How to Avoid a Panama Real Estate Disaster

When the Panama City real estate boom was beginning, demand for condos was so high that buyers could flip their condos for double the money—before the building was …

When the Panama City real estate boom was beginning, demand for condos was so high that buyers could flip their condos for double the money—before the building was even built. Buyers snatched up anything they could. Savvy buyers acquired properties that were unique, inimitable, truly one-of-a-kind and, more importantly, easy to sell to other eager investors.

The real estate market in Panama today

Investors are now learning real estate market is no exception to the laws of supply and demand. New developments have saturated certain areas and buyers have a larger supply from which they can choose, allowing them to be more patient in searching for the perfect property for them. Meanwhile, many sellers have an unrealistic idea of what they can get for their real estate, and they are getting anxious and frustrated.

Investors who aren’t looking to spend the rest of their days living in or on their investment should only buy property that they would feel confident putting on the market. Whether its commercial space, farm land, condos or historic real estate, real estate that is unique and which stands apart from the rest will fare better when it is time to sell.

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Consider two factors to ensure that prices rise and that the investment is lucrative:

  1. Buy on the basis of a definite and impending increase in demand.
  2. Ensure that this increase in demand will far surpass supply.

Analyzing future supply

Land is a finite commodity and buildings takes time to produce, so it can be difficult to predict supply and demand. Between the two factors, predicting supply is a little easier than predicting demand. In a particular area, look at the amount of projects just getting started, near completion and currently inhabited. This ratio helps indicate if a region’s real estate supply is saturated or is approaching saturation, and whether or not new projects will continue to appear.

Analyzing future demand

Start by looking for growth in the local economy. More jobs and a growing population will create higher demand for real estate. Panama’s economy is growing very quickly: New oil refineries and mining projects are on the horizon, as is the expansion of the Canal, and demand is sure to increase. The question is: at what rate and for how long will it increase?

 

The Panamanian economy is just starting to truly flourish, which is good news for investors, but one cannot rely solely on the statistics. Investors must use common sense and instinct. Take heed if a region is still growing but appears to be nearing saturation, depite the cheering of optimistic developers or promoters. Panama has many niche markets and regions that are begging for investor interest, so don’t look exclusively at the famous areas.

When the time is right, exercise this calculated risk and be one of the first to buy in a condo project or mountain development or beach retreat. Whether you personally enjoy the property or not, you’ll be in a position to make a significant profit off of your investment.

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