Construction & Real Estate
From The Report: Panama 2015
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Buoyed by a combination of factors, including the country’s prime geographic location, sustained economic growth and the influx of foreign investment in recent years, Panama’s real estate market has seen unprecedented growth since 2006. Today it is a key component of Panama’s economy, amounting to $4.6bn or 12% of GDP in 2014. Though fast growth has led the cost of land to skyrocket, sometimes as much as three-fold, a growing middle class and a significant housing deficit, coupled with thriving industrial and retail segments, make for a positive outlook for the real estate sector. Meanwhile, representing $5.1bn and 14% of the nation’s growing GDP, the construction sector is another dynamic component of the economy. According to the Panama Construction Chamber, the sector grew by 14% in 2014 and is set to expand by 10% in 2015, with the residential market offering the most potential for dynamic growth.

This chapter contains an interview with Ramón Arosemena, Minister of Public Works; and Alberto Vallarino, President, Grupo Verdeazul.

Articles from this Chapter

Overview

Price and vacancy: The surge in high-end units shifts to low- and mid-range amid a growing middle class and a sizeable housing deficit
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For many years Panama’s real estate market has been one of the fastest growing in Central America. This growth has been driven by a combination of factors, including the country’s prime geographic location; sustained economic growth, which has averaged more than 8% over the past decade; and the influx of foreign investment seen in recent years. The emergence of a middle class in the country has also provided a significant boost to the sector. Today real estate is a key component of Panama’s…

Analysis

Logistical motion: Intriguing developments in industrial real estate
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Industry has not traditionally been among the largest sectors of Panama’s economy, which is based largely on services – especially transport and logistics, which make up more than one-fifth of GDP – but recently the sector has begun to benefit from the development of value-added services. A sizeable number of companies have in recent years begun trying to leverage Panama’s connectivity to develop industry-related activities like storage and value-added services, including labelling, repackaging…

Interview

Ramón Arosemena, Minister of Public Works: Interview
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Interview:Ramón Arosemena Public debt rose to $18.23bn at the close of 2014, up by 16% year-on-year. To what extent has overspending on infrastructure contributed to this? How can cost overruns be avoided in the future? RAMON AROSEMENA: This administration is analysing projects awarded under the previous government and how tenders were awarded. The conclusion is as yet unclear in terms of the conditions that determined bid winners, preventing us from being 100% sure if there was overspending.…

Interview

Alberto Vallarino, President, Grupo Verdeazul: Interview
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Interview:Alberto Vallarino How has the sector been affected by the slowing issuance of construction permits? ALBERTO VALLARINO: The effects can be felt both in the public and private sectors. Public finances are affected by longer issuing and approval processes because the tax revenues that can be collected from building permits and construction activities are suppressed. Meanwhile, private company profits are affected as well, as slow issuance can result in longer interest payment periods…

Analysis

Liveable space: Government programmes are in the works to boost the social housing segment through private sector collaboration
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With its economy expanding rapidly, one of Panama’s key challenges is to provide public services for its inhabitants. From housing itself to sanitation and energy, these areas are providing a host of opportunities for construction through concessions, tenders and public private partnerships. Housing, especially at a social interest level, has become a government priority and a fast-growing niche – Convivienda, one of the main developer associations, reported $826m in sales for the 2014 period,…

Analysis

Bureaucracy backlog: Why the number of building permit requests has fallen
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As one of the main challenges in Panama’s construction sector despite the rapid growth of recent years, many developers point to the process of issuing building permits, which has been fraught with delays and rising prices. Permit costs have risen significantly in some municipalities, such as San Miguelito, which raised them by 40% in 2015. The reasons given for such adjustments were that the price of construction materials has risen, and that fees had not been raised in over a decade. According…