real estate

Banks feel protected

According to the Superintendencia de Bancos de Panamá´s annual report for 2007, banks operating in the Centro Bancario Internacional have protected their mortgage portfolios and lending for construction from the ill winds blowing in the U.S. real estate market.

"Banks are implementing conservative credit policies in areas of high exposure," said the superintendent of banks, Olegario Barrelier.

Banks are not financing small-scale residential projects of 90 to 110 square meters or high-cost projects with a value of $2000 to $4000 per square meter in order to control speculation. And they are requiring developers to demonstrate that their buildings are on the average between 40 percent and 50 percent presold before approving loans.

"Foreign promoters are required to be associated with local developers," Barrelier added. "And in general foreign developers will not get financing unless they have proven experience in the market."

The impact of foreign purchasers on the real estate boom in Panama is difficult to measure because not all foreigners who bought homes here have taken out a mortgage from a Panamanian bank.

The Superintendencia stated that in 2007 foreigners accounted for 38 percent of the total presales of apartments reported to banks by developers. Panamanians accounted for 62 percent. When the sale of houses was considered, the percentage of purchases by foreigners is 13.7 percent.