Property Values and the New International Airport at Rio Hato
According to the best rumors available (including the owner of Coronado and construction workers on site in Rio Hato), the new “Scarlet Martinez International Airport” will open before the end of 2013. According to Wikipedia, this airport was established in 1931 and during World War II the Río Hato Army Air Base was used by the United States Army Air Forces Sixth Air Force as part of the defense of the Panama Canal.
It takes me a mere 22 minutes to drive from the Scarlet Martinez airport to the entrance of Coronado on an excellent four lane divided highway and I am not the fastest driver on the road. For comparison, it currently requires about 2 hours of very stressful driving from the Tocumen International Airport in Panama City to Coronado and only if you do not get lost which is almost guaranteed.
Initially, charter planes will be rerouted to the Scarlet Martinez International Airport freeing up much needed space at the Tocumen International Airport. Panama City has been bursting at the seams and preparing for a major influx of tourism with 1000’s of new hotel rooms available for 2014.
Initially these charter flights will bring tourists registered for one or two week stays at the string of new (and existing) “resort hotels” being constructed from Playa Blanca to Punta Chame. Coronado will remain the commercial/residential “epicenter”. It is also expected that in the relatively near future “regular commercial” passengers will be able to use this airport bringing a different type of tourist/traveler to this area.
The Big Question
Now, the big question is “to what extent will this new airport impact the price of land in Coronado and the surrounding area?”
One current view is that land prices are already very high in Coronado. For example, raw ocean front land has a selling/asking price in the $1200 to $1500 per M2 in the best streets of Coronado. As a consequence the new airport, for the person holding this view, will only make a minor albeit positive impact on price.
My prediction is that for the first three years after the new airport is fully functioning land prices in the greater Coronado area, including the Playa Blanca district, will increase by about 20% per year on an accumulative basis. In other words a lot selling for say $100/M2 in late 2013 will sell for approximately $175/m2 by early 2017.
To put this price prediction in some perspective, when my wife and I purchased our home in Coronado (April 2005) the asking price was about $70/M2 for raw land across the street from the ocean. Today, as of September 2013, the asking price for such land ranges from $400/M2 to about $550/M2. This increase represent almost three “doubling periods” over a span of 8.5 years which is a doubling speed of slightly less than 3 years. A doubling speed of exactly 3 years requires a 24% annual accumulated increase (72 divided by 3) so my prediction of a 20% annual increase over the next three years is less that the rate for the past 8.5 years including the most significant world economic recession since 1929.
And not to mention, that a great deal of this price increase occurred while Coronado was still basically a “one horse town” (one bank, one supermarket, one pizzeria etc.) which situation has dramatically changed.
Another observation of possible relevance; in 2004, my wife and I owned a small condo in Puerto Vallarta Mexico. At that time, ocean front land was already selling for $1000 per M2 and this was NOT in the best parts of PV. Coronado ocean front property only reached this price level during the last year or so or about 8 years later.
Panama and Costa Rica share many similarities however Costa Rica got on the tourism band wagon decades before Panama. If you study the impact of the new international airport at Liberia on property values in Guanacaste on Costa Rica’s west coast, you will see a price pattern that should to a certain extent be repeated in the greater Coronado area. I say “to a certain extent” because the Guanacaste area was less developed than Coronado prior to the airport. In another post I will marshal some additional research on this comparison.
In conclusion, if I am right, Coronado property values are about to become even less affordable.