“Do’s and Don’ts” of Buying Pre-Construction Real Estate in Panama

Pre-construction real estate investment in Panama is on the rise.

I can’t say I’m surprised, either. When the government announced its multibillion-dollar Panama Canal expansion, I knew prices would once again climb upon completion.

The Panama Canal’s Effect on Real Estate

Besides attracting thousands of international buyers to Panama, the Canal (whether directly or indirectly) has boosted the income of countless locals- giving the people of Panama an unprecedented purchasing power that trickles into the real estate market.

Now that the Canal is nearing its final phase in 2015, the real estate sector has even more to gain. As do those with money invested here.

Residential projects that are scheduled for completion in the next few years are now rising in popularity. Developers of these buildings have timed their construction perfectly- with residential ribbon-cuttings mirroring that of the anticipated canal.

And some of them are offering pre-sale prices.

Buying Pre-Sale Real Estate

The incentives behind buying pre-sale real estate are clear. Properties are offered at special pricing that is limited in time and availability, meaning whoever snags one pays a great deal less than their competitors.

Combine that with the properties near certainlikelihood to rise in value by the time of completion, and you’ve got yourself a real estate goldmine.

Of course, there are potential disadvantages to buying a pre-construction property. The wrong investment could put you in store for quite the headache- or worse, financial disappointment.

Following these Do’s and Don’ts are a good start to ensuring you make the right call on your pre-construction property.

Do Buy From a Reputable Developer

At the top of this list is the importance of going with a trusted developer. The developer behind the building must, must, must have a solid reputation for quality and timeliness. You also want to be able to explore existing projects to determine the quality for yourself.

Empresas Bern, for example, has been a leading luxury real estate developer since 1978 and has built some of the Panama’s most successful developments. According to a nation-wide real estate survey done by Panama Equity, Bern is among the 3 most reputable developers known for “completing the best product in Panama.”

Don’t Buy From Unproven Developers

While Panama is home to some reputable developers, it is also infamous for shoddy names that construct low quality projects and finish much later than promised. If you can’t see, touch, and read (good things) about the developer’s past projects, stay away.

Do Buy if You’re an Investor Looking to Flip

As an investor looking to buy something now that you can sell later at a profit, securing a property at a discounted 2013 price might be the smartest decision you make. The pre-sale price is likely to already be 20-40% lower than what the completed project will be at it’s baseline price. Combine that with the fact that, with time, the right property continue to rise in value..

Don’t Buy if You’re Looking to Move Immediately

For obvious reasons, if you’re looking to move NOW you should look at projects that are already completed. I would still suggest following the rest of the advice in this article, however. (Always, always do your research and buy from a reputable developer!)

Do Buy if You’re Looking to Move Later

Not ready to move quite yet? Invest now and move later. You’ll essentially be saving yourself thousands of dollars by paying the pre-sale price, as well as buying something at the present time value rather than what it would be in a few years.

Even if you’re not ready to move by the time the project finishes, you can rent it out to make a return on investment in the meantime.

Do Buy in a High-Potential Area

This is important when buying real estate in general, but particularly when buying pre-construction properties. You need be as confident as possible in the area that you’re buying into. If your property is in a quickly up-and-coming area, for example, it’s likely to be a good buy.

Don’t Buy in a Saturated Area

Is the property you’re considering surrounded by other properties, or about to be? Are there cranes riddling the skyline, and buildings going up on every corner? If so, there’s a chance that area is already saturated with properties- making yours less unique and valuable. Ideally, you want your investment to be in a location that is on the rise, but not so much that it’s already been tapped from a real estate standpoint.

Do Your Research

Look into the history of the developer that you plan on buying from, as well as the area you’re looking to buy in. See what different experts have to say, along with the personal experiences of everyday Joe’s. Stay up to date with the market, the neighborhood, and the political landscape- as things can change so quickly in Panama. Curate all relevant information and make your own judgment based on it.

Do Get Everything in Writing

Of course, whenever you’re dealing with any real estate matter (pre-built or not) you need to get everything in writing. Know the terms and conditions of your agreement with the developer. If the contract is in Spanish, have it translated to English. I insist on having English translations of contracts for my clients.

Don’t Work Around a Language Barrier

Unless you’re fully bilingual yourself, I suggest working with an agent who is comfortable using both languages extensively. I have seen a lot of misfortunes launched from a simple (yet expensive) case of mistranslation.

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Above all else, be sure you trust your agent and the developer they’re working with. A good agent will be honest with you up front about the bad as well as the good, and you should expect nothing less from your own.

If you have any questions about current pre-sale real estate in Panama, I invite you to contact me directly.

 

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