The world wide financial crisis and economic slowdown is starting to have repercussions in Panama, although fairly moderate compared to what the rest of the world is experiencing..
According to LA ESTRELLA Canal traffic is down.
The Panama Canal Authority ACP said that the transits of the Panama Canal slipped 1.4 percent . . . However, the Executive Vice-president of Operations , Manuel Benitez said that the results are better than expected, because the forecast was a diminution of 5 per cent.
“Our results for this quarter paint a favorable picture of how the Canal continues to weather the global economic crisis. [Fiscal] second quarter numbers remained steady and we do not expect to see major fluctuations,” said Benitez . . .A total of 3,914 ships passed through the Canal from January through March instead of 3971 vessels for the same period last year.
Fewer super size ships are using the inter-oceanic way and their transit numbers declined by 2.9 percent – to 1,815 transits from 1,869.
While the overall tonnage dropped 3.3 percent to 75.7 million tons from 78.4 million tons a year earlier.
The key segments such as general cargo, dry bulk and tanker transits increased, while refrigerated (reefers), container, vehicle carrier and passenger transits decreased.
According to THE VISITOR . . .
Panama’s economy grew only 2.5% in the first quarter of this year, it was reported by the Comptroller’s Office. That is the lowest rate in the last 22 quarters and reflects the significant economic slowdown that the country is experiencing, caused by the global crisis. Over the past five years, Panama grew at an average annual rate exceeding 8%. . . . The Minister of Economy and Finance (MEF), Hector Alexander, said this week that Panama will not fall into recession in the remainder of 2009. He said that the “last two indicators” for the first quarter, showed a growth of 3.2% and so far, “we are confident that this pace will be maintained throughout the period.”
The Colon Free Zone, second largest free zone in the world, second only to Hong Kong, has been increasing according to THE VISITOR.
But business of the Colon Free Zone in May amounted to $1,574 million, an improvement of 17.4% over the same month last year, when $1,340 million in merchandise was moved. Imports were $756.1 million (20%) and exports $818.4 million (15.2%).
Not bad when you consider that some parts of the world are experiencing negative growth.
All of this, of course, impacts the real estate market in Panama, but by how much? Without any organized real estate – MLS, local real estate boards, etc. – there is no way to come up with accurate and meaningful numbers. According to NUWIRE, “The real estate market in Panama is being hit hard by the global economic downturn as foreign buyers become scarce. Since the luxury real estate market is extremely dependent upon foreign buyers, it is taking the brunt of the damage.”
The best “guesstimate”, without any MLS or accurate way of keeping track, is that things are slow in Boquete. The good news is that, unlike five years ago, when we came to Boquete, there is a good inventory of quality, “gringo-style” houses on the market, so you don’t have to go through the nightmare of building. There is some softening of prices, but folks aren’t “giving away” properties to bottom feeders . . . “cheap”, indicated in Panama by tapping the bottom of your elbow. Most people, myself included, believe that as the economy starts to rebound, and more importantly as people make a realistic assessment of their resources, that Boquete will bounce back with vigor. So rather than give away property at distressed prices, if you don’t need the money, why not just wait it out? If you did sell, where would you put the money? Still not made when in many parts of the world their is negative growth. Having your money “parked” in real estate in what still promises in many ways to be the Singapore or Dubai of the Americas, doesn’t seem such a bad idea. I can stand on my land and I can see it and feel it, and, as Will Rodgers noted, “they aren’t making any more of it.”
Most of the Boquete market is aimed at expat retirees, the “war babies” and “baby boomers.” For many the crisis is more a psychological barrier to making a move, say, to Panama. These are folks who watched the papervalue of investments soar to ridiculous heights in the 90’s, but it was profit only on paper. Same thing with houses. They bought in many cases homes which were really quite tacky and intrinsically had little value. They fixed them up, made them nice and livable, and watched property values, again on paper, soar. So the house that was really worth about $70,000 that you bought for $200,000, that soared in value to $600,000, will now only bring $500,000 . . . so folks feel cheated, like they’ve lost money. But it wasn’t real value. Sell for $450,000, pay off a $60,000 mortgage, and you are still $390,000 ahead . . . which will buy a very nice home . . . the one I’m selling in Valle Escondido for example . . . for cash. No mortgage! No taxes for 15 years! And a cheaper, safer and better quality of life!
Folks think, “Well, I’m so poor right now, my house is worth $100,000 less than I thought it was worth, I can’t afford to live out my dreams right now. I need to wait a few years.”
But what is a year of your life worth?
If you can do it, why wait??? Things change. The older you get the less certain is your future. Why wait to enjoy life and live out your dreams based on the money you do have, not waiting or worrying about what you might have had?
The condo market in Panama City is something different. In my humble opinion it is, and has been for quite a while, a crap shoot. Next to Dubai, Panama probably has the second highest number of cranes in the world. Thankfully Venezuelans are snapping up a lot of Panama City properties, but many feel, and have felt for some time, that a bust is imminent in the Panama City market.
According to PROPERTY WIRE . . .
Property development in Panama is being affected by the global economic downturn with projects being scaled down and some halted.
A lack of buyers, especially at the luxury end of the real estate market, is affecting both developers and construction as it hits their spending power. But there is also support for a crackdown on corruption to make Panama more attractive to foreign investors.
According to housing minister Gabriel Diez the luxury condominium market has been affected the most because it relies more on foreign property investors than other parts of the real estate sector . . . According to Jesse Levin from Archers Group Investment an interesting phenomenon happened in Panama when the real estate boom exploded three years ago. “Many foreign speculators came to the country and bought on pre-sales several luxury units with the idea of selling them at a profit before they have to pay the rest of the money, but after the financial global crisis, they were unable to settle their debts or get rid off their properties at a profit,” he explained.
NUWIRE, discussing the “2009 Panama Real Estate Report” says . . .
“While it’s been projected now for over a year that Panama’s market is due to bust, there still exists, as of May of 2009, a dimension of incongruity between buyers and sellers: sellers want to sell high, buyers want to buy low, and no one really knows an appropriate price,” the report reads. “Unlike more developed markets where a sense of reality and facts preside, we believe Panama’s disparity between buyers and sellers to be attributed to one main liability and that is the inability to obtain real comparative selling data. In other words, buyers and sellers aren’t on the same page because…well, there’s no same page to be on.”
The report finds that over the past year, the average price for Panama City condos and houses in four major areas has fallen between 3 and 16 percent. In Panama City itself, average prices in May 2009 were $448,762, down 3.26 percent from 2008’s average of $463,875. The Coronado to San Carlos region saw an 11.76 percent drop, while the Boquete and Volan area had a 6.42 percent drop. The most significant drop was 15.96 percent in Bocas del Toro. The average price for all areas dropped 7.80 percent over the last year.
The report calls out the Boquete and Volan submarket as a microcosm of Panama City as a whole. “Sales have come to a halt because of the vast gulf between buyer expectations and seller flexibility,” it notes.
Price decreases in Panama can be considered mild compared to many United States markets, including those in Florida. The report notes that the Florida Association of Realtors reported median condo sales price of $108,700 this spring, down 37 percent from $172,300 a year ago. Panama City, for its part, saw median condo listing prices of $450,200 in May, down a far more reasonable 3.5 percent from $466,400 in July 2008.
Panama City, which has become popular for foreign investment in recent years, appears poised to continue across-the-board declines in listing prices. However, real estate professional Paul McBride, who works in the Boquete market, says in the report that it will remain an expensive destination for investor dollars.
“(Property discounts) are no longer the case,” he says. “Property in Panama – city, beach, mountains – has become more expensive than property in the US, Canada, and Europe.”