REAL ESTATE

Demand falls as supply rises

06-12-2009 | STAFF

Foreigners have stopped coming to Panama, and buildings are still under construction. Will Panama become a ghost city?

Panama Star PANAMA. In the first five months of the year, the demand for housing on rent in Panama City fell 18 percent, according to statistics by the Association of Panama Realtors (API).

Felipe Chen, API’s vice-president, confirmed the secret that has traveled across the country: foreigners have stopped coming to Panama although some projects, albeit at a slower pace, are still under construction.

“Immigration has fallen and executives coming (to Panama) are looking for more economic apartments. Currently, the most solicited rentals that ranging between $500 and $1000,” Chen said.

Added to the fall in occupancy rates, statistics from the Economic Affairs Directive of the Chamber of Commerce show that the price per squared meter in Balboa Avenue has fallen from $3,000 to $2,500, and in San Francisco from $1,900 to $1,600.

For the real estate analyst Jose Boyd, the decline in occupancy rates in Panama City is a “momentary phenomenon.”

“Recovery signs will return by the end of the year, when world economies end up recovering,” said Boyd.

“The real estate market is changing. Three years ago the main tenants were people coming from the United States, Canada and Spain. Today investors come mainly from Venezuela, Ecuador, Costa Rica, and Colombia,” claimed the analyst.

For Boyd, the change that the sector is undergoing will allow service-oriented sectors to grow: “With so many empty apartments the service industry has a market niche to attack. Maintenance and security are key sectors.”

For the former president of the Panamanian Association of Real Estate Agents and Promoters (ACOBIR ), Ivan Carlucci, the market is readjusting.

“This is not time to despair. Everything is changing, from the clients’ priorities to the prices of the units offered. Calm will soon return,” he concluded.

Meanwhile, some believe that while the local condominium market has slowed recently due to a possible oversupply of in ventory, a different niche is emerging in its wake: the capital city's well-constructed and centrally-located homes, which, historically scarce, are now entering the market.

For Kent Davis from the real estate brokerage Panama Equity, market conditions have opened up the opportunity to buy some few houses on prized downtown areas such as Obarrio, which rarely enter the public market, as owners traditionally chose to pass the home from generation to generation.

Now, he says, the market is starting to see examples of limited edition properties with surprisingly reasonable price tags.