Western Panama Market Shows Signs of Recovery

February 26, 2010

BOQUETE, Panama – Property developers and real estate agents are allowing themselves a bit of optimism with regard to the real estate market for 2010 in this western Panamanian mountain town.

After slogging through one of the slowest years in recent memory, in large part brought about by the global economic recession, a number of real estate agents said they’ve detected a few signs of recovery.

“In the last two months, we’ve had a number of new clients begin to approach us,” said Karen Wittgreen of Constructora Bienes Raíces Tropicales, developer of Brisas Boqueteñas, a gated community about 15 minutes outside Boquete.

The development caters largely to North American expatriates but also includes a number of Panamanian family households. While it originally had ambitious plans for 200 homes, a little over a year ago the developer stopped at 70.

“Demand fell considerably,” Wittgreen said, adding that though 2010 has shown signs of promise, there are no current plans to begin construction again. Typically, the houses sold for $125,000, she said.

Vicky Wilson, a real estate agent based in nearby David who spent nearly 30 years working in real estate in the U.S. state of California before returning to her native Panama, said she has scheduled substantially more client visits to the area than she had last year at this time.

While 2009 was a “very down market,” she said, “perhaps it will be the end of the decay.”

During Panama’s boom years, which Wilson put from 2002 through 2006, “it was heaven,” she said. The interest was unrelenting, she added, as speculators routinely flipped properties and development was on an accelerated, if unsustainable, pace. But a calamitous 2009 brought some realism to the marketplace.

“Besides weeding out some who shouldn’t have been in the market,” Wilson said, prices have come down and sellers are more willing to negotiate.”

Due in large part to the boom, luxury homes now dot the hills surrounding Boquete, a town known for its cool climate.

The town has been heralded by the U.S.- based interest group AARP and major U.S. media outlets as a top foreign retirement destination for North Americans.

Furthermore, Panama has enacted aggressive policies to attract retirees to the country, such as major property tax exemptions and seniors’ discounts on hotels, airfare and insurance.

“With the pensionado (retiree) visa, you get discounts on just about anything,” said Joy Koopman, who opened Century 21 Boquete Gold three years ago, as well as Century 21 Bocas Gold, in the Caribbean archipelago of Bocas del Toro, five years ago. She added that the cost of living here is approximately one-fourth that in the United States.

Speaking about the market, she said “2009 was brutal due to the recession in the U.S. going global” and other factors, but added that business started to pick up late in the year and that she has high hopes for 2010.

“I feel it will be a tremendous year,” she said. “The market was overinflated, so what we’re seeing now are sellers being more realistic about their profit margin. Now we’re recovering from both a global recession as well as the real estate market in the U.S., which is flooded with short sale and REO (bank-owned) properties.”

Koopman said that while the sellers are still earning profits on their properties, “they’re not walking away with, say, 300 percent returns like they were during the boom times in other markets.”

Renny Kranish-Perry, attracted by the low cost of living and temperate climate, retired in Brisas Boqueteñas four years ago, after having worked in the U.S. state of Texas as a financial planner.

“Americans are coming here, and what they’re finding, surprisingly, is a paradise,” she said, affectionately citing “the geriatric interests” of gardening, golf, community theater, poker and fishing available in the area.

Kranish-Perry volunteers her time as the director of Inglés Tec, an English-language school in David. The Panamanian government has made it a priority to make the country more bilingual – another good sign for English-speaking expats – stipulating in 2007 that all university students must pass an English proficiency test to receive a degree in their field, Kranish-Perry said.

 

— Will Harrington

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