Panama City: a work in progress
By Richard Lapper and Adam Thomson in Panama City, Http://www.FT.com
Published: Jul 11, 2007
Intermittently over the past 400 years, Panama City has been one of the world’s most cosmopolitan spots and, revitalized by the canal expansion project and development boom, it could well become so again. Faith in the future is evident in the frenetic construction of towers and skyscrapers – many targeted at wealthy foreigners – along the oceanfront, and also in the investment in its past: the restoration of the old city quarter, Casco Viejo.
The oceanfront strip, a glassy neon skyscraper skyline hugging the Pacific shoreline along Avenida Balboa to Costa del Este, through Punta Paitilla, Punta Pacifica and Coco del Mar is a much-touted image but it is not quite a reality yet. The city is a work in progress and, for now, beyond the spectacular crop of towers at Punta Paitilla and the start of the new, improved colonization of Punta Pacifica, the dominant skyline features are cranes and scaffolding.
The site of Trump Ocean Towers is marked by hoardings and, elsewhere, there are only large holes. But from a precarious vantage point among the buckets and builders of what is temporarily the top floor of the Destiny apartment block on Avenida Balboa, it is clear the metamorphosis is well under way.
More than 160 residential towers are under construction. Destiny is one of 12 being developed by Procasa, a company owned by the Panamanian Mizrachi family, and the first of many towers to be specifically designed for a foreign market that three years ago no one was certain existed. “It was risky to do,” says Jonathan Mizrachi. “The land was bought with the project in mind and I put an advertisement on the internet to get an idea of what interest there was among foreign buyers.” The first response came from Jim Weir in the UK, who went on to become the first Destiny apartment buyer, purchasing when prices were $120 per sq ft; a leap of faith rewarded with a hefty investment growth. Destiny property has doubled in value in the past two to three years. Apartments with an ocean view are now valued at $280-$320 per sq ft; a non-ocean view commands $100 to $200 per sq ft.
Destiny’s architecture and interior design were tailored with the international market in mind. The apartments were given floor-to-ceiling glass, an open-plan layout and contemporary fittings, gym, squash court and pool. “These things appeal to Americans,” says Mizrachi. “Panamanians want double garages and maids’ rooms, and won’t pay for a pool on the 51st level.” Accordingly, not one has sold locally, but 25 per cent have gone to UK buyers, 60 per cent to Americans, and the rest to South Americans.
Foreigners are the big buyers across the oceanfront developments and the number of British buyers is surprisingly high. According to Andrew Richardson, managing director of UK-based agents Property4Wealth, once “misconceptions about Panama being a shady, drug-ridden Central American set-up” have been corrected, and the country’s credentials as a stable, prosperous international banking centre with a robust economy, low crime rate and good hospitals revealed, the remaining negative – its distance from the buyers’ home country – is generally outweighed by the potential return on investment. And it’s not just waterfront properties that have doubled since 2005; several blocks back, new-build apartments have increased from $100 to $200 per sq ft in the same period.
Demand is primarily for pre-construction tower units from retirement-age buyers, or those approaching retirement age, who are considering their options and buying-to-let in the meantime.
Many of those, particularly pre-retirement age buyers, are attracted by the vibrancy of Panamanian city life and are queuing for restoration projects and restored apartments of the old quarter, Casco Viejo. A crumbling no-go area with a significant crack problem less than a decade ago, Casco is fast becoming one of the city’s most desirable residential areas. It is home to an eclectic mix of inspired and energetic Panamanians, North Americans and Europeans, keen to take an active part in the community’s comeback.
Founded in 1673, Casco is the oldest city on the Pacific coast of the Americas and was declared a Unesco World Heritage Site in 1997. It comprises 780 17th-century Spanish and 19th-century French colonial buildings (plus a few art deco anomalies) laid out on a grid of 38 blocks bordered on three sides by the sea. Even in these early stages of its lengthy restoration, it’s obvious that Casco is changing for the better. An afternoon spent crossing cobbled squares, wandering the narrow streets between buildings (white or the color of sugared almonds) with shutters and ornate iron balconies trailing bougainvillaea is usually enough to get tourists knocking on the tall wooden doors of estate agency Arco Properties.
But Casco won’t become a foreigners’ enclave or a desert of second homes. “Before, many Panamanians didn’t want to be in Casco,” says Arco’s Clare Hardin, “they wanted new and fresh, somewhere to put the car. The great thing is that now they’re coming back to roost.” There’s also a show of support from national institutions including the canal museum, the national theatre, the presidential palace and the ministry of foreign affairs, which all occupy splendid historical buildings. Some of the capital’s most popular restaurants – Mostaza, Las Bovedas, Manolo Caracol, Scena – are among the businesses moving back there. There are also the families that have always lived and worked in Casco, seen it decline in the 1950s and are now watching it recover. “There’s a blending of culture and economic groups that just feels right,” says Hardin. “It’s a community; we look out for each other. No one wants total gentrification.”
Foreign entrepreneurs who have moved here say the attraction was the lively, bohemian feel and sense of history – the atmosphere of the place. But while value appreciation might not be uppermost in the minds of prospective buyers, increased demand and a finite number of properties within the Unesco zone make it an inevitable bonus. Apartments in restored buildings range from $175,000 for a small one-bedroom, to $600,000 for a two-bedroom with terrace and canal view. A year ago, prices averaged from around $165 to $258 per sq ft but now there is little to be found below $220 per sq ft. The expectation is that prices will fall in line with those of similar properties in the old cities of San Juan and Cartagena, currently at about $320 per sq ft. “These properties can’t be replicated,” says Hardin. “Even the biggest restoration project like the conversion of the Benedetti department store will only add 10 apartments to the housing stock. These are collectables, not commodities.”
Back across the Bay of Panama, where hope of a good return on investment is the motivator for many, there’s growing concern that in a few months, when up to 12,000 luxury apartments hit the market, there might be a glut.
Inevitably the property market will break down into desirable apartments in prime locations whose owners are laughing, and superfluous apartments in new development zones whose owners are not. Richardson stresses that despite Panama’s seemingly bottomless boom, not all tower block property is golden. “There’s a big problem with first-time developers jumping on the gravy train and trying to push prices up,” he says, “but they’ll stumble. Quality units, well located, with solid developers will do well”. |
