Decline in Apartment Construction Offset by Increases Elsewhere

Sunday, June 06 2010 @ 06:17 pm EDT

Contributed by: Don Winner

The construction of buildings suffered a decline of 22.2% in the fourth quarter of 2009 in the districts of Panama and San Miguelito, compared with the same period last year, according to the Census of Construction of the Comptroller General of the Republic. In the last quarter of last 2009 a total of 784 buildings were built, while in the fourth quarter of 2008 the number was 1,008. What's more, a total of 629 occupancy permits were issued in the fourth quarter of 2009, registering a fall of 38.39% compared to the same period of time in 2008.

"At the moment there is little availability of suitable land for construction in the area, and the few that exist are very expensive, which has affected the sector," said Elisa Suarez Gomez, the Executive Director of the National Council of Housing Promoters of Panama. She added that the trend for 2010 with regard to buildings in San Miguelito will remain the same, with a slight tendency towards a decrease.

However, Pedro Detresno, the owner of Pedro's Real Estate, the construction of new buildings in these areas will achieve a recovery towards the end of this year or in the beginning of 2011. He explained that this recovery will be a result of the start of the current government's five year plan which will be pushed further by the ongoing project of the expansion of the Panama Canal.

In this sense Aristides Hernandez, of the consulting firm BDO Panama, said that despite the decline in private sector buildings, the decline this year will be offset by an increase in the construction in the public sector. Among other expectations of the sector a decrease is expected in the construction of high rise buildings and apartments, offset by an increase in the construction of infrastructure, roads, and houses. Detresno said the construction sector is currently directed towards the local market and tourism, unlike past years when the market was directed towards foreign buyers.

During the first quarter of 2010 the amount of construction being accomplished by the Grupo Su Casa increased 15%, according to their Vice President Guillermo Quijano. "Sales of low cost social housing and to the middle class increased significantly, encouraged by the Law of Social Interest, thanks to good levels of liquidity in the banks, and because we expect the prices of materials used in construction to remain stable," said Quijano. (Panama America)

Editor's Comment: Check out this same article as "interpreted" by another online publication. Notice, there is no mention in the original article of the last line. Also, they fail to credit the original source. This article appeared in the Panama America yesterday, 5 June 2010. Now, with that having been clarified, there is no doubt that the construction sector is turning away from apartments and moving towards commercial buildings, infrastructure, roads, and other large scale projects. For example when they talk about projects of "social interest" what they mean is that they are building large numbers of low cost houses for people who make less money. There is a government program which basically provides the profit margin. If I can remember the numbers off of the top of my head I think the builders get $5,000 for each house they can deliver at a price of $21,000 or less, and it has to meet a series of government specifications. Like, so many square meters, so many rooms, on a lot of a certain size, etc. What's more, the construction sector in Panama is looking at the 8,000 jobs they have to fill to build the third set of locks for the expansion of the Panama Canal. And, Panama is about to embark on the construction of a new mass transit project - the Panama Metro - which will cost about $2 billion dollars. All told in the next five years the government of Panama will spend about $17 billion dollars on public sector projects, and the guys who are in the construction business are walking around making tents in their pants - yes, they are happy to see it coming. So, of course there is a decline in permits for highrise apartment buildings, because a whole lot of them have already been built. The main point of this article is that the construction guys are moving on to something else. And that, my friends, is a good and healthy thing for the Panamanian economy in the strategic sense.

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