Rising Prices
It's no secret that real estate prices have gone up in recent years in both Costa Rica and Panama. The boom in Panama started more recently, and in many areas the price appreciation has probably only begun. This is a far different situation than most Americans and Canadians have encountered at home, where periodically prices jump, then subside to remain in proportion to income and rental levels. What's different about Panama today, and what will drive prices up over the next five years?
1. Baby Boomers. You've heard the statistic: 70 million Americans retiring in the next 15 years and seeking their place in the sun. If 1/10 of just one percent of them head for Panama, that's 70,000 folks with a Social Security and pension income.
2. Returning Military. Tens of thousands of US servicemen know Panama because they lived there and it's a likely destination for them, if they retire abroad. Already they are buying lots and building homes in Coronado, or snapping up condos in Panama City.
3. Cruise Ship Passengers Every year hundreds of thousands are treated to the sight on Panama City's skyline upon traversing the Canal.
4. Ruben Blades and Panama's Self-Promotion. Panama has rocketed from about zero tourists to a million annually in a few short years. The country is serious about promoting itself as a tourist and retiree destination.
5. The Internet. With a Vonage phone (so talking with friends and family back home is just a local call either way) and e-mail, it isn't so lonely or scary abroad. Chat groups like Yahoo's viviendo_en_panama help too.
6. Donald Trump. Really just a label put on one expensive condo project in Panama City, his name still legitimized the oceanfront condo market and drew foreign buyers paying waaaaay above the going prices.
7. The Panama Canal Expansion. The infrastructure project of the century will define Panama's drive and commitment to world trade, as well as bring in more shipping, as well as professionals and workers to do the work.
8. The Skyline. With hundred-story residential towers going up, Panama City conveys such dynamism that its attraction is felt immediately.
9. Crazy Dictators and Drug Lords. Wealthy investors and skilled professionals seeking refuge from Hugo Chavez in Venezuela and from the violence of Colombia are pouring in to buy land and condos.
10. Stability. Sure, General Noriega may want to come home (and face murder charges), but Panama is now a solid country. One of the few certainties in life is that the United States will never let it become unstable. Anything that could threaten the Canal will bring US Marines in a New York minute.
11. Red Frog. Ambitious developments pave the way for more upscale developments and higher demand for land, just by showing how it's done.
12. High Costs at Home. For retirees, who need more personal services, including quality health care, but don't buy many imported goods, Costa Rica has been a fine haven. In Panama, they get all that plus extensive retiree benefits and it's a great place to buy almost anything.
So where's the top to this market? The condo market in Panama City is probably not far from topping out -- after all, prices should not exceed Miami -- let's say it can go up another 35% in five years. After all, prices in the upper end have risen about 100% in two years. And beachfront land has gone up sharply, but will probably double in the next five years, if Costa Rica is a leading indicator. However, when it comes to raw land and lots in suburban areas, and near the beaches, the price appreciation is still ahead. Development has been incredibly concentrated in Panama City, in large part because that is where the middle class needs to find work, but for foreign retirees, the zone up to 1.5 hours from the capital is extremely attractive. Cheap land, good roads, great views, excellent shopping, proximity to the ocean...expect land prices to jump 200% to 400% in the next five years.
