Could Medellin real estate be the next Panama?

Medellin skyline

I have seen this question answered elsewhere on the Internet (usually be people with little or no real life experience investing in Panama).  This question interests me personally, as I lived and invested in real estate in Panama for over three years.  I was in Panama in 2006 when developers and investors thought they could do no wrong.  No price was too high for a Panama City condo with an ocean view.  At the height of the Panama real estate boom, apartments on Balboa Avenue were selling pre-construction in excess of $4,000/sqm.  Late last year, reality hit most of the world’s hot real estate markets.  Since then, markets like south Florida, Arizona, Dubai and Panama have seen price valuations cut in half.  I personally know realtors and developers in Panama City that have not moved a unit in 18 months.  Does this mean that Panama will no longer be a popular destination for international retirees and real estate investors?  NO.  Panama is still Latin America’s most stable economy and the new President seems poised to expand Panama’s investor friendly political environment.

So, Why Medellin?

Medellin at night

I will attempt to draw comparisons between the two markets over the next several weeks.  I will start here though by examening the issue that affects a person’s decision most, price.  At the beginning of the Panama phenomenon in 2003, prices per square meter for land and apartments in Panama City were very affordable.  A nice apartment could be had in one of Panama City’s nicest neighborhood for $800/sqm.  Today however, even after the 50% reduction in asking prices over the past 12 months, nice apartments in a nice area of Panama are running close to $2,000/sqm.

Medellin penthouse

Medellin on the other hand never experienced this kind of speculation-driven price increase.  Medellin has experienced its own boom of sorts, but in contrast to Panama’s international, internet-based boom, the growth in Medellin’s real estate sector was home-grown and fueled by a growing middle-class and Colombian ex-pats living abroad buying property for investment or for future retirement.  Prices for luxury apartments are on the rise, but beautiful apartments can still be found in Medellin’s most exclusive areas for less than $1,000/sqm.

Stay tuned to my next post where I will break down the average price per square meter for Medellin real estate in all 4 major real estate sectors.