Jan. 13, 2015
Panama uses the U.S. dollar
Dear Overseas Property Alert Reader,
Panama City was a miracle property market for many years. People who bought condos in those gleaming waterfront towers back in 2002 saw the values of their properties skyrocket over the next six years. Many income investors saw solid, double-digit returns, and it looked to some like the boom would go on forever.
This all came to an end, however, starting in 2008. The bubble burst, a huge condo inventory was hung out to dry, and prices dropped to the tune of about 25%… in some projects, as much as 50%.
To make matters worse, a large block of hotel units came online, driving hotel occupancy rates downward. In desperation, the hotel lobby forced through a law in 2013 that placed limits on a landlord’s ability to rent his unit short-term… dampening the most lucrative segment of the rental market.
So, by 2010, Panama City had a market that was characterized by a large inventory, soft prices, and poor rental returns. Not exactly a magnet for property investors.
But here’s one important thing to remember.
This wasn’t a financial crash, and it didn’t approach the crisis that was seen in the United States at that time. It was the bursting of a foreigner-fueled bubble in the luxury condo market.
The rest of the country remained strong, and Panama in fact maintained one of the world’s strongest-performing economies. As the Hub of the Americas, Panama remained the region’s business and economic center. And the long-term economic picture in Panama continues to be bright. Continue reading