How to safely buy an apartment in Panama City

For North Americans interested in buying a property overseas, the country of Panama always seems to end up on their short list. It's a tiny country - about half the size of Florida- but packs a great deal of diversity between it's borders. The most popular location for real estate investing is Panama City, the capital of Panama.

Panama City is easily the most cosmopolitan city in Central America. As you drive the 30 minutes from the international airport to the city center you'll notice the impressive skyline of multi story towers jostling for position. Since the early 2000 hundreds of condo towers have shot up offering apartments for sale. Many of the condo projects where designed with ambitious master plans offering owners a wide range of services and amenities. A good example is Donald Trump's Trump Ocean Club on Balboa Avenue which boasts a casino, hotel, ballrooms and fitness center with a marketing strap line; 'Live, work and play all under one roof."

The buyers for Panama city apartments fell into three main categories:

• First, speculators, buying mainly pre-construction, for quick flip profit.


• Second, 'safe haven' investors looking for capital appreciation over the median turn, and


• Third, rental income and lifestyle buyers interested in living and possibly retiring in Panama enticed by the tax benefits and incentives that this brings.

In addition to North Americans (the largest international buyer group) a good number of Venezuelan and Colombians have also been active in the market.

Since the global financial crisis many of the speculators have retreated and the condo apartment market has cooled considerably. Some of the projects sold pre-construction during the boom years have suspended operations now that financing is much harder to come by. Inventories are high and vendors are motivated.

Could now be the perfect time to buy?

There are certainly some good deals to be had on condos. Research hard enough and you should be able to find deals 30-50% lower than the pre-crisis levels. Bear in mind however that there is no MLS governing the Panama property market and no official statistics are published. This means that it can be hard to find objective data on sales and price trends. Panama is not the only country in Central America with no MLS. You'll find the same goes in Nicaragua, Costa Rica and Belize for example.
Moving forward safely

In order to ensure a comfortable balance between risk and reward it makes sense in this market to focus on completed property rather than purchasing off plan. Stick to condo towers that are built and which have all their amenities completed and ready for use. Prime areas are likely to weather any future market uncertainty better than the more speculative areas. Balboa Avenue and Punta Pacific, for example, are good places to focus your research. It also makes sense to seek out re-sales from end-users, as you may be able to find condos priced lower than developer direct offerings.

And above all, take your time. Make sure you don't rush into an emotional purchase based on seductive discounts, founders programs and 'special' incentives that you may be offered. Stop take a breath and think with your head as well as your heart.