Riding on the wave of Panama City’s most recent real estate boom, the tiny niche market of Casco Viejo saw perhaps more development in 2008 than ever before. Construction crews could be seen working diligently throughout the days, prospective buyers began snatching pre-construction property, and various aspects of social development in Casco (such as new bars, groups, shops…etc) arose almost over night. But with the global meltdown and the local bust of Panama City approaching, how will Casco Viejo’s property sector react?
1) Decrease in sales: Whether the local real estate agencies want to admit it or not, real estate leads and sales are down multi-fold. There’s simply not as much buzz, from web traffic to walk-ins, as there was a year ago and people are tending to be a lot more conservative when it comes to Casco’s largest real estate market, the $200,000-$500,000 window.
2) Leveling off of prices: Prices in 2008 rose very fast in Casco Viejo. Some say they doubled or even tripled over the past few years. Part of this was due to the increased buzz about Panama, part was speculation (considering most of the sales in Casco Viejo were pre-construction). While most experts agree that prices in Casco Viejo won’t go down (seeing as though it’s limited supply is a stabilizer), they certainly appear to be reaching a leveled peak.
3) Increased cost of materials: As with all projects in Panama, the cost of materials for Casco Viejo’s real estate sector has risen significantly. For this reason, prices for the simplest of renovation projects have risen and groups who once considered are now second-guessing themselves.
4) Financing: Most banks in Panama have cut off their loans to somewhere around $2,000/m2. Because the majority of Casco Viejo properties are just above that threshold, many fewer sales have gone through and more buyers are left without financing options. Back when the banks would cover up to 90-100% of the pre-construction cost, this now-difficult decision was a no-brainer.
Casco Viejo’s real estate market is widely thought to be a more stable and reliable one than elsewhere in Panama City. But with various factors at play, the recently booming market has certainly begun to cool off. Its advocates cite the Casco’s timeless and limited edition appeal as the main reason it should survive the economic recession just fine – while critics say it’ll suffer heavily.