The Chief of the Health Office of the Metropolitan Region (Panama City) has applied a $5,000 fine against the "Los Faros" real estate project located in Punta Paitilla, in the area of San Francisco. The project, which remains under construction, has become a breeding ground for the Aedes Aegypti mosquitoes, vectors of dengue and dengue hemorrhagic fever. Health officials took samples of the larvae found in the collected rainwater and sprayed around the structure. (La Prensa)

Editor's Comment: Normally in Panama when you see someone digging in the ground and pouring cement foundations and footings, that means relatively nothing as an indicator if the project will actually be built, eventually. Once they "come out of the ground", install working cranes, and start to pour structure such as beams, columns, and floors - then that's a much stronger indicator that the building will actually be completed. I have seen many projects, such as this "Los Faros" project, that get frozen at the "hole in the ground" phase. This was going to be a massive project - literally huge - and apparently progress has come to a screeching halt. It was going to dominate the skyline in the area, and now it's little more than a mosquito breeding pit. Big projects are often more likely to fail than small projects, just as a general rule of thumb. Let's see if this once comes back to life. It happens this way sometimes...   

Now available - office space in THE LAWRENCE BUSINESS CENTER - conveniently located on the ground floor of the Argentina Tower on Via Argentina in the middle of Panama City, right next door to the HSBC Bank. Every office is a fully turn-key operation and includes telephone, Internet, electricity, air conditioning, copier, reception, and a conference room. Prices start from $340 per month.

Contact Information: Telephone in Panama (507) 223-9050, 223-9060, or 223-9070. Contact in Spanish and English - Call Vicky at cell phone (507) 6673-5890. Email: avcoto@lawrencebusinesscenter.com.

Photos: Please see the rest of the article for photos of the office space. Thanks.   Click Here To Read The Full Article (22 words)

This week, a link to one of the hardest working and insightful real estate agencies in Panama. Kent Davis at Panama Equity has started to publish a quarterly “Market Report” focusing on individual neighborhoods within Panama City, and this month he provides some interesting information about things to come on Avenue Balboa. Anyone that’s driven along the Cinta Costera recently has probably thought the same thing. “ Exactly how many new condos are going to be built here.” Kent answers that very question and a whole lot more in his report, which can be found in it’s entirety here: http://www.panamaequity.com/en/market-research. I like what this agency is doing, and I’ve been hearing nothing but good things about them for the last two years. Enjoy folks, it’s definitely worth the read.   

Panama Realtor is an established, full-service, nation-wide real estate company with headquarters in Panama City and fully bilingual agents throughout the country. We have an advantage over other real estate companies in that our bilingual agents are all locals. Our love for the country is apparent in our insight and knowledge of Panama’s culture, traditions, land and people. Additionally we realize that making a move to a foreign country involves much, much more than just purchasing a home, apartment or property, and can provide support on many different levels such as assisting in everything from transferring utilities bills into your name, to recommending a family doctor. We have experience that has taken a lifetime to acquire and have developed solid relationships with just about every service provider one could need for everyday living in Panama.

   Click Here To Read The Full Article (354 words)

By Catherine Deshayes for www.themovechannel.com - Before you consider investing in Panama, follow these tips from Pathfinder's Margaret Summerfield, who has lived in the country for the last three and a half years... Margaret says, "I've lived in Panama City for the last three and a half years. And I started studying the real estate market here four and a half years ago. I love living in Panama City, but I still haven't bought a property here. And you shouldn't either-until you read this. Sure, you'll see those headlines about Panama's strong economy (forecast growth this year: 5%). And you'll hear the talk about all those multinational companies relocating their regional headquarters here (Caterpillar, Proctor & Gamble), and the properties their workers will need. Next it's the mega-projects...the new Metro, port expansions, and the granddaddy of them all, the Canal Expansion.

The argument goes like this. A country with all these positive factors must have a strong real estate market. Therefore buying property for investment here makes sense. But that's simply not the case. Back in late 2004 and early 2005, prime city waterfront condos in Panama were selling for £668 a square meter pre-construction. Fast forward to 2008, and those now-completed condos had price tags of £1671 a square meter. Then the cracks started to show. And I'm not talking about shoddy construction...

The asking price for new pre-construction condo projects on Avenida Balboa reached £2340 a square meter in 2008...but they were alongside those brand-new, finished units for £1671 a square meter. Built by the same developer, with the same amenities, finish quality, and views (and located only yards apart)-it didn't add up. Why would anyone pay £2340 a meter...taking a calculated risk and waiting three years for delivery...when they could buy the same unit, finished, for £669 a meter less? The answer is, they didn't. That price differential flagged up a market anomaly...a sign that something wasn't right. The city condo market was saturated...over-supplied.

Then the economic slowdown in the US hit. Americans comprised up to half the buyers of prime city condos at the height of the boom. That pool of buyers dried up. Coupled with that, banks here tightened their already conservative lending policies, leaving buyers without the funds for purchasing property. So the market slowed. It hasn't crashed Florida-style, though. You don't see foreclosure auctions (the banks handle foreclosed properties so discreetly, you're unlikely to know that your neighbour's in foreclosure, unless he chooses to tell you). You don't see properties advertised at 50 cents on the dollar, either. A chunk of property owners (Venezuelans and Colombians) don't want or need to sell. They see their Panama property as a safe haven for parking money...a better bet than banking in their home countries.

What you do see are fire sales, from owners (usually American) who bought preconstruction 3-4 years back, and now can't afford to close. Their circumstances changed...or the banks' tightened lending means they can't get financing now. They stand to lose the 30% of the purchase price they've paid to date if they don't close, and they're looking to claw some of that back. And to do that, they're offering properties in some cases for less than they agreed to pay 3-4 years ago for pre-construction. Yet their units are now finished and ready to move into... So, my advice is this:

Don't buy here for investment right now. Don't buy pre-construction (it always carries a risk...which is not worth taking in a stagnant market). Don't buy for flipping, or short-term capital appreciation. Don't expect the double-digit short-term rental yields we saw in previous years. More completed condos come on the market daily. Their owners can't sell, so they decide to rent. Many property managers won't take on new condos. They're trying to shore up occupancy rates for existing owners. Hotel occupancy is down around the 50-60% mark (from a high of 84.7% in 2007). The hotel lobby wants short-term condos (which they see as unfair competition) registered with the tourism authority, and paying the 10% a night tourism tax. Worse than that, they want a minimum 45-day stay in short-term rentals. We're still waiting for a decision on this.

Having said all that, buying in Panama may still be right for you. If your plan is relocating to Panama, or spending a chunk of the year here for the longer-term, then buying here makes sense. But look around, and find yourself a fire sale-a property at an unbeatable price. There is no MLS (Multiple Listing Service) here, so you'll have to contact different real estate agents to see what they have. P.S. Don't get me wrong. Panama is by far the best country in the region for living, setting up a business, or moving with a young family. It boasts the only truly cosmopolitan capital city, the best infrastructure and medical facilities in Central America...all with a very exotic Latin flair. I love living here...but Panama's not an investor's market right now.

Written by Margaret Summerfield for TheMoveChannel.com

Editor's Comment: Most of the time when I read these kinds of articles, I cringe. Let me start by saying that I agree with about 95% of the content of this article. There are a few details I would quibble with. For example - the issue of the hotel owners wanting to make apartment owners register their apartments as hotels, pay the 10% fee, and all of that. They tried it, I called them on it, and it's now a dead issue. The Tourism Administration tried to slip in a quick Resolution that had the actual affect on the ground of changing the basic property rights of all property owners in the country. It was a stupid idea to start with, they did completely wrong, and once we started holding their feet to the fire they backtracked and quickly issued another resolution to nullify their first resolution. In other words, it's not going to happen.

Rental Market Softens Anyway: Regardless of the whole short term rental issue, there are literally thousands of units that will be delivered in the next year or so, and the return on short term rentals will be coming down due to oversupply and very basic rules of supply and demand. Also, back when hotels were at very high occupancy rates everyone all had the same bright idea at the same time - build more hotels. Now there are dozens of new hotel projects under construction, and when all of those rooms come online that will add further downward pressure on the short term rental market. So, it's not a good idea right now to buy an apartment if your only intention is to rent that property out in order to make investment income. However, if you're looking at retirement ten years down the road and if you think you might want to have an apartment in Panama City as a retirement pad, then it might be a good plan to buy an apartment and rent it out, with the intention of simply having the property pay for itself over time. Even if the rental market softens substantially, you should still be able to get enough of a return to break even, pay all fees, and the property pays for itself. The "return" or "income" is a free apartment in the long term. But, you have to think strategically, and not tactically or short-term.

About the Value of Real Estate: The builders and developers first sell about 50% of the building at cost - at "pre construction" prices - in order to raise enough money to actually build the building. The remaining 50% of the apartments are their profit. The initial buyers foot the bill for the building, so the rest is just money in their pockets. Want to know why there hasn't been a price crash in the Panamanian real estate market? Because the guys who are holding all of those apartments see them as money in the bank. They don't have to sell them any time soon. They've seen demand come and go, and they are certain that eventually the buyers will return. When they do, they have a product to offer them. Prices only "crash" when the owners are either forced or compelled to sell for some reason at a lower price. If you are living in your home the value of that property might go up and down, but since you're not selling - what do you care? It's your home, not a piece of real estate on the market. The only people who are really getting hurt in this market are the speculators who bought up a bunch of apartments intending to flip them in a hot market and to make a killing. Now, they have already committed large amounts of cash as down payments, they are committed in contracts to follow through and buy those apartments when they are delivered, and some of those will be coming up for sale by people who just want to get their capital back out of the market and to walk away relatively unscathed.

Buyer's Market: Right now there are deals to be had, and there will be more coming available soon. If you're a buyer you have a virtual buffet of properties to choose from. The properties in the $200,000 to $300,000 range are still moving well. The higher priced $600K and above market is very tight - and almost nobody can sell anything at those prices. The few buyers that exist have hundreds of newly built luxury apartments to choose from. So, if you are thinking about buying something, take your time, shop around, and bargain hunt. If you're not below $1,500 per meter, you're not trying. Anyway, other than that, great article...   

By DON WINNER for Panama-Guide.com - I attended a meeting yesterday morning with the primary actors and lawyers who continue to work towards a solution with regards to the deposits paid by investors in the Malibu Beach Park & Resort in Gorgona. They continue to work towards achieving the same goal of placing a large parcel of land in a specified trust, to sell that land, and then use the money to return deposits to all investors. This was the decision reached back in January when they developed a plan on how to move forward and to clean up the mess left behind by the Econoplade disaster. In April 2010 this press release appeared in local Panamanian newspapers, and today now more than two months later significant and tangible progress is being made towards achieving the strategic goal. It's taking time because there are many specific and complicated steps to be accomplished and there are four primary actors involved. For example there is the management of Malibu, the trust company that currently holds the land, the new trust company, and a company that holds a small previously existing mortgage on the land. So, there are four "actors" and all paperwork and decisions have to be coordinated with and agreed to by all of them, making the entire deal more complicated and time consuming to bring to fruition.

Entering Into The Trust: Anyone who currently holds a contract in the Malibu project needs to immediately contact the law firm of Almanza y Almanza if you have not already done so, in order to formally and officially enter into the new trust. This is the only way to receive a refund for the money paid to Malibu as a deposit. Almanza y Almanza can be contacted at telephone number 209-8029, via email to vcastillo@aa-panama.com, or by visiting the website www.aa-panama.com. Yesterday at the meeting Gabriel Almanza told me "we are doing everything we can to communicate openly and directly with all investors - tell them to call me directly at my cell phone in Panama 6090-3110, day or night, weekends, I don't care..." He wanted to emphasize the message that the "bad old days" of not getting an answer or a response are over. "We now have a plan, we are putting that plan into action, and we are very close to achieving a solution for all of the investors who invested their money in the Malibu project. There are already about 220 investors who have been registered in the new trust." He explained how investors will have to sign a new contract that in effect cancels the old contract in return for a refund of the original deposit paid.

Stringent Oversight and Requirements: The new trust is being managed and administered by Financial Warehousing of Latin America, Inc. (FWLA). They were recommended to the Malibu managers by Banco General. FWLA has adopted an exceptionally conservative approach in this case, and have been very demanding in the list of requirements. In the long run this is good and healthy for all involved, however it has also made the entire process slower and more demanding, requiring more time to complete all of the requirements so it's a double edged sword. Things like a physical inspection of the property to be placed in the trust, the creation of a new topographic map, a new independent survey and study of the land to include the placement of survey stakes to make were there is no over lapping with adjacent parcels, all paperwork and taxes up to date, etc. In short, everything is being certified, verified, and checked, once, twice, three times - to make sure everything is in order. The good news is that now almost everything has been done and the trust is practically ready to go.

Three Buyers Waiting: The managers of Malibu have received offers from three different groups of buyers who have expressed interest in the property. Of those, two groups are local Panamanian investors and the third is an international group. The price for the land has been set well below current market value in order to create a "quick sale" situation because they want to sell the land and proceed as quickly as possible in order to put the whole "Econoplade train wreck" behind them and to move forward. However, all of the potential buyers are simply waiting right now for the trust to be established, and they will proceed to move forward with their offers and negotiations once that step is complete, and not before.

My Original Prediction Stands: A few months ago I predicted that Malibu investors will probably start to actually receive refund checks before the end of 2010. One of the faults and weaknesses of the Malibu management is to have a tendency to make overly optimistic projections and estimations with regards to time and actual delivery. I still think that if checks are going out by November and December 2010, that will still be a victory and excellent news. The most important part of this entire evolution is to remember that there are hundreds if not thousands of people out there who got involved in other projects or investments who are not hearing this kind of good news. They got ripped off, their money is gone, and they have no practical hope of ever seeing a refund or of getting their money back. However Malibu investors will, in fact, be seeing that refund check. Maybe not as quickly as they might have hoped, but at least there is a light at the end of the tunnel and it's not an oncoming train. Patience, folks, patience...

Copyright 2010 by Don Winner for Panama-Guide.com. Go ahead and use whatever you like as long as you credit the source. Salud.   

Panama City, Panama – June, 2010 David Lorber and Wolff Services have recently opened a new company in Panama City, Panama. The new company is a property management company named Panama Corporate Property Management (PCPM). “This is a unique company created to serve the foreign real estate investor who needs a trusted and established company to manage their real estate holdings” says Lorber. PCPM will work in concert with Panama Corporate Living which is the corporate housing sister company to PCPM. For more information visit our websites at www.pcpm.com.pa and www.pcl.com.pa   

The construction of luxury apartments is not a forgotten business. The pace of 2007 which some called a real estate bubble has been slowing, but investments in this segment continue. It is estimated there are between 8,000 to 10,000 apartments either newly built or under construction with prices between $2,000 to $5,000 per square meter in the areas of Punta Pacifica, Costa del Este, and Ave. Balboa. However, is there enough demand to fill these apartments? Within the real estate sector people are hesitant to talk about the subject, but unofficial estimates have reported a glut that could exceed three thousand units. Put another way, about half of the units have no owner. Felix Carles, a real estate agent, acknowledges that four years ago about 70% of buyers were speculators. People were trying to lock in a preferential purchase price (before construction began) and then sell the property later for as much as three times the purchase price. However the business was not quite as accurate as previously thought, when the international crisis hit and then international buyers abstained from purchases.

Now many of those "investors" are trying to take advantage of their property by renting it out in order to cover their mortgage and maintenance costs. Or in the best of cases to find a buyer willing and able to pay more than $300,000 for an apartment. Hope for the future for those in the real estate business is that with the arrival of multinational executives from companies such as Caterpillar, Procter & Gamble and the companies associated with the expansion of the Canal, they can rent or sell the existing apartments. Therefore, Carles says that despite the uncertain demand prices have not fallen as expected and what has happened is a technical "freezing."

There are sellers who under some circumstances are willing to make significant deductions for buyers. In rental situations, the length of stay makes a big difference as well as the method of payment. If you pay for the entire year's rental with one check, the total cost might be reduced as much as 25%. When it comes to a sale, the most important aspect is how long it will take the seller to find a buyer who is willing to invest.

Most of the very expensive apartments are located in the areas of Costa del Este, Punta Pacifica and Balboa Avenue. The companies of Btesh & Virzi, Grupo Bern, and F&F Properties are some of the promoters who are betting on these areas. Excluding buildings that have already been completed, these three firms are responsible for 16 of the 22 buildings being constructed in these areas. For Eduardo Ameglio, the President of the National Council of Housing Promoters, it is good that there are just a few companies that are building these large projects because they are strong and, although sales have fallen due to the international financial crisis, work on these projects has not stopped. "Otherwise, we would have had a housing crisis, with many projects left half-built and passing into history," he said.

One thing that has happened, and that several promoters have recognized, is the transformation in the way apartment buildings are administered. Some buildings originally conceived as apartment buildings have since been converted into "condo-hotels" as in the case of the Megapolis. This gives the owner an additional incentive of receiving profits when the apartment is rented.

Although the investments in construction and renovation have increased each year since 2005 - 2009, in recent times they have had a change of direction, and now they are focusing on projects with apartments costing less than $150,000 dollars. The demand for housing was not in line with local needs. Units costing more than one million dollars were being sold on pre-construction contracts. This trend was unsustainable. Now projects of "social interest" are coming into play. The construction of these houses, which had been marginalized due to the construction of high value projects is now making a comeback. For this year there are plans to build 1,691 houses in this segment, which represents an increase of 39% compared with 2009 when 1,217 thousand were built. For real estate agent Natasha Sucre this is the best time to buy a home. She expects prices to rise once the ITMBS taxes are increased from 5% to 7% for basic construction materials. This increase could put more pressure on the developers, hungry for more business in a market that has limitations. (La Prensa)   

Panama's Ministry of Economy and Finance (MEF) has issued their approval of the statement of bids for a contract the government will let to have new assessments done on 12,000 properties located in Punta Paitilla. Ten companies have expressed interest in winning the contract. According to the MEF, this will be an "abbreviated" bidding process, and the contract will be awarded to the company that offers the best value for service of conducting new assessments of property and real estate, of the land and improvements (buildings and apartments) located in Punta Paitilla that the Tax Office will use to update property values for tax purposes. Under the tax law, the alternative rate is capped at 1%, which is 1% lower than the rate that currently governs (2%). According to the bidding package released by the government, the area of Punta Paitilla has been divided into eleven sub-zones, and each of these zones could be assigned to different companies that are participating in the process. (La Critica)

Editor's Comment: And here it comes. This is another one of the "open secrets" in Panama. Everyone knows that property values currently reflected "on the books" for tax purposes are not the true, current, actual market value of the property. The government of Panama has always been lax in updating those values, and they have never had a quick and efficient means of obtaining true, current, and actual market values. It makes perfect sense to simply outsource a contract to these evaluation companies, who will probably charge a few hundred dollars for each report. The government will quickly recover that money in the first year property owners are forced to pay the property taxes they actually owe, based on the newly assessed values. And, it makes perfect sense for the government to start in Punta Paitilla, because there are apartments in this area that are more than 20 years old. Anything built in 1990 or before now has to pay the full property tax, assessed at 2.1% for anything over $75,000 dollars. Well, it's a little more complicated than that because you might have applied to have your property value updated based on the 2006 law that was designed to motivate people to do this themselves, and it remains to be seen exactly what the government will do with this data once they have it. But in any case, after this process is complete I think it's safe to say that the values of properties will be more accurately reflected in the tax rolls, and that overall the government will be taking in more property tax revenue, based on those updated values.   

Given the magnitude of the project, we can say that is still in a nascent stage of implementation. But Panama Pacific, the logistical, commercial, and real estate project being developed on the former Howard Air Force Base in the Republic of Panama, is reaching a level of progress that has exceeded the expectations of its promoters, the British company London & Regional (L & R). At least 58 companies have already pledged to settle in the Panama Pacific project. One of the latest is VF Corporation, an American multinational which sells clothing brands like Lee, Wrangler and Nautica. This company joints Dell, 3M and Caterpillar, three large multinationals that have shaped in a certain way the "resume" for development overseas. The number of companies with signed contracts to install offices in the project could increase soon, because there are several ongoing negotiations.

History - The past, present, and future of Panama merge on the 2,500 hectares of land that comprises the Panama Pacific project. The buildings in the former Canal Zone and the two bunkers that are still there reminds one of the military origins of the area the the American presence. With the land now in Panamanian hands, a study by the World Bank found the area was ideal for logistical and commercial development. In 2007, L & R won the bid to develop 1,400 hectares over 40 years. The company is committed to invest $705 million dollars during the duration of the contract, of which $405 million must be invested before 2015. At the end of this year, L & R estimates they will have $154 million allocated, mostly for infrastructure development. The present is felt in the 2,271 people who, according to data collected in January 2010, are presently working for the companies that have already installed a presence in the Panama Pacific project. John McKay, a representative of L & R, said that in the first five years of the concession they will generate more than 4,000 jobs, exceeding initial estimates. In ten years, there will be about 11,500 jobs, and towards the end of the 40 year concession, 40,000 jobs. To the permanent jobs generated by companies that are installed and operating, one has to add the additional manpower that will be needed for the construction of buildings and infrastructure in the area, as well as internal and external connections (roads).

The Government has announced it will construct a highway linking the Panama Pacific project with the Centennial Bridge, which will greatly improve connectivity between Howard and Colon. President Ricardo Martinelli has also said the government plans to build a new bridge or tunnel to cross the Panama Canal which will unite the Panama Pacific project with the Coastal Strip, which will be extended to the causeway.

Residential - The housing part is the third development axis of Panama Pacific. The movement of earth has already commenced for the first phase which includes the construction of 126 townhouses, 78 apartments, and a commercial premises. These residences will be the first of what will be the urban center of the Panama Pacific project. In the coming years they will start the development of a community with a golf course, hotels, and luxury homes. In total, when the execution of the project is finished, there will be 20,000 homes and apartments, an authentic city on the other side of the Panama Canal. (La Prensa)