Construction in Panama City has been booming with around 50,000 units currently being offered for sale.
'We have seen a period of high speculation and property flipping but it is coming to an end,' said Paul McBride of Prima Panama. 'The market now shows more potential as a location for long term investment,' he added.
Of the 50,000 units under construction he reckons fewer than 8,000 have been completed in the last three years. In some areas end user demand has slowed.
McBride says it is difficult to predict what will happen when most reach completion but there are worries of over supply.
'My suspicion is that when there is a large delivery of condominium units probably between 2009 and 2011, that prices will begin getting tested,' he said.
There were worries that the downturn in the US economy would have an effect on demand but European investors are filling the gap. 'Europeans, with their strong currency, have stepped in where US investors could not,' said Matt Landau, of The Panama Report and a real estate consultant based in Panama City.
Although some investors have already encountered difficulty in selling their new condos in Panama City 'it's not nearly as bad or drastic as anyone expected,' Landau said. 'Not yet, at least.'
The bottom line for investors, however, appears to be that the sharp curve of growth in Panama City has probably seen its heyday. 'If you're looking for purely high appreciation, it's probably too late,' said Carolo Duda said.
On the bright side, Panama City's strong local economy and low-cost quality of living will likely drive positive long-term growth, and the market still offers significant, but different, opportunities for investment, he added.
