Property prices are going down

PANAMA. Real estate prices are decreasing for the first time since the boom according to the 2009 Panama Real Estate Report.

This trend is causing a great deal of distress among developers and speculators who are beginning to see their dreams of doubling their money disappear.

The report written by Martin Landau says that the main problem with real estate in Panama is that sellers want to sell high and buyers want to buy low and nobody really knows the right price of the properties.

At the beginning of the boom Panama was an attractive proposition, because real estate was cheap, but with the entrance of speculators and luxury projects the prices went skywards to first world levels.

Landau said that the projects that are suffering the most are the luxurious ones.

For example the multi-millionaire project Los Faros is apparently in financial trouble and although the developers are no longer brokering the condos, it has not been officially cancelled.

The report pointed out that the prices of condos in Panama City are similar to those previously paid in Miami, where prices are in free fall. In Panama city condo asking prices increased 2.88 percent since last year, possibly fueled by Latin Americans having trouble entering more northern markets.

Landau said that “some experts wager that these numbers represents the maximum peak in a curve that will soon begin its downward slope, as supply continues to increase and demand appears to be tapering off.”

Real estate advertising has all but dried up in the last six months as more projects are being cancelled in the pre-sales stages.

The CEO of the popular classified web site Encuentra24.com, Boris Métraux sees prices in Panama real estate listings about to drop and efforts from desperate sellers increasing.

Métraux said that they are getting more individual ads from foreigners who bought properties as investments or second homes and are now desperate to get out.

A Canadian who wants to remain anonymous admitted to being too greedy over the past few months and passed several good offers on his Balboa Avenue unit. Currently he has been obliged to lower his asking price to one third, down to the the amount he originally bought the property, but nobody is interested.

The report indicates that in the case of Bocas del Toro province property values are going down as the province’s image is being affected by news of land disputes, drugs and crime.

Additionally , thenumber of potential buyers has fallen. The report says that 99 percent of the people who are reducing sale price of their properties for a quick sale are foreigners, who were affected by the financial economic crisis and need cash quickly.

The Boquete and Volcan market is a little different as plot prices went up by 2.83 percent helped by developers and land speculators, but sales in general have come to a halt. Paul McBride, sales manager of Valle Escondido said that “now the real estate market has crashed overseas the effects are being felt here and properties must be priced realistically.”

Condos and houses in Coronado and San Carlos have lost almost nine percent of their market value and the average property price is down by 12 percent. again because of cancelled projects.

Landau came to the conclusion that the only way to revive the ailing real estate market is to increase demand and in order to do that sellers will have to lower the asking price.

The fact remains that foreigners came to Panama because the properties were cheap and the cost of living was low. Currently that is no longer the case, with homes here often more expensive than in Europe and the United States.