The Covid subsequently upended where and how people wanted to live and work, which became a story in itself (and still is).
But day to day, no one’s really paying attention to U.S. housing market fundamentals the way they are to dips in the Dow or spikes in the S&P.
Despite being 17% of U.S. gross domestic product few people pay attention to how the needle moves on
…
America’s housing marketgetty[+]
“
–was making the rounds all over the news. It also lit up angsty chats on LinkedIn, Reddit, and social media about the uncertain future of America’s housing market.On face value, the facts in the NAR report are unremarkable.For example, foreign buyers residing in the U.S. purchased $23.4 billion of existing homes from April 2022 through March 2023, a 31.4% decrease from the prior year–a trend NAR economists attribute to stiff prices, higher borrowing costs, a strong dollar, and historically low inventory. The This But it’s the lowest percentage since NAR began tracking foreign real estate purchases back in 2009, representing a 14.2% decrease from 2022.
South Florida was the most desirable location for foreign investors to purchase U.S. real estate in
…
2022-2023gettyOther data in NAR’s report were dryly demographic.Chinese nationals, for instance, remained U.S. real estate’s most active buyers– averaging $1.23 million per closed deal and accounting for over 25% of all sales by dollar volume ($13.6 billion). Canada scored second in this category at $6.6 billion, followed by Mexico ($4.2 billion), India ($3.4 billion) and Colombia ($900 million).Geographically, Florida attracted the most foreign real estate investment at 23%, followed by California and Texas (12% each), and North Carolina, Arizona, and Illinois (4% each). No surprise here either.Warm weather, mountains and beaches, and a world-class gastronomy, nightclub, and culture scene has …
traditionally made California and Los Angeles specifically a favorite location for foreign real estate investors
gettyYet, taken together, what does it all mean?[+]
Second, if foreigners
really are
starting to fall out of love with the American real estate dream, there inevitably will be consequences for U.S. housing.
For one, new condo markets in cities like Miami, New York, and Los Angeles, which have long relied on a steady stream of “flight capital” out of countries with less than stable economies and governments like Venezuela, Brazil, and now Colombia, could see prices drop and inventory languish.A quick retreat of high net-worth foreign buyers from U.S. real estate would also suck the over-priced oxygen out of the luxury sector faster than another dot.com bust, which would also hit high-end real estate values hard.[+]
Hamptons in Long Island outside of New York City as well as Miami and Los Angeles
getty
Nestled within the NAR report was also a third inferred conclusion which is arguably the most significant.
America has long taken its global real estate preeminence for granted. With a carefully governed banking system, a deep history of private property rights, great beaches and mountains, political stability, rich traditions, an entrepreneurial culture, and a central, easily accessible location in the world, what’s not to like?Ultimately, however, people invest in visions and places and things that they have confidence in. If What If But could it actually be plausible that real estate’s global centers of gravity are shifting slightly more permanently away from the U.S. to other countries, climates, and economic epicenters?If foreign buyers retreat from American real estate long-term there will be inevitable consequences
…
for the U.S. housing market (Historic brownstone townhomes in the landmark Beacon Hill district of Boston Massachusetts)
gettyIf you stirred him up in a martini shaker, Philip J. Spiegelman would pour out one part Monopoly-Man, two parts Panama Jack, and three shots of real estate legend all sassed up in a four-piece suit (ascot included).[+]
Philip J. Spiegelman has sold more than $20 billion of international real estate over 40 years in
…
business
Courtesy of Matthew Spiegelman
So, when it comes to international buyers, Spiegelman has seen almost everything there is to see. He’s also one of the few people in the real estate business best equipped to prognosticate on the NAR report.
“Foreign buyers have long considered America the gold standard”, says Spiegelman, who is currently managing director of InterAmerican Global Realty and IGR Panama. It We The Foreign The The The It’s where all that money is going to go nextgetty[+]
foreign buyers are cooling on U.S. real estate, says Spiegelman, is
where
all of that money will be reallocated to instead.
Capital flight and wealth sheltering are businesses of alternatives. When one formerly financially favorable jurisdiction–like the Cayman Islands, the Isle of Man, or the British Virgin Islands–becomes too regulated or overly transparent, money will start to move elsewhere along a path of least resistance.The same financial physics apply to global real estate. As soon as one haven (like Miami) becomes too expensive and crowded, or cities (like Los Angeles) start imposing “mansion taxes” and requirements for Limited Liability Companies, or LLCs (through which many foreign investors purchase U.S. real estate) to disclose their ownership, smart high net worth buyers will simply find other places to park their money.[+]
…
about as a place to live, start a business, or invest
gettyWhich is ultimately why NAR’s report–as much as it was met with a collective groan across the U.S. broker community–is great news for Panama and its capital Panama City specifically.[+]
like Miami and Los Angeles, especially when it comes to the quality of lifestyle that it offers. Panama The The It And you’d be just as likely to bump into a global CEO or billionaire at a low-key BBQ joint in Casco Antiguo or Costa del Este as you would be at Nobu in Beverly Hills or Midtown Manhattan.Unlike Miami and Los Angeles, however, Panama as a country doesn’t get ravaged by wildfires or droughts or take direct hits from Category 5 hurricanes since its lies south of the Caribbean storm belt.Panama City’s skyline rivals the world’s most architectural significant and prosperous cities like … Miami, Singapore, or Dubai
getty
Panama City’s skyline and architecture looks a lot like Miami and Los Angeles as well, precipitating a centrifugal design force that is only beginning to be recognized by the global real estate investment community.
“While Panama City’s skyline is impressive, it’s been comfortable for a long time with the economic cushion that the Panama Canal and the international banking industry provide,” says Annamaria Zampogna, Principal Designer at the Panamanian architecture firm, Forza Creativa, and a graduate of the University of Miami School of Architecture. Along with her partner Eduardo Quintero who trained under the legendary Cesar Pelli, Zampogna has designed some of the most notable and iconic projects both in Panama and Latin America, including winning the highest prize awarded for architecture by the SPIA (Architecture and Engineering Society of Panama) in 2022 for their building “Allegra”.
“The city’s like a young adult that isn’t begging for attention yet, but knows that it’s about to have its breakout moment. Panama The The Its galleries also tell the story of how the rise of the isthmus of Panama changed the world.getty[+]
On a causeway less than a mile from downtown, for example, sprawls the Biomuseo, a curving, multi-colored, platelet-like Frank Gehry design that houses Panama’s science museum celebrating the country’s world-renowned biodiversity, ecology, and sustainability efforts. The It’s the kind of skyline-defining architecture that you can’t unsee once you do.
Then there are Panama City’s recently developed luxury residential towers, many of which have been conceived in collaboration with some of the world’s leading style icons, like famed French designer Phillipe Starck who was the creative director and driving force behind the Arts Tower on Balboa Boulevard downtown.The Sky Lounge at Wanders & Yoo by world-renowned Dutch design icon Marcel Wanders connects the …
development’s two towers and features unobstructed views of the Pacific Ocean and Panama City’s skyline and rivals any amenity in Miami or Los Angeles
Courtesy of Wanders & YooNot far away in Marbella at the center of Panama City’s financial district is another new architectural icon called Wanders & Yoo whose every material, detail, finish, and furnishing down to the wallpaper and light fixtures was brought to life by Dutch style superstar Marcel Wanders, dubbed the “Lady Gaga of the design world” by the New York Times back in 2011.[+]
…
University of Miami and along with her partner Eduardo Quintero was awarded the highest prize in Panama for works of architecture called the ‘Premio Magno’ by the SPIA (Architecture and Engineering Society of Panama) in 2022 for their building “Allegra”
Courtesy of Franco Assenza/Forza Creativa
Forza Creativa’s newest multi-family building called “Allegra” in Panama City’s prestigious Santa … [+]
A big part of Panama’s ability to stay on the cutting edge of global style and design is the country’s location at the pivot point of the western hemisphere, along with being an international corporate and banking epicenter.
“Our dedication to fashion, fine art, and design excellence is really what allows us to compete in the global real estate market,” Attie explains of Panama’s real estate aspirations. The But the main reason foreign buyers invest here is that they discover Yoo by Starck or Wanders & Yoo together with all of the benefits of Panama and realize that it’s a perfect location to live and work and run a business in Latin America with access to the global stage.”
The interior design, finishes, furnishings, and artwork in Panama City rival anything in Miami, Los
… Angeles, or New York City[+]
Better penthouse view. One quarter the price
Courtesy of Tirone Garcia/Forza Creativa
Perhaps most importantly in today’s market, Panama City is quickly earning an international reputation for offering more for the money compared with well-heeled real estate hotspots like Dubai, Miami, London, Paris, and New York.“Panama is still very affordable internationally for high-end residential properties of all kinds,” says Zampogna, “And because of that there’s amazing growth opportunity. The Panama is attractive to many foreign buyers who are looking for a fiscal address. They quickly learn that Panama is both a strategic decision and a way to save money. Panama is an ideal place to start a business and raise a family. It is located in a region that is safe and convenient for traveling. It is a safe metropolis with a very good school system, international communities, and a competitive curriculum. The city is also very cosmopolitan. “[+]
Americas at the Pacific Ocean entrance to the Panama Canal with Panama City in the backgroundgetty[+]
Panama’s present and future is predicated on a well-thought out mix of balancing old with new
getty
All of which makes Panama an exception among nations.
The country has no standing military; just a robust police force and it’s protection is guaranteed by the U.S. Armed Forces as part of the Panama Canal Treaties. Panama’s currency is the U.S. Dollar, and not just pegged to it. Its infrastructure– including the country’s roads, bridges, and airports–is world-class, its government is freely and democratically elected, and its economy is widely diversified compared to countries like Costa Rica and Belize who are overly-dependent on tourism.“Panama’s economic and political stability has always been kind of a secret,” says Henri Mizrachi, a former civilian Director of the Board of the Panama Canal. “We have not felt the need to announce this to the world in order to attract investment. The only difference is that everyone is finally taking notice, even though we’re a small country of just four million people.” The only difference now is that everyone else is finally taking notice even though we’re a small country of only four million people.”[+]
Panama’s real estate market is also stable and appreciating, making it an attractive place to invest when other hotspots start to cool.
“Florida for years has been the main object of desire for offshore prospects,” says IGR Panama’s Spiegelman. The weather and low taxes were the main draws. At the time, entry costs were low. The pandemic changed the demographics of the United States and caused higher prices. You can combine these factors with higher prices for construction materials and hurricane insurance to create a perfect storm that will cool down the American market. Consider the alternatives. Countries like Panama can meet most, if not all, of these requirements. The country has just done a poor job of marketing itself, though that’s quickly changing at all levels and in both the public and private sectors.”
Come here for lunch. Be back at a 5-star hotel and restaurant in Panama City for drinks and dinner
on the same day
getty
Panama’s biodiversity makes it one of the top sustainable tourism and adventure destinations in the … [+]
Denise Guillen, Panama’s new Minister of Tourism who could arguably be biased, doesn’t disagree. From a marketing standpoint, countries are really no different than technology companies or a food truck start-up; it’s only the scale that changes.
“Most visitors who come to Panama for the first time are especially surprised by the incredibly rich biodiversity that we have to offer; yet, still with excellent connectivity and proximity to metropolitan centers,” Guillen tells me. We are lucky to be surrounded by rainforests, beautiful coastlines and national parks that offer a wide range of activities to visitors. The Smithsonian Tropical Research Institute has been in Panama for more than 100 years. A visitor can have an adventure–hiking trails, observing wildlife, taking beautiful photos all day at the Soberania National Park for example–and then get back to a marvelously restored 5-star hotel in Panama City to freshen-up in time for an amazing gourmet dinner surrounded by architectural masterpieces.”
Attention all scuba divers: Yes Panama has thriving sea life underwater including schools of
…
getty
This level of culture and biodiversity so close to a sophisticated urban area is not a minor natural asset–especially when it comes competing with other countries like Costa Rica, Portugal, and Thailand for the coming wave of Babyboomers retiring south and bringing their money with them.“Historically, we have attracted expats, retirees and investors alike, and Panama has welcomed them as our very own,” continues Guillen, “But not with the same intent and focus as we’re doing now. This is a great thing because people who come to Panama to live love it so much they want to continue helping to develop tourism and their communities. They eventually become Panamanos and enjoy all that Panama has to provide. Panama’s reputation will continue to grow globally, which will better position us as a retirement and real estate investment destination. As Panama’s reputation continues to grow globally, that will better position us as a retirement and real estate investment destination.”Panama is the “land bridge” that connects North and South America between Costa Rica to the north
…
and Colombia to the south placing it squarely at the epicenter of the Western Hemisphere
Another reason U.S. real estate’s temporary loss could be Panama’s gain is location, location, location. Panama has one of the most central locations in the world. Panama City’s Tocumen Airport is accessible via dozens of two-step flights that originate in Asia and Africa, through Los Angeles, Mexico City, Frankfurt, Germany, Sao Paolo or Rio de Janeiro, Brazil. From Asia and Africa, dozens of two-step flights arrive into Panama City’s Tocumen Airport through Los Angeles, Mexico City, Frankfurt, Germany, and Sao Paolo or Rio de Janeiro, Brazil.
Not surprisingly, Panama is frequently referred to as the “Switzerland” of Latin America in the same way Dubai is to the Middle East, and currently supports global operations for more than 189 multinational corporations including Procter & Gamble, Heineken, Caterpillar, BMW, and steel giant ArcelorMittal.
“Panama’s central location in the Americas and the Panama Canal’s strategic position are vital for our economic and tourism potential because they facilitate global commerce, trade and transportation, making Panama a logistical hub for the entire world,” says Tourism Minister Guillen. Our privileged geographic location allows us to attract visitors from all over the world. We are also protected from major natural disasters such as hurricanes. What’s not to love?getty[+]
“The Panamanian government recently created a ‘Golden Opportunity” for those interested in either a visa or future citizenship to compete with countries like Portugal, Mexico, and Spain for foreign investors and especially retirees,” says IGR Panama’s Spiegelman. The Qualified Investment Visa is the primary program to attract real estate investors. The owner of $300,000 in real estate can apply within 60 days for a Panamanian Visa. After the visa has been issued, the owner may apply for citizenship within five years. This program offers different benefits depending on the country of origin. Panama’s visa program is a great incentive for foreign buyers from countries that may make entry to the U.S. difficult. For foreign buyers from countries that may make entry to the U.S. difficult, Panama’s visa program alleviates that hurdle, which creates an attractive incentive to offshore buyers and investors with a long-term plan and view.”“It’s Panama’s time now”[+]
For U.S. real estate it’s hard to say. There’s good reason to believe that foreign buyers won’t buy in the U.S. until the housing market stabilizes and borrowing costs drop. Panama has not done much to raise its international profile and promote itself. This is why the country is still a secret. This is changing as more and more information becomes available. People are considering all options and alternatives in a world that is undergoing turmoil. Panama is now the right time to invest in Panama because of its climate, culture and banking and finance.