Panama Investor Blog

Foreign buyers say, "Were not going to take it anymore!"

I get many emails from readers asking me where  they can go when they believe they have been treated unfairly by the real estate promoter/developer. I tell them about the government agency set up for this, Authority for Consumer Protection and Competition (acodec), but unfortunately little is done except the collection of information from what I have heard. So it comes as a pleasant surprise to see that an unhappy foreign real estate buyer has set up an organization where those who believe they have been mistreated by a promoter/developer can go and air his/her grievances.

Unfortunately complaints alone will do little to motivate the promoter/developer in a very slow market as sales are few or non-existent, and one has to be careful what one publicly says because in Panama, as legal action can be initiated against you and any assets sequestered until a court decision, which can take many years.

I find it amusing that ACOBER, an association of real estate brokers, developers and promoters, state in the article " "and we'll tell you that these are isolated cases and not the common denominator of our society." The real problem comes down to the lack of transparency in real estate in Panama and  ACOBER is made up of some of the very people who have been involved in many of the projects that many foreigners complain about. It is very hard for an organization made up both developers and promoters to be forthcoming in helping the clients. Real Estate agents need to be in one association completely separate from developers and they need to be able to be brought before an independent council that can strip them of their license when they abuse their positions at the very least.

Developers need to be held accountable by the municipals that issued their permits and any actions should be implemented by them when their is clear wrong doing. Unfortunately this is Panama and these are just wishes that I highly doubt will be implemented.

According to the article in La Prensa today, legal action is being initiated against promoters and developers by foreign buyers which may be the wiser approach. If a claim is made against a developer for say $1 million, you would only have to put up 1/3rd that amount and the developer would have to put up cash, assets or a bond in order to cover that $1 million. This 3 to 1 leverage is very powerful and can quickly get a developer to resolve the conflict. He does not want to tie up monies or pay for bonds for the many years it would take to get through the courts. Every civil case can be appealed all the way to the supreme court in Panama.

Machine translated from La Prensa

Roberto Gonzalez Jimenez
[email protected] [email protected]

 Rolly Bob is a retired American who decided to invest in several properties in Panama, a country he chose as a retreat.

  But the relationship he had with some leading property developers have fallen apart and is not as pleasant as he wished.

He is not the first customer to feel that his consumer rights have been violated, but in this case, he has initiated the appropriate legal action. Rolly and a group of investors decided to take action and created a sort of platform for the affected Real Estate buyers.

An advertisement in print media account of some of their cases.  In one, referring to PH Brisas de Amador - Causeway Towers, say that despite several years ago having paid the full price, they have not recieved" any document evidencing that we are the rightful owners of the property acquired, and may not sell, rent or behave as true owners. "

  Representatives of the developer contacted yesterday said in the coming days they will make public its version.

Investors invite other people passing through similar situations to refer their cases to an email address: [email protected].  Literally translated, the message leaves nothing but the picture of Panama: "Abuse estate. Victim of Panama. "

  Rolly says that since the publication of the notice have received about 25 responses and that its purpose is to gather as many citizens as possible to force the authorities to take action.

  Image and investment

 Many of the buyers of luxury projects in Panama are foreigners, and when they suffer setbacks of this kind, problems with ownership, quality of materials, non-deliveries also suffers the Panamanian market as a safe destination for investment.

  "I'm not going to tell anyone who buys they will have problems," said Rolly, but he also said he did not arrive out of the country. (A reference to being stupid)

 Not so with a Swedish investor who bought an apartment on Avenida Balboa.

  In a complaint lodged with the Authority for Consumer Protection and Competition (acodec), the buyer ensures that the surface of the apartment received was below the contracted and that even the material of the walls was as reflected in the contract and at the Municipality.

  The investor's attorney, Zoraida Rodriguez reported that the disappointment and difficulties in recovering the money paid to the investor did not want to know "anything more about Panama."

 La Prensa sought feedback from the developer, Btesh & Virzi, but no reply was received.

Claims

The property sector  in 2009 generated many complaints to the Department acodec  Of the 745 complaints, 433 were related to housing activity.

  The board of the Panamanian Association of Brokers and Agents of Real Estate at its last meeting discussed these situations.  A board member noted that the association will support consumers, "and we'll tell you that these are isolated cases and not the common denominator of our society."

  The investigation of former municipal engineer for money laundering seems to reflect that the authorities of the past administration were part of the problem.The current government is challenged to reverse a situation that can hurt the brand country of Panama.

How Bad Are Commercial Values?

Many of us believe the next shoe to drop in the U.S.  economy are commercial properties. Although it will be a buying opportunity for some it will be disastrous for most. It has already  begun in many places  and just starting in others. Consumer confidence continues to decline bringing little hope for improvement for some time.

Excerpts from International Property Journal; Real Capital Analytics reported that total U.S. commercial sales volumes plummeted from $557.8 billion in 2007, to $181.6 billion in 2008, to a miniscule $54.4 billion in 2009.
As in any leveraged investment, so goes lending availability and costs, so goes value. And values have plummeted as lending has evaporated. Compared to 2007 total commercial lending was down 63 percent from 2007 to 2008, and another 50 percent from 2008 to 2009 (per the National Mortgage Bankers Association based on averaging their quarterly lending index). When comparing 2009 to 2007, commercial lending was off 81 percent. That’s a train wreck.

While it is impossible to pinpoint the value change of any specific commercial property without doing a full-blown appraisal, we can talk reasonably knowledgeably regarding major price trends. Unlike residential real estate, commercial is more nationally and internationally held, with investor motivations being return driven.

The impact?  Limited refinancing capacity and lending on new purchases will continue to put pressure on commercial real estate values (from the glass half-empty perspective). Yet prospective buyers have not seen opportunities like this since the late 1980s provided they bring significant equity to the table (the glass half full view). Simply stated, this is the best buying opportunity for commercial real estate since 1988 and 1989. Fortunes will be made by those who act.

Los Faros mega project to rise from the grave

This news certainly comes as a complete surprise. The project was supposed to be ready for occupancy this year, but it has yet to come out of the ground. Everyone has pretty much given it up for dead. Now, low and behold the local papers say it will rise up from the ashes and be even taller, 361 meters and 83 floors.

Panama never fails to surprise. When you think that it can't build another high rise in these tough economic times, someone comes up with the money and makes it happen. Apparently they will convert more of the residential to commercial and the project will include a 400 room hotel operated by Jumeirah Dubaití chain. So there apparently is still a great deal of money out there looking for a home and this mega project by Grupo Mall is the happy recipient. We wish them good fortune.

To give some scale the building to the bottom left is Multi Plaza mega mall and the buildings at lower right are the Punta Pacifica, Johns Hopkins affiliated hospital.

More fuel for the global warming meltdown

Just for educational purposes and to further stir the pot, I present another great video debunking the global warming myth. Ask yourself this; Why do so many politicians and government pay-rolled scientists continue to promote man-made global warming using admitted falsified data? Is it because they care about you or the planet? Maybe for some who are gullible or just plain misinformed, but for most it is about money, your money. This is a money making machine designed to redistribute wealth, your wealth and that of your children. Don't be fooled, look at the facts and then make up your minds.

Over 30,000 real scientists have risked their careers and signed a petition denying the facts of the global warming conspirators. As their theories fall apart with facts the conspirators continue to try and implement new laws and taxes to make you pay for "human kinds mistakes" that further their careers and/or agendas. Your only mistake will be believing these fools.

There are six short videos in this series and you can go here to view them all.

Panama gets a Royal Visit

I for one have never been too interested in modern royalty although my family and most other Panamanians I know read a great deal of the tabloids when they have anything to say about royalty. Of course the recent visit by the 4rth in line to be King of Great Brittan, Prince Andrew, got a lot of attention by the public as well as the politicians. This is understandable as one of her majesty's subjects is London & Regional, who are doing a mega project near the Pacific entrance to the canal. Here is their press release with a  photo of Prince Andrew"s visit to the project.

Press release: His Royal Highness, Prince Andrew, Duke of York, who was in the Republic of Panama on an official visit, stopped at Panama Pacífico, where he met with Henry Kardonski, Managing Director and JuliAnne Murphy, Marketing Director of London & Regional Panamá, Master Developer of this multiuse community located on the Banks of the Panama Canal. Prince Andrew was accompanied by H.E. Richard Austen, United Kingdom Ambassador to Panama and by H.E. Gilberto Arias, Panamanian ambassador to the United Kingdom, who also admired the level of quality and the progress of this development and emphasized on the need to promote British investment within this Special Economic Area. The fourth in line for the British crown, could appreciate the progress that has been made in the Panamerica Corporate Center (PCC), where the most modern logistics infrastructure are being built, the great highways that have been constructed fulfilling the highest global standards and the new Class-A office buildings located at the International Business Park (IBP), that now welcomes everyone. The Duke of York described Panamá Pacífico as a unique place and was very pleased with the progress and quality that this development presents. Also commented, that Panamá Pacífico has the advantage of being located in the most strategic place and that it should be better used by more British companies, and that it was very important to promote de goodness of this Project. At the end of his tour, Prince Andrew, unveiled a plaque that was made to commemorate his visit to Panamá Pacífico, where the world gathers.

Hydro Power Versus River Rafting

River rafting has been a part of the Boquete Chiriqui experience well before I arrived here in 1997. I have made several rafting trips down the less active parts of the Chiriqui Veijo with my family and it was an inspiring journey. Several companies operate rafting adventures in Boquete and by and large they bring a great deal of tourism to our community.

Now these businesses and the adventure tourism that has sprung up around it are in jeopardy. The Chiriqui Viejo river than runs near the border of Costa RIca is now being harnessed for hydro electric power which includes damming the river in a number of places to extract the valuable energy it contains. Panama is hungry for new sources of energy and hydro, which makes up a majority of our energy in Panama, is continuing to grow in leaps and bounds. Unfortunately, like most modernization and "progress" some very good things take a back seat or are eliminated entirely by the advances. In the case of Boquete's river rafting, the hydr'os will eliminate any water passing through the river in areas that are considered some of the finest rafting experiences in the world.

Is there a solution or a compromise that could be found to allow river rafting to continue while much needed energy is derived from the river? In a number of similar situations around the globe, governments and private enterprise have found it beneficial to release sufficient water for several hours each morning which allows for river rafting and the tourism it brings to flourish without the hydro's losing much in the way of revenue. Lets hope that Panama's leadership will consider this matter seriously before the switch is thrown and Panama's only river rafting industry has its lights put out.

The Failure of Anti-Money Laundering Laws

Our friends from Freedom and Prosperity have come out with another great video, this time about money laundering how unsuccessful it has been in catching crooks but highly successful in making everyone's life for difficult.

112 developments surveyed, 43 reported no sales for 2009—zero, nada

These are statistics from Mexico, but I would venture that Panama has more than its fair shares of zero sales. I have spoken to a number of developers who are just plain desperate. They have borrowed heavily and invested in infrastructure only to see nothing happen in the way of sales. Now the banks want the money or at least the interest and they can't come up with it.

One has to wonder how long it will take Mexico to recover. It has been hit be the economy, flu virus, drug violence and more. In this report the story is told from the standpoint of real estate sales.

Everyone knew there had been a steep drop in Mexico second home sales last year. But a new study of the Puerto Vallarta coast line reveals just how far sales fell in new resort developments.

In 2010, developers along the stretch known as Costa Vallarta—including Puerto Vallarta, Punta Mita and the Riviera Nayarit—recorded sales of 315 new units, a 54 percent drop from 2008 and an 80 percent drop from 2007, according to a survey by the Vallarta Lifestyles Publishing Group.

Of the 112 developments surveyed, 43 reported no sales for 2009—zero, nada. Eighteen of the projects had been canceled or taken off the market.

Read the rest of this dismal news at International Property Journal.

Record Wave of Skyscrapers Due in 2010

Here is a very interesting article about high rises in International Property journal. The train wreck of 2008 is so slow in unwinding that 2010 has turned out more sky scrappers over 200 meters than ever before. Somehow I don't think  this is good news.

More than 100 buildings of 200 meters or taller are due to finish this year, which is more than the total already in existence in New York and Hong Kong combined, the Council on Tall Buildings and Urban Habitat says.

“It is not just height, but the sheer volume of high-rise buildings set to be completed in 2010 that is astonishing,” the organization reports.

In many ways, the flurry of activity in 2010 is simply a fluke, the delayed residue of the go-go years, when these projects were financed. In 2009, the number of completed skyscrapers fell by 28 percent from 2008, thanks, in large part, to the unprecedented number of skyscrapers built in the United Arab Emirates in 2008.

 See the details here...

Health care to become part of developers plans in Costa Rica

With health care at the center of attention in the U.S. this concept could certainly gain ground if implemented properly. According the an article in Costa Rica's La Prensa, developers are teaming up with local government to put together health care centers within their projects. If Obamacare gets legs one area that you can be sure will be left out in the cold is alternative health care practitioners. I bet they will head south with technology and skills.

The Costa Rican authorities work with developers to construct Healthy Cities to attract wealthy foreign pensioners, especially Americans, who could inject $ 340 million annually to the local economy and create thousands of jobs, announced on Thursday.

  Written by AFP
12:30 Thursday, February 18th, 2010 12:30

 

  The 'Cluster' for Retirees, asthe project is called, aims to develop residential centers in various parts of the country in which they offer comprehensive services and personalized care, domestic services, transport and nursing for foreign retirees to choose their residence in Costa Rica.

  At the same time, it will involve the development of other activities such as advanced research, high value recreation, theme parks and pharmaceuticals, said the promoters.

  The project, involving various commercial and medical institutions, was presented  Thursday as a national public interest by Ministers for Competitiveness and Regulatory Improvement, George Woodbridge, and Foreign Trade Marco Vinicio Ruiz, in a ceremony in which participated many promoters.

  "It's a tremendous opportunity to coordinate efforts to increase the attractiveness country," said Ruiz, who said that Costa Rica is able to offer these services "immediate and with very high quality."

As do countries like China, Costa Rica also expects to benefit from knowledge and preparation of their own retirees, especially in the scientific field, the minister said.

Thus far, the country has offered medical tourism, which last year attracted 30,000 visitors, an average expenditure of $ 6,000 per person on services they use. And as "medical costs continue to grow in America," recalled the minister of Competitiveness so will we.

Moreover, growth and dynamism of the country in the manufacture of medical devices, which account for more than 1,00 million dollars in the export pattern and the existence of human resources in health sciences are some of the main attractions offered by Costa Rica, according to Irvin Stewart, the Costa Rican Coalition for Development Initiatives (CINDE).

This is compounded by the lower cost of living, proximity to many destinations, climate, security, peace and beauty of the country and its commitment to the environment, noted for his part Woodbridge.

  Retirement communities bring more than "two to three times" the revenue generated by tourism or just the real estate sector, which has suffered a major setback in the last year because of the global crisis, claim the developers. "This is an opportunity to change strategy," said Woodbridge, who said he retired to live in Costa Rica have "minimum bonus" to do so, especially when you import your household items and cars.
  It is estimated that the development of Healthy Cities could generate $ 340 million annually in foreign exchange.  In addition, attention to a population of 10,000 retirees would produce 40,000 jobs, direct them 10.000.
  Costa Rica already has some projects of its kind in Liberia, near the Pacific coast, and northwest of the Central Valley, home to San Jose. In Central America, however, Panama is the most advanced country in this type of service, as has five retirement communities and 42 in permitting and construction process.