5 Lessons From Real Estate in Europe
Ah! La Bella Roma! From the cradle of Western civilization to a huge melting pot, for those who have visited or lived in Rome it blows your mind away and steals a piece of your heart. But if you actually want to own a piece of Rome, you’d better be prepared to give also your kidney away (the good one), an eye and seriously consider adding up one of your lungs to sweeten the deal. Wao. The incredible thing isn’t that prices are astronomically high; it is that at over $20,000 US dollars per mt2 or $2,000 per ft2 people are still buying.
Of course, it took over 2000 years for it to appreciate to that level, so salivating speculators in Casco Viejo, Panama, need not apply. But still, if you compound it all, what may seem crazy in today’s world is not buying a historic apartment in an urban center. What I learned from my recent trip was that human place value where life is most enjoyable.
1. Human Scale:
Never underestimate the power of a city that makes a person feel like one; where you are an important element of a beautiful city, not an afterthought behind your car.
Where you can walk both to get your groceries and to have fun. Where having a car is almost a nuisance. Anyways, in today’s world of raising oil prices and global warming having a car and using it on a daily is almost prohibitive. Rome was bursting with people walking around or riding bikes. Every historic city I’ve ever been to is a heavily pedestrian/ bike site. Creative solutions have been thought to fit them into the space and be more efficient, but not all the way around. As size does matter, Rome is the land of the Smart Car, the “Cinquecento” (or Topolino as Italians call it), and the mini everything from public transportation to the garbage truck which can be operated with only one person.
In yesterday’s world, it was just common sense. People clustered together because it was efficient. In today’s world where time and resources are money, it is a matter of survival.
2. Mix = Authenticity = Excitement =Vibrancy = Value
This package moves around together. There is no way to get one without the others.
Rome is still in many ways the center of the world. It is chaotic, irreverent, eclectic and fun. A thousand voices speaking different languages, gothic kids in the sideways giving away flyers for a concert, businessmen in their Italian suits and Ferragamo shoes elbow to elbow with tourists and residents who are having a cappuccino at one of the many sidewalk cafés or gelatterias. Laundry on the balconies, rainbow flags on the windows.
To my surprise, most buildings looked like they haven’t been painted in ages, and the ones that were didn’t have latex but lime based paint. Nothing in Rome is or feels manicured. It looks and feels like an unexplored city with mysteries to be solved at every corner. No matter if it is by far the most visited city in Italy and probably Europe. People will visit and return countless times to learn more, to explore another corner, to see what has changed.
3. It is where you live, and it shows.
Flipping through most real estate and lifestyle magazines they tend to show minimalist spaces with slick designs that make you wonder… where is the stuff? People live with a lot of stuff. Very few will have antiseptic lives where your night bed table features only a thin design lamp and nothing else. Mine has piles of stuff, books, change, my ipod, CD´s, among many other things. Someone walking into my bedroom can clearly say like the Goldilocks story: someone lives here. Cities are made of people. They must be a logic reflection.
So, if you ever step into a city that is so clean you can eat on the floor of the main plaza, every building is covered in a latex paint that reflects both the sun and your face, plus smells like plastic, gardens are unnaturally trimmed, there are no dogs or cats to be found, loud music shuts down at 9 p.m. and everybody looks just like you… wake up!
Every year, Disney spends a lot of money to make you believe it is possible to have such a place and that you would be actually happy there. Truth is, for those cities that have attempted and somehow succeeded in making it happen, they are worldwide known as a) tourist traps or b) the most boring places on Earth.
On the long run… which option holds more value? Probably the option where humans can get excited about new things and enjoy the multiple flavors coming his way. Because of the mix which brings the vibrancy, cities like Rome can look and be old, but keep hearts that are forever young and therefore relevant. And as humans, we instinctively value this.
4. Green bucks chase Green cities
There is something very human about wanting to live where we can touch, see, smell, enjoy, nature. Parks, gardens and pets have been the usual ways to incorporate this factor into urban settings and keep us connected. There are volumes written about the benefits of green spaces within cities. While some developers might see it as lost space, urbanists, majors and more importantly residents, know there is no valuable city without them.
Historic cities are special because they where built around green spaces making them the daily meeting point. And limited space hasn’t been an obstacle for imagination and creativity: roof terraces, walls and balconies have filled in with fantastic combinations of plants.
On historic cities there is a myth that everything has to be regulated in order to keep it truthful to what it was. Façades are carefully restored and not much visual objects are allowed. Rome, the ultimate European historic city, proves quite the contrary.
There, balconies explode with plants, roof terraces have huge trees growing on them and many façades are covered if not completely at least partially with plants and vines. A refreshing twist: most of these gardens, even the ones on the plazas are edible gardens. Urban agriculture is huge, as the cost of food has increased tremendously. Every corner with some soil and sun is used to plant herbs and vegetables, a healthy and cheaper choice for today’s world.
5. One of a kind.
Rome is unique. There is no other like it and no one is building another brand new Rome. If they were, it would obviously be a fake. Maybe Disney at some point will open a Rome pavilion with centurions dressed in costumes. I’m sure the Italian filmmaking company CineCittá has many of its buildings carved in foam. But at least on both examples the idea is to honestly create a fantasy. For those developers who have tried to replicate the style it has gone dead wrong and has ended up looking, feeling, smelling and therefore being really tacky.
Historic cities can’t be replicated. And for those who hold the advantage of being near thriving cosmopolitan cities with a mix population, the combination for value is perfect. Scarcity and uniqueness are the two key elements of value. On the long run, historic cities tend to appreciate more than modern ones and to hold value better. It is the difference between buying a Picasso or buying a full color poster of a Picasso painting.
Summarizing all this to what brings us here: Casco Viejo, Panama.
You can probably recognize several of these elements in our beloved Casco Viejo. As an investment, it is still on an early cycle compared to any of its peers (including Cartagena, which is the closest one). To give you an idea, the best stuff in Cartagena is between $5,000 to $6,000 per mt2, almost double the price of Panama. The best properties in Italy (Rome) are over the $20,000 per mt2. The worst apartments at the Italian rural south (literally in the middle of nowhere and probably unrestored) are around $3,000 per mt2 which is the price for the best apartments in Casco Viejo, Panama, with views, amenities, parking, sometimes even with pool and elevator, a UNESCO protected site 5 minutes away from a cosmopolitan urban center and 30 minutes away from an international airport considered one of the biggest hubs in the region, not to mention 10 minutes away from the domestic airport in case you want to spend a weekend at the San Blas white sanded beaches learning from the Kuna indians or if you feel like stretching your legs hiking the Baru Volcano at Chiriqui. All these flights are less than an hour.
Again, for pure investors with a taste for instant flipping, here is a disclosure clause: appreciation is an organic process that takes time. You want to maximize your profits? You need to get involved, inject energy into the neighborhood and promote actively content that would add texture. Come on! It is actually fun. No time for it? Consider donating. From the Scouts to all the social programs of Fundacion Calicanto, from the music festivals to opening your commercial space or your building to young artists in need of space, there are tons of things you can do to increase the value on the neighborhood and therefore your property that doesn’t require much.
If not for altruism, then just because it is good business.