Anyone who is familiar with large real estate construction projects, knows it takes time to go from pre-development to construction and then operation.
There are a lot of moving parts, which is why I was a little surprised when I heard two very large and very different projects broke ground last month In Costa del Este.
I have waited anxiously for the big earth movers to appear on the lot that has boasted a sign signaling where the 46-story Arcadia residential tower will be located. I smiled broadly when the machines appeared and told myself it would be a little juvenile for me to clap my hands. Then, I realized a second project, Casa Bianca, had also begun construction. I admit I did a little clapping—and dancing.
Hitting A Bullseye With Market Research
Market research is one of the most important aspects in real estate development. You must consider where the needs will be in four or five years and then you have to figure what the desires will be long-term. It’s one thing to fill a need, but another to fill that need with something desirable. Predicting the future, planning the answer and executing that plan requires incredible insight. If you don’t hit the target needs, your project can and will stall.
When the Arcadia tower was announced, short-term rentals, or condotels weren’t really “a thing” in Panama, even though they had enjoyed success in cities such as Las Vegas, Miami and Napa Valley. Condotels provide individual investors the convenience of owning property that can be operated as a hotel or as a rental condominium.
Units are individually owned, but when the owners are not present, the unit can become part of the hotel room inventory and treated as a condotel room. These rooms are managed by an on-site property manager who does everything from checking people in and out, to cleaning and maintaining the unit. The rental income off-sets the cost of the unit, provides a steady revenue stream and allows the value of the unit to increase over time.
Need For Short-Term Rentals Skyrocketing
As more and more international companies establish a presence in Costa del Este, the need for short-term rentals has skyrocketed. Arcadia seems to be coming on-line at just the right time. The Westin Hotel in Costa del Este is frequently sold out, as it enjoys an 86% occupancy rate mid-week. While the market is hot for hotel rooms, condotels are even hotter. They offer short-term rental options, along with amenities associated with condominiums, including a private laundry, more living space and full kitchen.
Arcadia is attractive to investors, but it also addresses the rise of young professional Panamanians, who want to live where they work. “I love the idea of being able to walk to work,” said a woman in her mid-thirties, who recently landed a marketing job with an international shoe company. “When my unit in Arcadia is ready, I won’t even need a car,” she said.
“Everything Is Here!”
“Everything is here,” she said. “An upscale food market, restaurants, dry cleaners and retail are all within walking distance. My parents don’t understand, well, they didn’t,” she laughed. “I’ve shown them all around and they now call Costa del Este, the ‘new Panama City’ even though it’s still Panama City.”
“The pre-construction pricing made it possible for me to purchase in Arcadia,” she said. ‘Since I won’t be able to move in right away, I received a fabulous price on my one-bedroom home. I made the down payment, secured financing through the builder and now I’m going to watch my new home come to life.”
The market research seems to have been spot on for Arcadia, as interest from investors and individuals alike, has been unprecedented, which is why I was a little surprised when I heard the residential project of Casa Bianca had also been fast-tracked.
A New Concept In Living
While Arcadia will join a number of existing high-profile residential towers in Costa del Este, Casa Bianca will have residences in three- and four-story buildings. The Arcadia units are compact with one- and two-bedrooms, containing around 800 square feet of living space. Casa Bianca will offer ten unique floor plans with approximately 2,200 square feet, three-bedrooms, three and a half baths and maid’s quarters.
Lately, I have been working with a number of relocation managers who are charged with finding homes for executives and their families who are being transferred to Panama on a temporary basis. I was thrilled to see Casa Bianca break ground because the residences there will offer a completely different lifestyle than what will be found at Arcadia.
“These are some of our most valued employees,” said a woman who needed four homes, preferably in Costa del Este as soon as possible. I scrambled to find rental homes in some of the already occupied residential towers such as Parkside but knew this was only going to be a temporary answer. “They all have families and young children,” she explained. “They want a place with space and fun spots for the children to play.”
Addressing The Needs Of The Whole Family
The woman seemed a little frazzled with all the details. “These four employees will be critical to our success in Central America, I need to keep them happy,” she explained.
“They are going to love it in Costa del Este,” I began. “There are tremendous schools, lots of green space, wide boulevards and a lively expat community.” I went on to mention the residences of Matisse which have about 4,000 square feet of living space and only two apartments per floor.
“I need Casa Bianca today,” she said and soon we were talking about time lines, pre-construction pricing and how the company should just purchase a few units in Casa Bianca for the next time she needed upscale residences for executives with families.” Shoot me the prices and floor plans,” she said quickly. “I’ll look like a hero!”
I wanted her to look like a hero. Once again, market research seemed on target, but with a different target. It’s great when everything comes together. I think I’ll clap my hands.