
After an absence of nearly ten years, I recently had the pleasure of visiting the republic of Panama. I must say I was surprised how much things had changed. From the once run-down Casco Viejo district and the obviously changed skyline of the capital to the development on the Pacific coast , nobody can deny that the government and private companies have invested some serious money in the country’s future.
And if you follow the news closely you might have heard that Panama’s credit rating outlook was upgraded by Moodys to positive in 2009. Fitch later gave the country a investment grade rating for the first time in history. And with a relatively strong GDP par capita (US$12,100) and cheap prices the local population might actually have a some buying power in the future.
But not so fast.
So many of those fancy new high rise buildings I saw along Avenue Balboa were empty. And when I say empty, I mean they were not even near finished yet. The same goes with the historical Casco Viejo. Only the facades of many buildings stood. And to top it off, Panama has plans to build even more office space, a convention center and hotels in a “airport city” near Tocumen International Airport.
Now, I don’t pretend to be an expert on Panamanian Real estate, but looking through the real estate section of the newspaper I didn’t see any real bargain out there. And surfing the net I found some pretty ugly stories about investors who had lost a lot of money on projects that never got built. Of course I also found the usual slew of real estate websites that claimed everything was ok. But who believes what real estate agents say?
So I started looking around for some statistics on occupancy rates, although I was not sure if I was going to trust them anyways. Years of living in Latin America have taught me how to look at statistics. You take what the government says, add it to what the opposition says, and divide it by two.
So I found this:

This from the Fourth Quarter 2010 Office Market Report NAI Panama .
Well the words (and numbers) speak for themselves. Nothing too drastic until you get the that Office Under Construction figure. Now fair enough, some of that space might already be spoken for. And sure enough, in the same report I find this:

Note that these statistics don’t include the Casco Viejo district, which isn’t an office space zone. Of course it wouldn’t make a huge difference if they did include it, but it is perhaps more symbolic than anything. I love Casco Viejo, but I can’t really see that many people willing to invest a lot of money for a shell of a building. The building costs would be far more than just starting from an empty lot.

statistics for the above surveys were taken from these areas
Well I am going to cut it short here before I go overboard. But I will continue researching and will update within the week. Meanwhile, let us know what you think by filling in the comment box below.
Ian