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The 6 P's making Panama a rising star for Chinese buyers
By Juwai, 02 August 2017
Chinese investors viewing Panama real estate grew 82% y-o-y on Juwai.com in Q2 20171, confirming its emergence as the next hotspot for Chinese buyers.
Already, Chinese businesses and individuals are pumping huge investment flows into Panama, whose status as a global trade hub combined with a whole range of attractive factors are ratcheting up its popularity with investors from China.
Chinese investment in Panama grew 10-fold in 2016, with total investment reaching $1.27 billion last year, more than ten times the $140 million invested in 2015, according to The American Enterprise Institute.2
One factor driving Chinese investment is Panama’s uniquely-positioned infrastructure. Panama is one of the most important trade conduits in the world, handling 13,114 freighters during 2016, explaining why Landbridge Group is investing $700 million in building a port at Margarita Island.3
On the real estate side, China Construction America (CCA), a subsidiary of China State Construction Engineering, sees Panama as having unique appeal, hence its decision to develop Panama’s biggest ever residential project in Vista Alegre named City of Hope.4 Valued at $137-million and boasting 2,250 units, CCA has definite plans to market City of Hope to Chinese buyers.4
Market prospects look good too, because the strong growth in Chinese buyer views on Juwai.com is turning into deal flow on the ground – Chinese buyers accounted for 20% of all transactions for Punta Pacifica Realty in H1 2017.5
The 6 Ps of Panama real estate enticing Chinese buyers
We break down Panama’s attractive proposition to property investors from China below:
Chinese buyers are excited by value, and at close to a quarter of the price per sq.m. compared with properties in Beijing, Shanghai and Shenzhen, Panama offers outstanding value and affordability.
In fact, the stark comparison would leave many Chinese buyers palpitating with sheer excitement, considering how expensive it is now to own a property anywhere in China, much less in the prime property markets of Beijing and Shanghai.
Most Chinese households (with a median income) would require over 30 years to own a 970-sq-ft apartment in Beijing and Shanghai – two of the most expensive cities in the world.6
Panama is uniquely positioned as a strategic gateway into the Pacific, North America, and South America. And if Panama’s hotspots like Bocas del Toro, Panama City, and San Blas Islands aren’t enough, then the Caribbean is only a mere 2-hour flight away.
The IMF has ranked Panama as the most prosperous economy in Latin America7 over the past five years, and looking ahead into 2017, the Panamanian government is forecasting a 5.8% growth8 – the fastest growth rate in Latin America, and far exceeding expectations for both South and North America.9
#4 Property access
Panama puts no restrictions on foreigner’s real estate investments, and that greatly appeals to Chinese investors who highly value the possibility to buy and own titled land10 that can be passed down to future generations to come. This is a huge drawcard because mainland Chinese are not allowed to take full ownership of their property in China due to the Chinese government’s rulings that all land is state-owned.
Panama has recently established diplomatic ties with China, and that means closer trade and investment links between the two nations.11 Besides that, improved bilateral ties could augur relaxed visa rules and the start of direct flights between the two nations as well, which could spur more Chinese tourists and investors towards choosing Panama as their holiday and investment destination of choice.
Miguel Montenegro, CEO of Omega – a real estate company and Juwai client – recently shared with Yicai.com that Chinese real estate investors have become much more interested in Panama since diplomatic ties have been created.
“The number of visitors to my booth has grown at least 10-fold at the exhibition in Beijing last week compared with in April when we attended a Chinese exhibition for the first time,” said Montenegro.
Lifestyle ranking consultancy International Living has ranked Panama as one of the best retirement locations in the world, and we can see why.12 From its tropical weather to its low cost of living, generous healthcare benefits, excellent infrastructure, and its extensive range of tourist resorts and attractions…all these are highly attractive to retirees looking to spend their golden years in an exotic and idyllic paradise.
Promoting Panama real estate: A 5-step how-to guide
That said, while Panama offers an overwhelmingly attractive proposition to Chinese investors, it’s your job to get this message through to the millions of Chinese buyers seeking overseas property. Here are five steps to get you on your way.
#1 Getting online
There’s no online market in the world that can match China’s for audience and spending power – China had 731 million netizens13 and online retail $752 billion in sales at the end of 2016.14 Since China is huge and geographically diverse, online platforms offer the most cost-effective and efficient way of penetrating the market, so look to optimise your online offerings.
Read 5 must-knows to capitalise on China’s booming online market.
#2 Present the process
Shopping for property in an overseas market can be a challenge for any international buyer, but it needn’t be if you take the time to educate your Chinese clients about buying processes. Case studies of successful transactions, extensive disclosure of incurrable taxes and fees, details on mortgage procedures, and backgrounders on property rights and entitlements – these can make the difference, and can go a long way to building confidence and trust with Chinese buyers.
Discover the 3 biggest challenges Chinese face when buying property abroad.
#3 Be a tour guide
There’s no substitute for local knowledge, so treat visiting clients to an extensive tour of your property portfolio, as well as familiarise them with the local schools, facilities, shopping centres, and public amenities. Doing so will not only impress your knowledge on your prospective clients, but will also help them feel more at ease when deciding to make an investment.
Learn 5 tips to tailor your property tour for Chinese buyers.
#4 Drill down with detail
Knowing the market is one thing, but knowing your customer is another thing entirely. With this in mind, use data profiling to drill down on what properties Chinese buyers are searching for. By building more precise buyer profiles, you can tailor your offerings accordingly and maximise your chances of nailing a sale.
#5 Stand out on social media
Competition for buyers’ attention is ratcheting up, so use social media channels like WeChat and Weibo to keep potential clients informed of the latest deals, and also about the many attractive features of the Panama real estate market.
As with everything, details make the difference, so take heed of the above tips, and brush up on how you can secure better success with Chinese buyers.
With Chinese buyers already ratcheting up their interest in Panama, and their overseas investment expected to top $80 billion in 201715, there’s no time to lose, so get organised and maximise your chances of landing a windfall.
Sources: 1. Juwai IQ Data Q2 2017; 2. American Enterprise Institute: China Global Investment Tracker; 3. SCMP: Why diplomatic ties with Panama are so important to Beijing; 4. Panama Sol Realty: Chinese state developer launches Panama’s biggest property project; 5. Punta Pacifica Realty: Analysis: Panama real estate set to benefit from China deal; 6. Oxford Economics Report; 7. IMF: Panama’s growth prospects: Determinants and sectoral perspectives; 8. PR Newswire: Panama forecasts Latin America's highest economic growth rate for 2017; 9. IMF: World economic growth outlook (July 2017); 10. Global Property Guide: Panama – a buying guide; 11. Reuters: Panama establishes ties with China, ditches Taiwan in win for Beijing; 12. International Living: The world’s best places to retire in 2017; 13. Tech in Asia: China now has 731 million internet users, 95% access from their phones; 14. Digital Commerce: Online shopping in China grows 26.2% in 2016; 15. SCMP: Chinese overseas property purchases crash through US$100b barrier in 2016;
[Image source: Panama Canal on Rainforest Adventures]
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