As a real estate agent shows off a model apartment — white leather sectional, stainless steel appliances, open concept, ocean views — in the 59-story Yacht Club Tower, and touts its fitness center and pool deck designed to mimic a ship floating on the sea, he makes a telling statement:
“We tried to emulate the Miami style in this building.”
Approaching this Central American capital from the air, the first thing a traveler notices is a skyline on steroids — gleaming towers jutting skyward like so many pickets on a fence. There’s even a Trump high-rise here — the sail-shaped 72-story Trump Ocean Club International Hotel & Tower. And it’s not uncommon for those active in Miami real estate and development circles to try their luck in Panama or move back and forth between the markets.
Although Miami is nearly 1,200 miles from Panama City, the real estate markets of the two cities share certain similarities. Both went through booms and overbuilding and then had way too many empty condominiums. Wealthy Latin American buyers were a salvation in both cities when traditional segments of the market fell off.
“Now that things are starting to pick up in the States, they are picking up here too. Now that there’s not as much economic uncertainty in the United States, people feel more confident about Panama too,’’ said Morris Hafeitz, general manger of Emporium Developers. He used to work in Miami as a project manager for Odebrecht, the Brazilian conglomerate.
While U.S. financial problems rippled to Panama on the sales side, the local banking sector remained strong.
“The good thing is the banks are still giving mortgages in Panama,’’ said Sandy Schwartz, president of Zoom Development. “In the U.S., the banks closed off the tap.’’
Unlike Miami, the banks in Panama didn’t approve loans when prices reached the stratosphere during the boom.
In projects where developers were charging $400 to $500 per square foot, banks wanted down payments of 50 to 60 percent, said Margarita Sanclemente, a Miami real estate broker with offices in Panama City and New York. Such hefty down payments are now the norm for new condo construction in Miami, but they weren’t before the South Florida real estate market crashed in the summer of 2007.
“Demand is being supported by a strong local economy, banks flush with cash, government-sponsored infrastructure improvements, and foreigners and multinational corporations continuing to relocate and invest,’’ Panama Equity said.
“Now Panama is similar to where Miami was two years ago — the market is very active but the prices are continuing to go down,’’ said Sanclemente. But she believes prices are at or near bottom.
In the meantime, Latin American buyers are helping the Panamanian market just as they soaked up excess condo inventory in Miami.
“Venezuelans saved the Panamanian market,’’ said Sanclemente. Argentines, Russians, Canadians and Asians are buying as well as foreigners who work for multinationals, but she expects it will take about two years to absorb the current inventory.
While American interest in Panama is still strong, Sanclemente said, Americans’ shaky personal finances are still keeping significant numbers out of the market.
Kent Davis, of Panama Equity Real Estate, said the same factors that initially attracted American buyers are still a draw: “Obviously the political and economic stability, the closeness to the United States and the dollar economy.”
Other attractions are low living costs, very low condo maintenance fees, no property taxes for 20 years on residential real estate purchases, and a pensionado program open to foreigners and Panamanians alike that provides deep discounts on goods and services for those who receive pensions.
Source: Miami Herald
