“You know it’s a little different in the United States,” said a woman in her sixties.
“We expect the building to be, if not completely finished, pretty close to being finished. We think we should be able to walk through and clearly visualize the residential space, but in Panama you show me a small billboard announcing a project that will supposedly be built sometime in the future. And, you want my money before you break ground,” she continued laughing. “What guarantee do I have? You must be really good at having people trust you!”
It certainly wasn’t the first time I had heard this feeling expressed, especially with clients from the United States. Canadians are much more at ease with the concept since much urban construction in Toronto is sold as pre-construction. Great Britain sells plenty of pre-construction as does much of the European Union
Know How The Process Works
“You should be exceptionally careful,” I said smiling. “There are a lot of wonderful things about buying early, but you have to do your research and make sure you know exactly how the process works.”
“So what research should I be conducting?” she asked cautiously.
Know The Builder
“The main thing to consider is the builder’s reputation,” I said standing in front of the Arcadia sign in Costa del Este, an upscale suburb of Panama City.
The sign and supporting marketing materials touted a futuristic structure with 46 floors, a long list of amenities and luxury appointments with a perfect location overlooking Central Park. You could almost feel the kind of vibrant life-style that would be occupying the residences.
The sign was a little sad but it confidently proclaimed a stunning high rise was coming to the dusty burnt field soon.
“The response to this project was intense. All permits have been secured. We’re just waiting to hear when groundbreaking is scheduled, but Arcadia is coming soon!”
“But what about the builder?,” my client reiterated. “What should I know about the builder?”
Forty Years Is A Long Time
“The developer of the Arcadia project is Empresas Bern,” I began. “They have been in business for 40 years and they are the most respected building developer in Panama. It is a family run company that has worked over the years to further develop Panama, providing jobs and opportunities for Panamanians. They have completed over 160 projects, not counting a total of nine hotels. Empresas Bern is also building the Johns Hopkins international affiliated hospital located just on the other side of the park,” I said turning to point in the mall’s direction. “You couldn’t pick a better developer than Empresas Bern.”
“OK. I’ll go along with the great builder concept, but why would I buy something that is going to take years to materialize?” she asked.
When Pre-Construction Is Not For You
“If you need to move into property right away, pre-construction projects are not for you,” I explained. “I have units in Parkside right over there that you could move into this week. But if you are investing for the future, there are lots of reasons pre-construction might be a great option.” I said.
“Who doesn’t like buying something that is brand new and perfect? When you buy early, it’s easier for you to negotiate with the builder exactly what you want. A second bedroom? An appliance bonus? A different door leading to the balcony?” I said. “Negotiate on just about everything!
The Very Best Price
“There will never be a better price than when a project is in pre-construction. When the project is completed, pre-construction buyers realize immediate equity. A condo that sold for $330,000 before occupancy should be looking at about $30,000 in equity when they take possession,” I continued.
“You also get the best location and layout. You know, when you are thinking about going on a cruise and you are out about 18 months. Normally, you can snag that cabin with the veranda that is close to the middle elevators for the best possible price. Makes a lot of difference, but if you are a late comer you might have to settle for a view of the life boats and have to start out 10 minutes early just to make dinner because you are located at the end of the ship. You are also likely to pay a higher price for that less desirable cabin,” I laughed and she joined me.
Looking Long-Term At The Neighborhood
“It’s also important for you consider the neighborhood and where it will be in a few years. Property ownership is a big deal so you want to buy in a hot market,” I said, turning around to show the beauty of Costa del Este.
Joggers were along the foot paths and trails, automobiles were driving down the wide boulevards and the Town Center Mall was alive with people. “
“This is the hottest part of Panama City and it’s perfectly located between the international airport and downtown. All the electrical wiring is underground, the schools are the best and Costa del Este even has their own water supply and processing system.
Considering The Ability To Rent
“Arcadia has a license for short- and long-term rentals if you don’t live in Panama full time, you can rent it and work with an on-site property management company that does everything for you—from finding renters to checking people in and out and making sure everything is maintained,” I continued.
“I’m not saying you should sink every penny into Panamanian real estate” I paused to laugh. “I’d love to sell you a lot of real estate, but it’s my suggestion that you consider the diversity of having a place in Panama which is a secure country, with a US dollar-based economy, growing faster than almost every other country on the globe. Keep money in the market, have cash on hand but, buying pre-construction, with a solid builder, is something to consider,” I concluded.