Panama City’s Apartment Rental Market
Coming Out On Top In The World’s Most Enigmatic Property Market
July 30, 2009
Panama City, Panama
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Dear Overseas Opportunity Letter Reader,
"In my increasingly desperate quest for a reasonably priced Panama City apartment in a desirable neighborhood," writes Editorial Assistant Rebecca Tyre, "I have spent many hours scanning newspaper classifieds and online listings and visiting so many vacant units in this town that the entire experience is becoming a blur.
"Bottom line, this market is coming back down to earth...but not with a thud. The market as a whole hasn't had its legs chopped out from under it, as has happened elsewhere in the region and in the world. Yes, this a better time than in a long time to shop for a place to live in Panama City, but trying to find an affordable apartment to rent is far from a straightforward experience these days. It seems that not every landlord has gotten the news. Some are holding on stubbornly to last year's inflated pricing.
"The reality is that hundreds of the pre-construction units sold over the past few years are right now being delivered to their owners. Those who bought pre-construction are, therefore, right now, in the process of trying to flip their units as they take possession...or rent them out.
"As a result, in rental classified ads, it's common to see the word estrenar, which means "almost complete" or "about to be delivered." This indicates that this unit is one of the hundreds of condos currently being released to owners. On any given day, you see dozens of these estrenar listings, sometimes many of them in the same building, often each with a different price tag.
"For instance, one brand-new, 121-square-meter, three-bedroom, two-bathroom apartment in the popular San Francisco neighborhood I found is being offered for the reasonable rental rate of US$1,500 a month. The apartment is directly in front of Parque Omar, considered Panama's Central Park. It has a maid's bedroom and bathroom, a balcony, two parking spaces, and a storage area. The social area is well equipped, with a swimming pool, a children's play area, and a gym.
"Sounds pretty good.
"Meantime, in this same building, identical units are currently listed for rent for US$1,900, US$2,300, and US$3,000 per month. Identical units.
"The lesson here is that you must do your homework. And this is my fundamental point. In the current climate, more than ever, the burden is on you, as the renter, to make sure you're not paying boom-time rent during this post-boom cycle.
"In addition to reduced rent, it's also possible right now to take advantage of special incentives. Some landlords are getting creative to compete in this increasingly supplied marketplace. They're including cable, Internet, and electricity in the rental price, even one-year memberships at a top Panamanian gym franchise.
"Perhaps the best deals right now are for older apartments. These are sometimes being offered with one month's free rent. I saw one, for example, two bedrooms, two bathrooms, 150 square meters, in Bella Vista, just blocks from the Pacific Ocean. The rent is US$600 a month. Because the place needs some aesthetic repairs, the landlord is willing to give you one month rent free, in exchange for cleaning and painting. (If you go this route, I can recommend a good, cheap painter.)
"I began my apartment search about two months ago. As recently as four weeks ago, it was nearly impossible to find a decent apartment in a decent neighborhood for less than US$800 a month. This is changing as I write. In the past couple of weeks, I've seen more and more US$450 and US$500 apartments popping up.
"These apartments aren't in perfect condition, and they're not spacious. Some are no bigger than a shoebox. But the point is, it's possible now, for the first time in the past couple of years, to find an apartment where you'd be comfortable living in Panama City's top neighborhoods at increasingly attractive price points.
"I still haven't seen the great prices from 2006, when I rented a three-bedroom apartment with a balcony in San Francisco for US$450 a month. And, frankly, I don't think we'll see those rates again. But the situation is improving. And I'm finally confident that, with a little more effort, I'll be able to find a place to live that I can actually afford!"
Kathleen Peddicord
P.S. The Panama City real estate market is one of the most difficult in the world to navigate successfully right now. With no Multiple Listing Service to turn to for reference, what is an apartment worth? It's worth what someone will pay for it. In recent years, owners have taken advantage of this reality, asking ever-further-inflated prices...and finding buyers and renters willing to pay them.
As Rebecca explains, this dynamic has been undone, thanks to the global recession and the dramatic increase in the Panama City apartment supply. As hundreds and hundreds of pre-construction units are being delivered, the market is changing day-by-day. Interesting opportunities are being created, and this is the best time in a long time to be a buyer in this town.
But, again, as Rebecca describes, buying safely is no easy matter in the current climate. The burden is on you, as the buyer or the renter, to judge whether an asking price is fair.
Rebecca has her finger on the pulse of the Panama City rentals market...and longtime investor-friend Scott Taylor, with four years experience buying and selling pre-construction units in this city, knows the for sale market from a real-world perspective.
To take advantage of the opportunities being created by the quick-shifting dynamics of this marketplace, that's what you need--real-world, not theoretical, advice. That's why we've invited Rebecca and Scott to join us on the line for our "State of the Panama Property Market Teleconference." I'll moderate the discussion and also on the line will be Lief Simon, our resident global real estate investing expert with nearly a decade's experience as a buyer, seller, landlord, and developer in Panama.
We're finalizing the early-August date for this urgent and timely Teleconference now. Panama Circle Members will participate free, of course. Watch this space for further details, coming soon.
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