Panama Condos - New or Previously Owned?

Posted By: Panama Expertos on 08.04.2008
Views: 2489, Published in sections: Panama-Expertos ::

Introduction - Many of you are new to Panama and are looking for housing. You are asking yourself which direction to go - new or previously owned condos. We will try to explain some of the issues.

Are Previously Owned Condos Cheaper? - Yes and substantially. New condos in the city are running from $1800 per sq. meter to $4800 a sq meter. Prices vary as to the hype associated with the project, the amount of flippers investing in the project, the view, the floor and the sq. footage. The very large condos (over 350 sq. meters) can draw premium prices because there are so few of them. Penthouses also draw premium prices. Previously owned condos or used condos can be had for $1000 to $2200 per sq. meter for the high-end penthouses.

Are the Older Condos Better or Worse?

Concrete - The walls, floors and ceilings are made out of concrete. These older condos were built before the building boom and there were no concrete shortages. Today we hear rumors of too much salt water in the concrete, which will over time (few years) lead to erosion and water damage especially during the rainy season.

Number of Apartments per Floor - The new buildings have 4 or even 6 units per floor. This makes for a noisy hallway with hustle and bustle. The older buildings have one or two units per floor for added privacy and more peace and quiet.

Penthouses - The older buildings have real penthouses. The elevator opens up into the apartment itself. The true penthouse requires a special key to make the elevator stop in the penthouse. A real penthouse occupies two whole floors with a connecting staircase. The new buildings have pseudo-penthouses, which are two to a floor mostly. Older penthouses have a 360-degree view; new ones have perhaps two sides of the building only. Older penthouses have things like skylights, extensive marble throughout including pillars, walls, planter boxes for flowers, marble bars, marble counter tops, massive kitchens, skylights, wrap around balconies, Jacuzzi's and so forth. Since the unit has a whole floor you can control the ventilation to get flow through breezes quite easily. The newer penthouses are just high floor apartments but they get premium prices for it by calling them penthouses. Until you see an older penthouse with 500+ sq. meters you have not seen a real penthouse. These penthouses in any major city of the world would be $20,000,000 and can be had for a tenth of that or less in an older building in Panama City. Once again think older unit.

Security - Pay close attention here. The new buildings are full of foreigners like yourself. The local Panamanians are not buying these new buildings and paying the high prices. To make things worse the occupants do not know each other, everyone is new. It takes about one year to get to know who is who in the building. The security guards are also new and untested. These buildings are ripe for all sorts of home invasion type crimes and we have heard stories already and most of the new condos are not yet completed.

In an older building you are going to be living with Panamanians. They will have already taken the security guards on a shakedown cruise and the bad guards who fall asleep, are inattentive etc are long gone.

TIP: Security guards are the great Panamanian Playboys and who do they play with - your maid. The maids are cooped up in your apartment five and a half days a week. The security guards have access to the maid all she needs to do is go to the lobby for some reason like walk the dog or go to the store. Then the relationship starts. Now she starts leaving the back door open late at night so she can sneak downstairs and meet her fellow the security guard or worse yet he comes up to your condo in the night on break while you are asleep and parties with your maid in her room. This opens up all sorts of nasty possibilities. The locals know this and are not going to put up with it.

Next problem is the maids talk to each other. Maybe they meet for the evening or morning dog walk or they hook up when taking the kids to the playground or pool in the social area. The maid listens for another maid to talk about the occupants going away for two weeks and that maid is off too. Now she phones the tip in to the bad guy boyfriend. What happens is when the people are away she goes to ring the bell and make sure. She is already in the building and can do so easily without notice taking the staircase if necessary or the service elevator. Now she lets the boyfriend into the building using the buzzer for her apartment. Him and his friends go to the service door for the vacant unit and attack it using the tools they have. He might have been impersonating a repairman for the apartment that buzzed him in or told the doorman to let him up - this is the corrupt maid accomplice. Now he breaks in, gets the safe open or carts it out to his car in the garage covered with a tarp in the elevator and so forth. The locals know all about these games and do not let them play out in their building.

My point is the locals will have already shaken down the security staff to make sure things run nice and securely. Cars getting broken into in the garage can be another problem. If there is an incident in the building the first person the locals will look at is the security guards and so will the police. New units are going to have many more part time occupants. This will attract more attention from burglars who will be spending time and energy casing the place, looking for maids and security guards to corrupt etc. The older buildings will be more secure.

Pre-Sale Units - Run the other way. Is the unit going to complete or not? Projects do fail and shut down before completion. Think what fun getting your down payment back will be. What if the unit completes and you get different appliances, flooring, cabinets etc? Again more fun and games getting a refund or the problem fixed. There are currently shortages of everything related to construction in Panama. You may order Italian marble for an extra $65,000 and wind up with cheap tile because there was not enough marble available when the builder was doing the flooring. So your $675,000 condo has $9.00 per sq. meter tile in it ruining the whole ambiance. Same with appliance you can wind up with bargain basement junk. Certain brands are rust resistant and other rust pretty bad here in the humidity so guess which appliances sell out fastest. Getting the picture. Make sure you can flush the toilet and turn on the lights before buying a unit.

If you must buy a pre-construction unit make sure it is a reputable builder as in lives in Panama his whole life. Make sure the buyers are mostly Panamanian or else run. Make sure the down payment is 30% at the time you sign. Avoid those 10% now, and then another 10% etc deals these are the ones three times more likely to fail. If flipping was really such a good deal they would not have to go out and find you with expensive advertising, would they? Flipping in this market at the high side like it is easy gambling with the odds against you. Buy the steak not the sizzle.

Real Estate Bubble - The new condos are elevated in price due to a real estate bubble. When or if this bubble will break we do not know, no one does for sure. If you have an older condo and the bubble breaks, so what you are already into the unit at a low price. How much further can it drop? Some of these $3500 sq meter buildings were $1000 sq meter in 2005. Will the market go to $8,000 - $10,000 a sq meter like some say? I do not know. Maybe when they finish Balboa Ave and the flyover and all the condos are occupied it may go that high. Eventually they will shut down new building permits and that could do it. If the market goes higher a nice older condo will shoot up in price too and the risk is much less.