The luxury sector in the Panama city real estate market has seen a resurgence in the first two quarters of 2012 compared to the same period last year. Real estate developers for high-end projects have been reporting steady absorption in the $1,000,000+ price point. Most recent May sales include several units in Bahia Pacifica and The Point, both of which are projects delivered by the luxury development specialist Desarrollo Bahia.
According to our contacts within this development, approximately four $1 million+ units were sold in the last five weeks, meaning that the last remaining units in Bahia Pacifica are now almost depleted, with an estimated 24 units left in The Point. Luxury sales on the secondary market have also been strong, with Panama real estate agencies and project promoters reporting 21 high profile $1MM condo closings over the last six weeks. Venezuelans are still a large part of the demand for luxury real estate in Panama, continuing to expatriate their capital to Panama and oftentimes relocating entire businesses and large families to the city. High profile Venezuelans fleeing the Chavez regime bring seven figure bank accounts with them and have been typically drawn to the Costa del Este and Punta Pacifica neighborhoods, in a handful of cases, purchasing multiple properties for both investment and relocating family members.
According to fellow agents and what we have also seen from in house demand, a new segment of the Panama luxury real estate market is the European buyer coming from countries such as Italy, Spain, and Switzerland among other EU nations. Given the current economic crisis in Europe, some see this as a capital flight from the euro to the dollar. Top executives from major companies such as Oberecht, Caterpillar, and Proctor & Gamble have also made large apartment purchases in the first quarter of 2012 in buildings such as Allure, Pacific Point, and the Trump Ocean Club.
The construction and development pipeline of new supply for high end luxury real estate offerings has slowed down over the last four quarters, meaning future prospects for appreciation over the next 12-24 months are starting to strengthen on the uptick in demand and slowing down of supply. The long term prospects for a resilient luxury real estate market in Panama are strong, supported in part by the completion of major city infrastructure projects along with increased purchasing power and wealth creation in the local economy. This week’s announcement that Mersk will be relocating their regional headquarters will bring another wave of high level executives looking for high end housing solutions.
Punta Pacifica, Costa del Este, and Balboa Avenue are the three principal sectors where developers are still focusing on new luxury condo projects. Clayton, Albrook, Camino del Cruces and the new Santa Maria Country Club are the most prominent four neighborhoods for single family homes that have the highest offering for luxury homes in Panama. Based on feedback from buyers, the developers of the Santa Maria project have been reluctant to give deep discounts, implying absorption in the project has been sufficient enough to meet their sales targets and debt obligations.
Rental absorption in the luxury segment has also been consistent in the first six months of the year, with a large number of $6,000/month apartment rentals coming off of the market.