This is a question we’re asked regularly here at Tulipanes by guests who stay in our apartments and think to themselves they’d really like to own a piece of history too. That the market has boomed over the past few years has left many of them though with a hesitant eye, seeing that deals which used to be obvious no-brainers, are now more expensive and challenging.
The bad news is yes, you are too late to get in at the ground level of Casco Viejo’s real estate market. You missed the chance to buy gorgeous buildings inside of sixth street for $50,000 and nothing like that will ever be available again (unless you’re willing to venture in the depths of beautiful Chorillo). You missed the opportunity to buy some of the first finished units on the market that have doubled, tripled, and even quadrupled over the past few years in value.
The second, more optimistic advice is that no, it’s not too late to still find good investments. It helps to compare Casco Viejo’s real estate market to other historic districts around the world (and more specifically in Central and South America). Compared to places like Old San Juan (Puerto Rico), Grenada (Nicaragua), Cartagena (Colombia), Casco Viejo real estate is still very reasonably priced (in some cases more than half of its similar counterparts). In this sense, investing in Casco Viejo now, still presents some interesting factors.
1. Limited Supply: From an investment perspective, there is no better guarantee than a guarantee of limited product, which here manifests itself in the form of the Oficina de Casco Antiguo: a watchdog government agency meant to preserve the historical integrity of the old district. With a fixed number of possible finished buildings in Casco Viejo, there’s no wondering whether a boom may make your investment less distinctive (as there is elsewhere in panama). With a fixed supply, one then must consider the current demand.
2. Unreliable Demand: Let’s face it, real estate all over the world is feeling the effects of a shitty economy, with Panama still holding relatively strong but (in many areas) poised to bust…hard. Fact: sales in Panama real estate (in general) are very slow. Casco Viejo has seen a direct hit from this stutter and as a result developers are accepting lower bids. That is not to say they are lowering their prices, but they are more lenient in what to consider. There’s no telling where demand will be in a year from now, but those who do invest in Casco Viejo tend to have more macro-oriented vision: seeing the larger picture as opposed to the immediate future, and knowing in their heart that Casco Viejo is a special place.
3. Price Peak: Ask any real estate agent here and they’ll tell you prices are at the highest they’ve ever been. Some conclude that, as a result, they’re geared to fall though we tend to think otherwise. Prices fall for a number of reasons, but in general Casco Viejo (and the sophisticated owners of it’s properties) seem to be comfortable enough in sitting on their investment (as opposed to hastily opting to sell). Prices in Casco Viejo may indeed be leveling off for the time being, but personally we don’t see them ever dropping down as products outside the ‘limited edition’ realm tend to do.
4. Financing: One of the previous advantageous factors about investing in Casco Viejo (the leniency and generosity of Panama’s banks) simply exists no more. Giant loans that were once available have dried up. Meaning, many buyers have been priced out of the market. Unless you have the cash or a reliable funding source, picking up property in Casco Viejo isn’t nearly as easy or friendly as it used to be.
So, is it too late? The answer is resoundingly ‘no’. Is now a good time to buy? Probably. But is it also a difficult time to buy, for sure. Chances are, a number of the aforementioned factors are making you think. Additionally, this is a time of global indecision; the straight shooting trends we once saw methodically growing in the market are now confused and cross-eyed: harder to predict, more risky to bet against. Over the long haul, prices in Casco Viejo will invariably go up, but as with many other of Panama’s special niche markets, it’s only a question of time.