FINANCIAL CRISIS HITS TOWN

Real estate boom starts deflating

Investments in the construction sector were down by 35 percent in September and 78 percent in October compared to last year

MANUEL LUNA G.
mluna@laestrella.com.pa

PANAMA. The global financial crisis has started to put a premature end to the construction industry boom in Panama, and in 2009 the fall of this important industry is expected to be more pronounced. The local market has reached saturation point, and demand for new projects is falling.

As proof, in the month of September, investments in construction projects were down by 35 percent, compared to September 2007. The sale of projects in the month of October fell 78 percent compared to statistics for October 2007.

A study by the economist Osvaldo Lao for the Panamanian Association of Real Estate Agents and Promoters revealed that housing sales reached 1,766 in October 2007, while the number fell to just 438 this past October, the lowest monthly figure in the last two years. In housing complexes that cost less than $80,000 the fall was 75 percent.

For units costing more than $80,000 the fall in sales was 80 percent.

The housing sector of less than $80,000 proves to be the most marketable, with a turnover rate of less than 10 months.

Meanwhile, the turnover rate of housing valued at more than $150,000 can be as high as 26 months.

A total of 435 active projects with 14,342 available housing units existed in Panama during October 2008, an increase of 3 percent over September.

The report also revealed that the average cost of the housing units in the capital city last October dropped to $257,286, from $260,500 in September.

Tocumen and Arraijan are currently the most active zones. Beach and mountain projects are the hardest to sell.

Lao’s study suggests the need to clean up the market, as the presale percentage is too high, which could lead to the suspension of some projects.

The economist Juan Jovane believes that the main problem is that in 2009 “there will be no buyers, because the local market is saturated” and international buyers will stop coming.

Added to the fall in demand, Star sources say that banks have become stricter with their mortgages, offering them for only $1,200 a square meter and requesting buyers to pay the difference up front, a scenario that certainly does not help the real estate sector.

Publicidad