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How To Avoid Panama Property Scams
February 25, 2009Article by Ray Withers
Panama property investors should consider taking on the services of a good team of professional advisors to avoid scams and the pitfalls of buying as an overseas resident.
The Panama Consumer Protection Authority (ACODECO) reports that property buyers are complaining about Panamanian developers, including:
* Developers failing to comply with completion dates
* Inserting penalty clauses in contracts that allow them to keep properties if buyers are a few minutes late completing
* General shoddy workmanship and construction defects
ACODECO can intervene and direct a case should go to court or arbitration, but is overwhelmed with the number of complaints.
ACODECO recommends purchasers take advice from an independent lawyer and carry out thorough due diligence prior to signing any contracts.
Many of these problems are avoidable if Panama real estate investors work through a reputable advisor, who will already have carried out due diligence and has local contacts to smooth the progress of any deal.
One firm of consultants with plenty of experience in Panama is Property Frontiers, currently offering investment property at the Nations Hotel, Panama City . Nations Hotel is in Bella Vista, Panama City’s financial district and a hotspot for nightlife, shopping and restaurants. This five-star hotel is a short walk from the ocean edge and harbour and will service international travellers and the business community.
A range of rooms is available throughout the 26-storey building, designed by renowned national architect Musa Asvat Kasu. Options for buyers include one-bedroom hotel rooms and one or two bedroom apartments.
Each option is a ‘turn key’ investment coming ready furnished. Room prices start from £95,245, while one-bed apartments are available from £142,865 and two bed apartments from £357,972. Property Frontiers expect net yields in excess of 12% for a minimum buy-in price of £37,810 with a 60% loan-to-value mortgage. Although Panama City is experiencing a price slow-down for apartments, the Latin American capital has the second highest hotel occupancy in the world, at 84% behind Perth, Australia, and a chronic undersupply of quality hotel rooms. Property Frontiers service includes recommending an independent Panamanian lawyer for buyers plus experienced consultants to guide investors through the buying process to avoid problems and pitfalls. Before advertising any development to investors, Property Frontiers also undertakes detailed due diligence on the developer’s security over property and the legality of any development. The firm also publishes a code of conduct and is a founder member of the AIPP (Association of International Property Professionals), which is committed to ensuring that the overseas property industry maintains high levels of honesty, integrity and transparency.
For further information on the AIPP visit www.aipp.org.uk.