From the time the United States handed over control of the Panama Canal the nation of Panama ceased to be seen as a US colony. Investment poured in and Panama's economic growth rate was similar to China's, peaking at 11 percent in 2008. Panama came to the attention of North American retirees when travel magazines such as International Living featured this paradise between two seas. Panama was seen as a safe, cheap, democratic place to live and retirees poured in, bought property, built homes, and helped drive up real estate prices, until the Recession of 2008 to 2009. With the economic down turn high end housing values in Panama dropped, some say corrected, but are now heading up again. Thus a problem becomes an opportunity in Panama.
Panama's economy never really went into recession. The annualized gross domestic product dropped to around 3 percent in 2009 but business continued and the middle class continued to prosper. The middle of the home market in Panama did not really blink in response to a worldwide recession.
The Problem is in the High End of the Housing Market
However, the high end of the market did. The priciest condos on the Pacific in Panama City and homes in the suburbs took a hit as North American buyers stayed home, went back home, or walked away from their down payments. Because foreigners typically need to put 30 percent down when getting mortgage in Panama, those who own homes here are typically OK. However, some whose cash flow suffered badly during the business downturn have had difficulty keeping up with mortgage payments. More of a problem has been a temporary reduction in buyers. However, this is gradually rectifying itself, leading to as much as a 30 percent increase in housing values in the last year.
Where the Opportunity Lies
Because of developers and the occasional home buyer being stuck a cash flow crunch due to the recession elsewhere there are a number of new, high end homes in Panama that have been repossessed by banks. These properties are available at prices substantially below what they were going for a couple of years ago and what will they will sell for as the worldwide economy comes around. Already in the last year some homes have sold for up to 30 percent more than their repossessed value of a year ago according to local real estate experts.
This situation provides an excellent investment opportunity for a Panamanian entity. Although a foreigner can buy a home in Panama it would be substantially more difficult to find repossessed mortgages, deal with multiple legal issues, and get a mortgage on the same property. Thus, in order to take advantage of this one time opportunity as the Panama real estate market's high end comes back over the next three to five years a foreigner would do well to invest in well connected Panama entity which, in turn, invests in repossessed mortgages in Panama. These opportunities are available with a simple click on a computer link. Turning a temporary problem in the Panama real estate market into an opportunity can be quite profitable in Paradise.
Article Source: http://www.articlesbase.com/business-opportunities-articles/a-problem-becomes-an-opportunity-in-panama-2844214.html
About the AuthorAn offshore formations and banking specialist working for several companies regarding offshore structures, formation of companies, foundations, banks and financial institutions in several jurisdictions, including provision of government issued financial licenses.
Working for User Bancorp Ltd, which is providing private and corporate accounts, merchant accounts, offshore companies such as Belize IBC's (International Business Company), Panama corporations and foundations, wire transfer services, managed funds/forex, credit- debit- and prepaid card issuing.
We also offer co-ownership and shares in different investment programs such as real estate investment in profitable jurizdictions like Panama, Belize and Spain.
Certificate of Deposit/Term Deposit accounts available up to 9 % p.a.
Contact me on e-mail: geir.holstad@userbancorp.com