November 24, 2007
I’m done with Panama Real Estate
As a professional overseas property investor, I am only too aware that I am constantly one mistake away from bankruptcy – that’s all it takes - one investment gone awry, one condominium building that didn’t get built, a sudden unexpected drop in the market, a burst real estate bubble, and I am back to washing dishes. Well, maybe not quite that bad – I might have to sell one of the Bentleys, which would be almost as much of a disaster.
Anyway, the purpose of this is to talk about the upcoming burst Panamanian property bubble. I know, it hasn’t burst yet and I know Mark doesn’t agree with me on this one, and even as he edits this before posting it, I can almost hear him cursing and imagining himself re-writing it.
I am out, finished and done with Panama for the foreseeable future. Why? It’s going to burst, and soon. Yes, I have made a bundle in Panama over the last four or five years. I even bought and sold the same condo twice – and made a profit both times. I picked up half a dozen high-end condos at $1,000 a square meter and sold them two years later for $4,000. My local agent was happy as Larry, that was the third time he’d sold them since the project broke ground.
But, the last visit I made told me one thing – the only people buying into Panama are the speculators and at some point in the not-too-distant future (I think within 8-12 months, certainly before 2008 is out) Panama is going to pop. Supply and demand rules the property investment world and there is nowhere near enough demand from the ground floor to support that many luxury condos. I got out while the getting was good. Take a long hard look at the social structure in Panama before buying property as an investment there. If you wish to live there, OK, different story, but from a pure overseas property investment viewpoint, be very, very careful out there. I expect 20-30% of the current un-started projects never to be built.
Filed under Panama by Ahmed
Comments on I’m done with Panama Real Estate »
[...] say’s he is done with Panama real Estate, but my feeling is there is some steam left in the market still. Here is one development still in [...]
Yea this guy gets it! but hey, its ok for me as long as people speculate, which probably will not be for too long since I am invloved with the following Real Estate company
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Panama Real Estate
I was recently in panama this year and this was the talk about how much the city was in a boom but i would have to agree with you. I simply do not see how all of these properties will be filled. maybe later down the road as the canal is now going into an expansion project maybe it will bring more people to the city but…i think i will agree on your call.
[...] firmly believes Panama is a bubble about to burst and is to be avoided in 2008, Spain needs selling ASAP and the U.S offers some opportunities in [...]
Obvious risk of oversupply, no-resale market and low occupancy values.
All these will inevitably trickle through and affect values. As The Economist correctly observes, this boom in real estate has not come with socio-economic reform modernising old school institutional corruption. Not to mention, the capital city has a complete lack of public transport. Its plethora of buses or “diablo rojos” are privately run!
If the city is to absorb all this growth. There needs to be massive investment in public infrastructure. Only then can it sustain all of this development.
After the enlargening of the canal, the implementation of the balboa-colon railroad, expansion to Tocumen airport and the high-tech parks in the canal zone.. this should all bring both capital and the skills required.
My point is that with such dramatic contrasts in wealth and poverty, there is still vast swathes of a once highly militarised, armed and politicised society that need to be given a share of all this wealth and development. If they are polarised further, then there could be some rather serious consequences.
Economic stablity and long-term growth are not a given here, and never have been.
Hugo - yes, although Panama City is not alone in this problem. Most of the “emerging” markets face similar issues.
A recent suggestion was that developers must build a certain amount of affordable housing along with any luxury developments, but…….