Panama Real Estate Market 2020 COVID Update: This is what we know so far

The Panama real estate market during the beginning of 2020 had a prospering outlook compared to the previous years, this was because of several factors: a new government took office in mid-2019, better preferential interest rates for mortgages, and a better overall forecast of the economy, as explained in our previous Panama market article.

This predicted outlook has taken a complex turn due to the COVID outbreak in the country and all the measures taken to stop it. This is not a surprise, many countries in Latin America have taken similar or stronger measures to stop the outbreak and flatten the curve as soon as possible. However, there are high possibilities that these measures will strongly impact the overall economy in the region.

During these last weeks we have tried to follow up, and get as more information as possible from different sources to try to understand better the situation of COVID in Panama along with its economy, and more closely the real estate market situation for the rest of the 2020 and the following years.

In this article we will summarize how Panama’s government has been handling this situation to mitigate the COVID cases, what measures they have taken in the labor market, the financial sector, the real estate and construction market, in order to navigate through this complex environment and maintain an overall strong economic position during the pandemic.

A Small Brief on the COVID Outbreak in Panama:

• As of May 6th, there is a total of 7731 cases and 218 deaths in Panama.
• The first case was detected on March 9th and have been growing ever since.
• The amount of cases is higher than the rest of Central America, but Panama was fortunate to obtain in time enough testing kits to detect as many cases as possible early on.
• The government proceeded to build a modular hospital in the city that includes 100 ICU beds to attend the pandemic.
• In March 17th, the government made a curfew decree from 9PM to 5AM, changed to 5PM – 5AM days afterwards.
• In Marth 25th, the government decided to order a total quarantine (with exceptions of essential businesses), where locals can go out only by 2 hours per day, and the time depending on their ID or passport’s last number.
• By April 1st, the government decided to strengthen the quarantine allowing women to go out on Monday, Wednesday and Friday, and men on Tuesday, Thursday, and Saturday, with the same time arrangement, and nobody going out on Sundays. One week afterwards, Saturdays were not allowed to go out either.

Panama’s measures on the Economy:

Along with the quarantine, the government has ordered a shutdown the airport, and most of the businesses and industries, encouraging to work from home those workers that are non-essential to be physically in their workspace.

This has few exemptions such as the delivery services, restaurants (food delivery only), public security, and other first-necessity industries, but due to the closure, many businesses applied for temporal work contract suspensions and reduced labor hour measures in order to maintain themselves afloat until the lifting of the quarantine.

To try to ease this situation, the government created a solidarity program where they provide cash and basic food basket to those most affected. At the same time, implemented a law to freeze the payments for utilities for 4 months, while successfully issuing US$2.5 Billion in sovereign bonds in the international markets, to ensure additional resources to deal with the crisis and other needs of the people.

On the financial sector, government reached to an agreement with the Banks Association of Panama to extend the debt obligations of the population up until December 31st, 2020, which includes mortgage payments, personal and commercial loans.

Additionally, it is prohibited to make evictions and the rent payments have been frozen up for those affected up to 2 months after the health crisis.

This measure and extending the mortgage debt payments are good practices to avoid growing the inventory of foreclosure properties in the banking sector.

Panama Real Estate Market Overview for the rest of 2020:

In the short term, the real estate market in Panama indeed is being affected due to the current economic situation and other facts, some of them are clear at the moment: the impossibility to arrange rent payments, to purchase properties, and moving during the health crisis.

It is also a fact that, in the recent years, the market in Panama has experienced more supply than demand of apartments, houses and properties, which has caused some prices to lower down time over time, and combined with the COVID situation it can prolong this oversupply for a longer term.

During the last couple of weeks we have detected a spike in listings of apartments and houses in Paitilla, Punta Pacifica, San Francisco, Marbella and Avenida Balboa with very competitive prices, this is an interesting tendency but it is still too early to know for sure how the real estate market in Panama will be affected during 2020.

Real Estate Apartments Projects in Panama in 2020:

During our research in Panama’s ACOBIR Real Estate fair at the end of January, we saw a huge amount of new projects both in Panama City’s metropolitan area and housing projects in the interior of the country, as well as a strong marketing pull in other projects which have been promoting already over a year.

The expectations of a growing demand were high, mainly due to the preferential interest and other measures the current government was making to push forward the construction and the real estate industry, we noticed this possible demand personally during the fair.

The reality for now is that there are high chances of not meeting these expectations and some projects might run the risk of being cancelled, this can be a small hit on the labor within this industry, but at the same time if this happens, there are chances of a price stabilization for the current properties in sale.

On the other hand, the Ministry of Labor, together with other important unions, syndicates, and guilds of different sectors, are discussing a plan for a gradual resumption of some businesses during the following weeks, so there is a possibility of the real estate construction sector to resume activities more soon than later.

Conclusions

There is not a determined date of when the economy will start getting back to normal in Panama, however the overall COVID situation in the country is improving over time.

Panama in fact has been praised for their approach to fight the pandemic due to the early actions done on testing and other measures that the government has taken. This is a signal that we might be going on the right way, and start resuming gradually our economy, what is important is to resume as early as possible, so both the economy and the real estate market won’t get seriously affected in the short term.

In the long term however, many still consider Panama a great country to invest in, due to its US dollar based economy, political stability, safety, and other reasons. Moody’s agency estimates that by 2021 Panama will be the richest country in Latin America by purchasing power, and due to its potential economy growth in the following years, it will recover from the COVID pandemic in a more balanced way than other neighbor countries.