Construction & Real Estate
From The Report: Panama 2014
View in Online Reader

A major driver of GDP growth over the past decade, the construction sector generated more than $2.5bn in 2013, accounting for around 9% of GDP, a year-on-year (y-o-y) increase of 30%, according to the Panamanian Chamber of Construction. Public infrastructure works are leading this surge, but the private sector is also playing a significant role through residential and commercial developments. The real estate sector is also experiencing a boom supported by real demand and increased purchasing power among the local population. Preliminary data released by the National Institute of Statistics and Census indicates that real estate, corporate and leasing activities expanded by an average of 10.3% y-o-y during the third quarter of 2013. While prices are slightly on the rise in both residential and commercial segments, indicators suggest that the market is cooling off and reaching a healthy equilibrium. Even so, tax incentives are set to maintain demand and continue to attract foreign investment.

This chapter includes an interview with Victor Alberola, President, Fomento de Construcciones y Contratas Central America.

Articles from this Chapter

Overview

An entire country to build: Infrastructure and residential development lead the upsurge in sector activity
OBG
plus

One of the country’s most representative sectors, construction has been a major driver of GDP growth over the past decade. While crucial public infrastructure works are leading this surge, the private sector is also playing a significant role through residential and commercial developments, all contributing to exceptionally low unemployment figures. Following the general trend of the economy, construction is expected to continue growing strongly in the short term, albeit at more moderate levels…

Interview

Key country: OBG talks to Víctor Alberola, President, Fomento de Construcciones y Contratas (FCC) Central America
OBG
plus

Interview:Víctor Alberola Where and on what scale do you foresee new infrastructure investments? VICTOR ALBEROLA: Panama will retain its current infrastructure investment level irrespective of who wins the upcoming elections. The compromise is maintaining future investment, which is expected to be more than $10bn. Tourism and other services are yet to reach their potential due to a lack of certain infrastructure. The Inter-American Highway, for example, needs to be duplicated from Panama…

Analysis

One step at a time: The market for low-income housing remains large
OBG
plus

With a housing deficit of over 136,000 units and growing at around 15% per year, a huge market remains unsatisfied as few developers construct within the low-income segment. Government incentives, almost entirely restricted to assisting the consumer in purchasing a home, have fallen short of providing viable solutions on a large scale and attracting needed development. “Over the past two years, practically no homes under $40,000 have been built, which is concerning both for the industry and the…

Analysis

Laying the foundations: Public works keep industry potential high
OBG
plus

While several of the most significant infrastructure projects draw to a close, concerns have arisen over an eventual decline in construction activity. However, deficits still remain among highways, roads, logistics operations and purely private sector ventures, providing a long list of work for the near to medium term. According to the Panamanian Chamber of Construction (Cámara Panameña de la Construcción, CAPAC), some $2.8bn worth of public infrastructure projects has yet to be put up for tender…

Overview

Helping hands: The growing middle class is expected to sustain growth
OBG
plus

Popular among North American and European retirees, the Panamanian real estate market consists of much more than beachfront property. As with construction, the sector is experiencing a boom supported by real demand and increased purchasing power among the local population. While prices are slightly on the rise in both residential and commercial segments, indicators suggest that the market is cooling off and reaching a healthy equilibrium. Such conditions, along with a stable political scene and security,…

Analysis

A mature market: Prime office rentals see healthy growth in the capital
OBG
plus

Already a recognisable symbol of prosperity along the Panama City skyline, office buildings continue to play a central role in the country’s real estate sector. Although demand has increased for office space, general trends indicate that rental prices remain relatively steady, contained largely by the many square metres slated to become available within the next couple of years. Demand Much demand for prime office space has been driven by tax incentives benefitting multinationals that set up…