Panama Real Estate: One Crazy Market
After living in Panama City for four years as renters, Lief and I are serious about buying a home of our own in this town. We’re here for the long haul. Our Live and Invest Overseas business is well-established, employing a couple of dozen Panama City locals. No way we’re uprooting and trying to reinvent that infrastructure anywhere else.
No problem. We’re enjoying life here–but for one thing. I don’t like living in somebody else’s house. The house we’re renting currently in Marbella is comfortable, but, if it were mine, I’d update the kitchen and the bathrooms, I’d replace some of the flooring, I’d add a pool in the back yard…
Thinking smaller-scale, I’d have better luck persuading Lief to fix the leaky faucet in the laundry sink, to rehang the towel bar that fell off in the guest bathroom two months ago, and to try to get the fountain out front flowing again. I think he thinks as I do. He’d be quicker with the screwdriver and the wrench if he were repairing a place of his own.
Having lived in Panama City for four years, we have a clear idea now of what and where we want to buy. We’ve been in touch with three real estate agents (remember, no multiple listing service, so you need to work with more than one agent to get any real idea what’s available), and we’ve now been shopping for about six months. We’ve viewed maybe three-dozen houses.
Here’s what we’ve learned:
This is one crazy market.
Our search is focused on the Altos del Golf/Coco del Mar area. This is for three reasons. First, thinking practically, this is where our office is located. Lief and I have had all the Panama City rush hour either one of us can handle. We’d like to eliminate it from our lives. Which means buying a house within walking or quick-driving distance of the office.
Second, this established area of the city is the best place (perhaps the only place) to shop for the kind of property we’re looking for–a big colonial-style house on a decent-sized lot. Traditional-style houses exist also in Marbella (where we’re currently renting), but in shorter supply and, generally, on much smaller lots. Most every house in Altos del Golf/Coco del Mar comes with a garden, a terrace, and a pool. This is not the case in Marbella. Plus, in this area, there are many more Spanish colonial-style homes to choose from.
The third reason we’ve focused our search on this region of the city specifically is because we believe this is one area that will hold its value long-term. This is where Panamanian families with money have been living for generations. It’s where presidents (current and past) have lived. It’s clean, safe, and pleasant, with lots of trees and flower beds.
How much does it cost to buy a house in Altos del Golf? In Coco del Mar next-door? Beats me. Beats everyone else, too.
Here’s what it doesn’t cost: It doesn’t cost what the listing sheet says it costs. This is a general statement, applicable to any listing. The agents we’re working with, now that they’ve gotten to know us a little and feel comfortable speaking a little more freely, admit that the asking price is not a starting point. It’s usually irrelevant.
“The man listing this place wants millions for it. I won’t even tell you how many, though,” one agent told us one day, “because the guy is dreaming. But don’t worry. I grew up with his son. I can speak with him about a reasonable asking price. The father will do what his son recommends.”
“The owners of the house we saw a few weeks ago, the one that’s been unoccupied for some time, called me,” another agent explained this week. “They wanted to know if you had any interest at this point in their property. They told me to tell you that they are willing to talk about the price. In fact,” the agent continued, “I can tell you that the price is very negotiable. Very negotiable.”
“This is Panama, you understand,” said another agent the other day. “Everything is negotiable.”
How negotiable? That we haven’t been able to pin down. It depends on the starting point, of course, and the starting points are all over the place.
We saw one house, 250 square meters, on a small lot with a tiny pool. Three bedrooms, three bathrooms. Colonial-style and cute, with some nice features (clay-tiled roof, exposed wooden beams, stone-tiled floors). Asking price US$1.3 million.
“This is a US$400,000 house,” I said to the agent after we’d toured it. She didn’t disagree.
We saw another house, more than 1,000 square meters on three levels. Five bedrooms, six bathrooms, huge home gym, big lot, big pool, extensive gardens and landscaping, beautiful finishes, even an elevator. Asking price US$1.85 million.
Now, US$1.85 million is more than we’re looking to spend, but this house has stuck with us because, once we got past the sticker shock, we realized that this is the only house we’ve seen so far that seems reasonably priced. More than 1,000 square meters for US$1.85 million is US$1,850 per square meter. This is an amazing house. It won an architectural award when it was built and would be at home on the cover of Architectural Digest. At US$1,850 per square meter, it is, in fact, a very good deal (if you’re looking to spend that kind of money).
The other, 250-square-meter house, on the other hand, is listed at what works out to US$5,200 per square meter. Almost three times as much…for the construction. The lot of the house priced at one-third as much (on a per-square-meter basis) is three times bigger than the lot of the other. Crazy.
Part of the problem is that many (maybe almost all) sellers in this Altos del Golf/Coco del Mar market are in denial. Their, to be fair, typically very nice properties enjoyed aggressive appreciation from 2005 to 2008. Then world markets, including the one in Panama City, changed. Maybe the houses currently on offer in this part of Panama City for US$1 to US$2 million (that’s generally the range of asking prices) could have found buyers at those rates back in 2007/2008, but this is a different era. Owners haven’t been willing to admit that, at least not publicly.
As a result, a lot of them have had their houses for sale for very extended periods–two and three years. Finally, it seems, as our agents are suggesting, they’re waking up to the fact that they’re going to have to be willing to entertain offers on their asking prices…or be happy to continue to wait, I guess, for buyers incapable of doing simple math.
Where should you start a conversation with the owner of a house you’re interested in buying in this market? I’ll let you know when we figure that out.