Real Estate In Panama With Guaranteed Return On Investment

panama city bay

“Can an evergreen tree die?” My son asked as I ran alongside his bike.

Under Irish lockdown laws, we’re free to go out for exercise once we stay within two kilometers of home.

“Of course,” I replied. “All trees die. Evergreen just means a tree keeps its leaves all year.”

No sooner had the words escaped my mouth than I began to have my doubts.

What if there’s a tree that never dies? I’m no expert on trees. I figure they all have to die. But, if you told me a year ago that the spread of a contagious respiratory virus would mean I’d be fielding questions on whether swans can kill and why Muslims don’t eat from sunrise to sunset during Ramadan… while keeping four kids on their bikes a two-meter distance from everyone we pass… I’d have thought you were crazy.

“Let’s look it up when we get home.” I said.

These uncertain times have me asking more questions than ever… from the smallest things I took for granted (like a supermarket shelf stocked with flour)… to the bigger issues (like what if we find ourselves in another lockdown this winter?)…

So, how can we tell what’s going to happen to property markets?

Of course, we can’t take anything for granted in any market. That’s always the way. And it’s why the markets Lief, Kathleen, and I talk to you about are ones that we believe in for the long term… come what may.

But, if you want to play it extra safe in the current climate—and still position yourself to profit—you have an option…

Focus on opportunities that offer a guaranteed return on investment.

Two projects we know of in Panama City do this right now. Both are developments that are geared toward housing the city’s growing middle class. In other words, a segment of the market that’s not dependent on tourism… and one where there’s a shortage of high-quality, affordable options.

The first is one I told you about early last month…

Low-Risk Opportunity #1: Pre-Construction Condo With A Buy-Back Guarantee

It’s a new development in a prime city-center location.

Walk out your front door and you’ll find shops, cafés, restaurants, and the Metro station at Via Porras and Via España connecting you to the rest of the city…

One-bedroom condos at 35 square meters start at US$90,700. At that price, local Panamanians of almost any income can buy here, qualify for a mortgage, and own for less than the cost of renting a bedroom in a shared apartment in the downtown area.

You could hold the unit—and either use it yourself or put it on the long-term rental market to earn a steady cash flow (again, you’d be renting to locals, not tourists). Return on investment is projected at 6.35%, based on a monthly rent of US$535.

But, if you want to minimize your risk, you can opt for the developer’s buy-back guarantee. On completion of your unit, you hand it back to the developer… skipping the hassle of putting it on the market yourself.

If the project is finished within 12 months, the developer will resell the unit on your behalf and pay you back your purchase price plus 10% interest.

If the project is finished within 18 months or 24 months, the buy-back option is your purchase price plus 15% or 18% interest, respectively.

Best of all, we’ve been able to negotiate a discount with this developer to the tune of US$16,155… which means that the standard US$90,700 unit comes to you for just US$74,545.

That’s a rare price for Panama City. And, again, it’s a brand-new build, close to the city’s amenities… just what our young buyer or long-term renter is after.

If you’re interested in hearing more, get in touch here.

Low-Risk Opportunity #2: Guaranteed 5.2% Net Return For The Next 5 Years

This second opportunity is pre-construction, too. It’s also in a convenient city location. But the idea here is to hold your finished unit and rent it out for a guaranteed rental return…

This development is on Calle 50—a thoroughfare in the city that takes in the Marbella banking district. You’re close, too, to Calle Uruguay and its vast selection of bars, restaurants, and clubs.

Bella Vista, the city neighborhood that Calle 50 runs through, is popular with the young professionals and millennials. And, right now, it’s undergoing a major overhaul. The city is widening sidewalks, setting up Wi-Fi in public spaces, putting power and communication cables underground, improving parks, creating safer shopping areas, providing more public carparks, enhancing public transport, and eliminating litter in the streets. The architects behind the gentrification say Bella Vista will offer “an urban, young, and metropolitan” lifestyle.

The amenities in this project include everything from a pet area to valet parking. The pool area will be more like a hotel pool and spa area than a typical pool in a Panama high-rise. The gym will have its own yoga and boxing studio.

This is upscale living at an affordable price tag. Prices start at US$162,000 for a 47-square-meter unit.

Your security with this opportunity is a leaseback option for a guaranteed 5.2% net ROI. And, you can choose any of the available units—one-, two-, or three-bed—to go with your rental guarantee.

For more information, get in touch here.

Panama Is Poised To Bounce Back

Remember, whichever option you go for, you’re not relying on tourism for your rental pool here. This is a local market with pent-up demand already in place.

Add to that, the city has a shortage of developable land. Panama City is surrounded by the Pacific Ocean on one side, and on the other by large parcels of protected land and watershed for the Panama Canal.

There’s very little room for urban sprawl. And this just adds to the pressure on housing supply.

As with the 2008 financial crisis—which had little impact on the property market here—I expect Panama to bounce back and continue upward. Financial ratings company Moody’s recently identified Panama as a country that’s poised to rise after coronavirus, thanks to its “strong economy, strong institutions, fiscal policy, and the ability to recover from a risky event.”

But as we wait to see the fallout from this global crisis, having the kind of guarantees that these developments offer would help smooth any potential bumps in the market.

Lynn Mulvihill