Commercial - rather than residential - may be the main growth driver for Panama's real estate sector, experts say.
BY CHRONICLE STAFF
Panamas residential real estate market - until recently seen as one of the hottest in Latin America - is starting to cool down, thanks to oversupply, rising prices, a new and controversial visa law and the U.S. sub prime crisis, experts say.
However, the commercial real estate sector is likely to see solid growth, thanks to the $5.2 billion expansion of the Panama Canal and the growing number of multinationals that are setting up offices or manufacturing facilities there.
"Theres a lot of residential product that needs to be sold," says Shannon Robertson, managing director of the Latin America operations for Jones Lang LaSalle. "We expect prices to correct or developers to hold on to their products. Theres no question that from a residential market view, Panama City got overbuilt very quickly. It became the flavor of the day."
Paul McBride, CEO of real estate consulting firm Prima Panama, agrees. "Oversupply in Panama City will begin to become a problem in the next 12 to 18 months," he predicts. "Increasing prices in the residential retail sector along with a tightening international credit market will likely slow demand."
While most of the oversupply is affecting Panama City, even areas with larger potential along the coasts could be affected by the U.S. sub prime crisis, McBride warns. "We’re very concerned about the sub-prime mortgage crisis and...
Keywords: Bocas del Toro, Panama City, Procter & Gamble, Re/Max Central, Tourism, Visa Law