Global downturn affecting property market in Panama
Property development in Panama is being affected by the global economic downturn with projects being scaled down and some halted.
A lack of buyers, especially at the luxury end of the real estate market, is affecting both developers and construction as it hits their spending power. But there is also support for a crackdown on corruption to make Panama more attractive to foreign investors.
According to housing minister Gabriel Diez the luxury condominium market has been affected the most because it relies more on foreign property investors than other parts of the real estate sector.
He is urging developers to switch to low cost housing which the native population can afford and if this trend is adopted he believes that the property market in Panama will weather the credit crunch better than many other countries in South America.
He confirmed that the government is looking into 'cleaning up' the property buying process to inject more confidence into the market. Foreign buyers often complain about developers not sticking to deadlines and keeping properties if investors are late with payments.
It is expected that the Consumer Protection Authority ACODECO (Autoridad para la Protección al Consumidor y Defensa de la Competencia) is to be beefed up. At present it has limited resources to deal with complaints.
A crackdown on corruption is also expected. A new inquiry could be set up to look into bribe taking in the property industry and the courts. Property rights also need to be modernised.
According to Jesse Levin from Archers Group Investment an interesting phenomenon happened in Panama when the real estate boom exploded three years ago. 'Many foreign speculators came to the country and bought on pre-sales several luxury units with the idea of selling them at a profit before they have to pay the rest of the money, but after the financial global crisis, they were unable to settle their debts or get rid off their properties at a profit,' he explained.