IL Postcard

Tighter Panamanian Real Estate Controls May Be Around the Corner

Date: 07/17/2007

Big changes in Panama's real estate sector are in the works. These past few weeks you have heard much from us (as well as from other Panama publications and blogs), about the construction and real estate boom now in full swing. The magnitude of it all, along with certain highly publicized project cancellations, has generated an international buzz.

Some articles and postings, as we've said before, border on hysteria. We've heard: "The bubble's going to last," and "No, it's going to pop," and "No, it's just a crack"…I mean, enough with the bubble analogies already.

Let's put things in perspective. Three major cancellations were recently announced-of the residential towers dubbed Palacio de la Bahia, Ice Tower, and Park32. But many, many projects are under construction and are still going strong. According to the Ministry of Housing (MIVI), there are currently 175 buildings under construction, with another 125 buildings approved (some of which can't start construction until current projects are completed, as these are using much of the available labor and machinery). With another 80 building proposals in the approval stage, that adds up to 380 projects in the works.

Only three cancellations out of 380. But that doesn't mean there is nothing to worry about. Panamanians and foreign investors are still concerned (and rightly so). Those three big cancellations have affected a significant number of investors and have damaged Panama's credibility as a safe investment haven worldwide. And when Panama real estate association ACOBIR said to the government: "Something needs to be done about this," it seems the government was listening, after all.

Just days ago, public officials met with real estate and construction industry professionals to begin a dialogue. One topic was how to protect the investments of buyers. "We have to achieve a balance and protect buyers, but without increasing the burden on developers," said José Batista, Director of the MIVI's Urban Development department.

Some suggestions that have gained support among include a model contract for the entire industry, guarantee bonds, and greater control over pre-sale conditions. The special industry commission is expected to approve the most appropriate measures at another meeting this month, on July 23. Talk about quick action.

Best Regards,

Jessica Ramesch
Editor, Panama Insider
International Living

P.S. Stop taking everyone else's word for it. Come to Panama this August.