Buyer Beware!
Panama is a Sellers Market & Gringo’s Pay More than locals.
It is traditional in Panamanian’s mind set and culture that when they are negotiating with a white Anglo male i.e. Gringo (term for United States white looking male), the price automatically jumps up…doubles. This behavior dates back to when American Military personnel used to rent apartments in Panama City, and the price of a “normal” apartment that rented for $600 to a local, jumped up to $2,000 per month if it was for a U.S. military person.
These days, now that everyone even cab drivers know the term “baby boomer” and use the term “boom” as in Real Estate Boom - everyone thinks their property is worth Millions. The story you hear is “my neighbor sold for X millions” therefore, my price is in the “X millions”. Panamanians do not know about “10% Cap Rates” and the diverse investment formula are used by sophisticated Investors. They go by “word of mouth” or by how you look. Expect that when trying to negotiate on your own you WILL pay more.
My recommended solution: Work with a local licensed real estate professional. Let the natives negotiate with the natives without stating who the investment is destined for; It should not matter.
I am not a career real estate agent. I do possess the Panama Real Estate License necessary to engage legally in the real estate business and to transact in favor of my clients which as I see it is the foreign Investor. My responsibility is to make sure that my clients “Buyers or Investors” do not pay more than what is fair price, and that the entire purchasing experience flows positively and is done with proper legal representation and maximum respect towards all parties involved.
Real Estate prices have tripled over the last year and the price HYPE or BUBBLE as we call it is all based on Speculation and a false wave hype that has creating a DEMAND that is not there yet. Most prices you will come across are Inflated and BLOWN UP by 30% - 40% and developers are masters at selling under the suspense of “there’s only one unit left”, when in fact there are probably at least a dozen units left and a long line of FLIPPERS waiting to FLIP the units they bought a year ago and now “their situation has changed” (when referring to their buying power negatively affected by the U.S. economic slump).
So what is the Solution? And is there a Real Investment Opportunity in Panama?
Answer is YES! However, today- to fully take advantage of the current real estate investment opportunity you must be informed and have access to recent pricing trends for analysis of actual accurate pricing, going back to January 08 or even further back 12 – 14 months. Research what’s developments are on the drawing board that may affect your investment?
Inform yourself with recent laws proposed that may affect your pocket, for example a recent law proposed by the government to have property owners in the Avenida Balboa area pay an additional tax for funding of the construction of the new highway (cinta costera) currently under construction.
To take full advantage as an investor you have to be exposed to “the next phase” or “future growth areas” in Panama. And you have to be shown ground floor opportunities so that you can buy- in low (at the first initial offering price) and possibly flip at the high end of the price curve. At the current trends you can make thousands of dollars or millions of dollars depending on your investment scope budget on ground floor opportunities.
Tips to pay less: Buy low!
- Work only with licensed real estate professionals. Require to see credentials ID.
- Let a local licensed expert that you feel you can trust negotiate on your best interest.
- Request data on pricing in the specific area? And rents in the area?
- Request to know about future developments, projects in the area?
- Get Info on other projects in the area; their sales performance?
- Ask about ground floor opportunities or first price, Pre-Sale pricing?
- If buying commercial property request past income and expenses reports.
- Work with a company (www.ThinkPanama.com ) that has experience working with foreign investors and that can provide references and positive experiences from past clients.
- Work with a local licensed broker that has the local market knowledge and leverage to negotiate for you directly with owner of the property or development.
- Work with a local licensed broker that can show you ground floor opportunities.
ThinkPanama.com holds monthly “Invest In Panama” workshops with round table of local experts that provide FREE: legal expertise, tax expertise, investor immigration visa options expertise, offshore investment expertise, relocation expertise, and a host of other topics in the interest of providing Local Expert Solutions to Investors. As a part of these workshops ThinkPanama.com licensed real estate expert Douglas McArthur Choy presents a PREVIEW of several Ground floor investment opportunities options in the Panama market. The next Invest in Panama workshop is on September 19, 2008, for information or to Register FREE contact Douglas Choy.
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Excellent advice about being wary of the old “there’s only one unit left”, routine. One guy told me that there was also someone arriving that afternoon to buy it. The other one to be careful of is when the realtor tells you that there are only 2 units left but he can get a special discount price and he has inside information from the developer that the prices are going up 10% in the next couple of weeks.
