Leading up to 2009 it appeared that Panama may have been fortunate to escape the severe economic and real estate downturn that had been devastating other markets around the world. Unfortunately Panama was not immune and the start of 2009 saw a steady decline. Occurring much later than other world markets gave Panama the advantage of taking any necessary steps to avoid a severe downturn and following approximately 6 months of decline, the market has now started to level.
The sector hardest hit by the economic downturn has been luxury housing, predominantly reliant upon the foreign buyers market. A move into developing affordable homes for the domestic population has seen the beginning of a major turnaround in the construction sector, adapting to the strongest demand in the current climate.
Panama developed over recent years as a preferred overseas re-location and investment destination amongst foreign buyers, especially from the United States and Canada. Europeans have more recently discovered the attractions of Panama, with taxation advantages, minimal associated buying costs and demand exceeding supply. As a re-location destination, Panama provides an excellent opportunity with all of the beneficial attractions. Located only a short flight from major North American cities, the culture enabled an ease of transition, where the dollar currency provided secure financial stability.
Despite the slowdown in Panama’s real estate sector, the economy is expected to experience a renewed growth pattern due to the excellent business environment the country presents. The expansion of the trade canal and free trade zones will continue to provide growth opportunities for the development of the country’s economy.
The move into affordable housing aimed towards the domestic population has been designed by the government following the economic downturn. The lack of speculative buying in the luxury end of the market, along with issues relating to developers, has caused some projects to be modified to suit the current demands. Affordable housing will avoid locals being priced out of the market in the long term, while assisting with the short term stability of the country’s economy. Revision of the purchasing processes to modernise the market are being considered, assisting with the revival of the luxury market in the coming years as the world economic situation and consumer confidence improve.
The decline in Panama’s real estate market has been minimal in comparison to other major attraction destinations. This has provided hope and confidence amongst investors that a revival of the real estate market will be successful in the short to mid-term, avoiding any severe losses on investments, along with improved future long term stability.