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Panama: Rising Property Prices Explained

Article Summary:

Panama has seen an increase in the price of building materials, labor, and land values, which are directly influencing the cost of housing, but don’t forget the taxes collected on the construction, those too are also reflected in the rising property prices.

Photo Credit: Panama America

Original Article Text From Panama America via Google Translate :

Increases in incidence rates of housing cost

Construction sector unions disagree with the rise of taxes and fees for residential projects implemented . Promoters of the country should bear the costs of health infrastructure and road for years, even though the work has been completed in full.

The price of materials , labor and land values ​​are not the only factors that influence the cost of housing in Panama . The rates and taxes charged to the promoters also have a degree of impact that somehow, according to experts, affects final buyers .

According to the president of the Panamanian Chamber of Construction ( CAPAC) , Enrique Asensio , in recent years the incidence rate with the rates and taxes, to be paid by developers, in the final cost of a home has increased going from 1.3 % to 2.7 % , ie has doubled.

The executive director of the National Housing Developers ( Convivienda ) , Elisa Suarez, also believes that the increase in rates and taxes impact the price of homes in the country.

“Generate significant costs or tax rates currently charged by state institutions such as the National Environmental Authority (ANAM ) , municipalities , firefighters, the Ministry of Health (MoH ) , the Transit Authority and Land Transport ( ATTT ), among others , Suarez said .

Rates
Asensio , also vice president of research and development of Sucasa promoter , said that the new rates to be paid to the Fire Department of Panama are part of this increase.

” Unfortunately, these costs are transferred to the end customer , ie , thousands of Panamanians who go to real estate companies and housing fairs in order to realize the dream of homeownership , he said.

This year firefighters have almost doubled the rates and also are charging separately a number of services previously included within the cost of inspection to grant occupancy permit , he said the president of the Capac .

It also found that often influences the interpretation of the rule, it is not clear . For example, if previously charged $ 50 for an inspection, now wants to charge this amount for each home. ” That is, if I have 5 houses for inspection, the amount of what I pay amount to $ 500 , which is a big difference. This point is currently under discussion , “said Asensio .

Luis De La Cruz, manager Lmentos architectural firm specializing in the development of housing projects coincided with Asensio noting that tariffs and taxes in some way have an impact on the final price of the homes , primarily those of the firefighters.

He said that while firefighters rates increase, the service is not efficient .

According to De La Cruz , this deficiency is reflected in the time it takes to obtain approval of a plan or the granting of an occupancy permit for each dwelling .

“Previously these services could last about three or four months , but now are delaying six or eight months and to top it cost more ,” said De La Cruz.

The director of Convivienda argues that bureaucratic processes are too long , causing unforeseen expenses that increase the interim financing to pay the banks by the developer .

Example of such incidentals, citing Suarez , are lengthy periods of time for the approval of the PH ( condo ) .

The unions that make up the Union Alliance in the Construction Industry ( Aiic ) are unhappy with this situation.

For this reason, hold meetings with representatives of the Ministry of Housing and Land Management ( Miviot ) to find ways to solve this problem.

However, Ivan Carlucci , general manager of Inversiones Natasha , evaluator and consultant company real estate projects, believes that the increases in both fees and taxes in order to develop a housing project respond to the natural evolution of costs.

However, besides the increase in rates of firefighters, Asensio explained that before the National Civil Protection System ( SINAPROC ) free they issued a certification stating that certain land was suitable to build a residential , but now this certification became mandatory and costs $ 200 .

Carlucci noted that these costs are the promoters are not significant when compared to projects that develop millionaires .

Taxation
On the other hand , one of the difficulties they are facing the promoters are the various ways in which municipalities charge for earthmoving .

Capac President explained that there Resume mayors like that interpret in their own way , the overnight , the cost of earthwork .

For example , he said, it is right to charge four dollars per cubic meter by removing soil from one place , and if you move to another place is paid equally. However, some municipalities want to charge for the removal and deposit though within the same building , they also want to charge for this transfer . Additionally, developers must pay taxes for three years for the farms where they build the residential streets , even after built and certified by the Ministry of Public Works ( Mop ) , an organization that provides road infrastructure that meets the requirements as Asensio .

Another expense that must assume the developer is the maintenance of the treatment plant housing project developed , although the Executive Decree 268 of June 6, 2008 states that the Institute of Aqueducts and Sewers ( Idaan ) should take over these after a year of built.

Asensio said there are about 64 national treatment plants that meet the requirements and have not received Idaan .

Aracelis Arosemena, Panama expresidenta Chapter of American Association of Sanitary and Environmental Engineering ( PANAIDIS ) , said that in this situation the Idaan argues that no budget to support it with their own systems , so do not have capacity to take the gated communities . For the specialist this is a serious problem because the plants need proper maintenance , accounting costs will not be borne by the estate forever , making it a complexity.

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From Panama America

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