One Panama City developer has identified a real estate market niche that no other developer has noticed.
I think of it as the Panamanian yuppie.
Most Panama City developers build for the foreign market or the high-end local market. But there’s another emerging pool of buyers no one has been paying attention to—the upwardly mobile 20- and 30-something Panamanian who doesn’t want to commute from outside the city but who can’t afford a typical Panama City condo.
He can, though, afford US$100,000 to US$150,000… and this developer is now providing precisely the product this buyer wants, in the locations where he prefers to be, and at a price he can manage.
This developer is also giving you an opportunity to invest in this product at below-market rates and then sell to the wide pool of potential buyers currently not being catered to. This is buying to flip at its safest and most profitable…
And you stand to walk away with a return of 34.7%.
The developer has been rolling out this strategy in series. We told our Global Property Alert members about the first project catering to this market in early January… and already that inventory has been bought out, including by a number of our GPA members.
Now a second project is available. Like the first, it is in a downtown Panama City neighborhood. Apartments range from 37 square meters (one bedroom) to 57 square meters (two bedrooms).
The units are being sold pre-construction and are priced at US$2,160.88 per square meter. This works out at just under US$80,000 for a one-bedroom unit and about US$123,000 for a two-bedroom unit. These prices are below average for apartments in this neighborhood of the city.
You could buy a unit, rent it out, earn a nice cash flow, and then leave it for your kids or grandkids to inherit. Again, the Panamanian yuppie will be banging at your door to become your tenant…
Or you could flip your property after the building is completed in 2020. The anticipated sales price at that time is US$3,100 per square meter. If that price point is achieved, you’d be earning a gross profit of US$939.12 per square meter. You will pay 20% per square meter to the developers (US$187.82) and take home a net profit of US$751.30.
That works out to 34.7% to you.
The developers behind this unique sales program started out in textiles in the 1960s—two ladies at a sewing machine in what used to be a poor fishing village. They went on to dominate the school uniform business across Panama and then to become one of the country’s largest importers of luxury fashion brands.
Not satisfied with that, they diversified into real estate and have since built a business that is behind some of the most desirable residential and commercial addresses in Panama, including Yoo Panama (with interior design by the famous Philip Stark), Hyde, Panama Design Center, La Maison (with Fendi Casa), The Residences, El Cangrejo Plaza…
Most every inventive real estate undertaking in Panama City is thanks to these guys.
The niche end-user market makes their current offering particularly attractive, but the building itself brings a lot to the table, as well.
It will include a commercial shopping floor, office floors, residential floors, and a sky lounge… plus a fitness center, events room, and children’s play areas. Work and home are connected in these structures that are intended to be more than simple apartments. Owning in one of these buildings is a lifestyle choice.
The current project is in Bella Vista, in the heart of Panama City’s downtown area and popular among creative types and millennials.
Bella Vista is undergoing a major overhaul. The current Panama City administration is widening sidewalks, making Wi-Fi available in public spaces, putting power and communication cables underground, improving parks, creating safer shopping areas, providing more public parking lots, enhancing public transport, and, importantly, trying to address the problem of litter in the street. All this while keeping the original 1920s lampposts.
The stated objective behind the gentrification in process is to create an “urban, young, and metropolitan” neighborhood.
Sounds like the ideal spot for the product this developer is looking to create.
Kathleen Peddicord
