Panama: Boom or Bust?

The article below, “Tourism and Hotels Boom in Panama,” may provide an overly confident outlook for Panama’s real estate market. NuWire Investors “Panama: Boom or Bust?” delivers a more well-balanced analysis. While the author acknowledges Panama as a global hub for real estate, tourism and business development, he is equally quick to point out that “much of the investment in Panama was based on speculation (much like the now ailing South Florida market)." While banks around the world tighten their financing (and Panama is unable to loan to weak credit buyers as it once did), a correction for Panama City real estate can be expected in the time it takes for many of the projects currently under construction to be finished. Builders will only then know which buyers can cover their balances due. Longer term investors are expected to fare well with good levels of appreciation predicted. If the bubble for Panama’s market does bust, experts are saying it won’t be as bad as the United States. Panama did not have the excessive levels of creative financing and many of its real estate buyers put down a substantial amount of cash.

As both articles mention, infrastructure problems (strain on water and electricity, traffic and parking) will only worsen as the city grows. It is crucial that the government plan for the city’s needs; however, this has not been a priority in the past.

“Panama: Boom or Bust?” urges buyers to consider other areas of Panama that have not yet been overdeveloped and speculated. Resort areas including Coronado-Farallon, the Chiriqui coast and Pedasi are predicted to increase in value as they develop and become a greater draw for snowbirds and retirees. The prices of more well-known and established destinations like Bocas del Toro and Boquete are expected to peak in the short term.

While not the bargain it once was, Panama will continue to attract global buyers and seems well-sheltered from the threat of a severe real estate crash. Many of Panama’s areas are still cheap relative to parts of Mexico or Costa Rica, and are likely to gain value as they are developed. The success of the Panama real estate market is in large part dependent on the government’s ability to balance development and planning concerns.