Real Estate

Value of building permits drop

la prensa

going down: The growth in construction is expected to slow as the value of building permits issued in September dropped.1130621

The value of building permits approved in September 2008 amounted to $118.5 million, $63.9 million less than in the same month a year earlier, according to figures from the General Accounting Office.

The drop was most pronounced in Panama City, where permits worth $99.7 million were issued. That is 41.6 percent less than the $170.85 million in permits issued in September 2007.

Despite the slowdown, the industry is still in line to grow this year, with permits for the first nine months up 35 percent, and up 32 percent in Panama City.

Carla López, director of appraisal and consulting at CB Richard Ellis Panama, said that the drop is most likely due to the fact that September 2007 had an abnormally large amount of permits issued, and in fact the amount was almost double the average of the remaining months in that year.

Still, the last months of 2008 have experienced a gradual decline in building permits. In May, $174.5 million were approved, as opposed to $118.5 million in September.

Financial adviser Osvaldo Lau said that the sector will continue to grow, but at a lower rate than in previous years. The primary reason, he said, is the impact of the global economic crisis on credit markets, which has made access to capital harder to get for developers.

The effects of the drop in building permits haven't been felt immediately on the construction sector, as the production of concrete, one of the main indicators of the health of the sector, increased 32 percent in September 2008 as compared to the same month last year.

The drop in permits, however, will be felt in the future.