced by another developer’s comments, who preferred to stay off the record:
“Europeans have been interested in our product” which happens to be two-per-floor 500-meter oceanfront condos ranging in the $1-2 million dollar mark. “But this year, it’s been Panamanians who have bought the most. We don’t do much marketing and generally tend to fly below the radar, so they are really finding us. This year, Panamanians have been number one.”
So in order to dig a little further, I did some research and tapped my good friend, the Director of CompreAlquile.com, a popular online listing portal.
According to his exclusive statistics, it appears at first glance that there is plenty of published inventory: In Punta Pacifica alone, for instance, there are currently 54 condos for sale listed at over $1,000,000.
But what we quickly determined was that because of the nature of the market (one in which sellers who choose to list their properties may use multiple listing agents), many of these listings are either duplicate listings, sold properties, or bait-and-switch units used to bring in captive buyers. This cements the fact that there is plenty to choose from online, but what you will find is not necessarily an accurate or complete representation of what is actually on the market.
It isn’t so much that investing in real estate in Panama is difficult. But to get the special stuff — the real estate that’s usually sold below the radar — you need to be working with the right team who can leverage local connections and turn over stones that may be covering that truly special, one of a kind property that is in fact for sale.
While foreign buyers still have the same rights and protections under Panamanian law as their local competition, it’s become increasingly important to become aligned with a trusted, informed, and most importantly connected property agent.