Is a reduction in property prices healthy?
Even though in general terms we have seen a 30% reduction in Panamanian property prices over the last 12 months many people believe there is still significant downside in the short to medium term. The vast majority of predevelopment contracts which were signed in the run-up to the worldwide economic downturn are only now coming into play and there are concerns that agreed prices were inflated against today’s market. There is also a feeling that these prearranged contracts will only store up further problems for the Panamanian market further down the line and could exacerbate a potential property market correction. In many ways the market can be compared to Dubai where international investors swamped the domestic market forcing prices higher and higher which brought more and more property developers into the market.
