Canny British property investors are following in the footsteps of US buyers and snapping up Panama property, says George Sell.
With its natural beauty, bustling cities and fantastic beaches on both Pacific and Caribbean coasts, Panama has been one of the sensations of the US property investment market in recent years. So what does property in Panama offer British investors?
Liam Bailey of David Stanley Redfern says: "The boom in Panama is still fairly young so it is difficult to predict capital appreciation figures, but I know that prices on plots of land recently tripled in a very short time, and the sudden, rapid expansion in the economy is triggering price rises on everything across the board, including building materials. Based on Panama's sudden popularity, low property prices and low living costs, the influx of American retirees buying property, and the fact that it is attracting global corporations like Hilton and Donald Trump to build sky-scraping hotel complexes, I would feel safe to put a figure of 15 to 20 per cent on capital appreciation in Panama."
Dan Johnson of The Move Channel is less sure of blanket price rises, and says buyers should look hard to make sure they are choosing schemes that will hold their value. He points to high levels of development in and around Panama City, schemes that may struggle due to their reliance on US buyers who have been made cautious by the credit crunch.
He singles out Panama City's Casco Viejo, or old town, as a good investment. "In the longer term, this will be a great part of town. It has colonial Spanish style, and the government is committed to regenerating it. It is a unique neighbourhood, and although you will pay a premium here it should hold its value well."
Elsewhere in the city, Johnson tips suburbs such as Clayton and Allbrook, which were traditionally home to US service personnel and have a lower density of housing and more green space than much of the city.
Bailey says:"Like in any property boom, the main focus of the drive upward in prices are the bigger cities, especially when, as in Panama's case, the boom is fuelled by rising migration and tourism."
A benefit to investors is Panama's climate, which is tropical with little seasonal variation in temperatures, which range from 21 degrees at night to 32 degrees during the day, all year round. This means a lengthy rental season, although there are peak times, which depend on the seasons. "The dry season is November to April. This is the main holiday season in Panama, but the green season, or the rainy season, which runs from May to September, has its benefits such as cheaper holidays, and you see a green Panama filled with wildlife," says Bailey.
As for the buying process, Bailey says: "There are seven procedures in the buying process which can be completed in around 44 days. The only restrictions on foreign ownership are that foreigners can't buy islands or property within 10 km of the frontiers. As for pitfalls it is advisable to buy titled properties instead of properties with possession rights [derecho possessorio] only."
Foreigners are able to get mortgages to buy property in Panama, which, due to its status as a burgeoning financial centre, has strict controls on the market. Mortgages here are typically for a 30 year period, and can be purchased with a loan to value ratio of up to 80 per cent.
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