How To Build A House In Panama In 2023

Are you an expat wondering how to build a home in Panama? Especially when new to the counry, it can be difficult to understand all the different rules and regulations that are involved in the process of building a home. When it comes to construction guidelines, or even where one is allowed to build a house in Panama, this article will inform you about the very basics.
Wether you are looking to build a beach house in Bocas del Toro or a mountain home in Boquete, having the proper know-how is key. Our goal is to provide you with a comprehensive roadmap to help you build your dream home in Panama. We will talk about different land types, property ownership, buildings norms and more.
Building a house in Panama may seem like a complex task, so let’s break it down a bit:
beach house panama build a home in panama

1. Understanding The Basics Of Building A House In Panama

Building a house in Panama involves following certain rules and regulations that are important for the process. Whether you’re planning to construct a luxurious town house or a cozy beachfront home, it’s essential to properly understand these codes. They affect aspects such as building design, height and setbacks, among others. By understanding these rules, you will be able to benefit greatly from the expanding Panama real estate market.
  • Properties in Panama City or David offer convenient access to a modern urban lifestyle with all its benefits. However, they often have stricter construction rules and higher costs. In the city, it is also more common to buy an apartment or town house that has already been built, as good building lots can be rare and hard to find.
  • Rural properties, especially properties in Boquete and the surrounding area, provide a calm and relaxed atmosphere to build your new home. But, keep in mind that infrastructure and services may not be as easily available as in the city, so logistical planning is important.
  • Beachfront properties in Panama are amongst the most popular for building a house. Yet, there are special regulations in place to protect Panama’s coastal environment, which can impact your construction plans. More on that later in the article.
In Panama, zoning laws classify land based on its intended use. They include residential, commercial, or agricultural. Each zone has specific building restrictions to consider, such as building height, density, and allowed land use. Ignoring these regulations can lead to legal issues or penalties.
property ownership panama laws


2. Different Types Of Land Ownership In Panama

Panama offers two principal types of land ownership. They include “Rights Of Posession” and “Titled Properties”.
  • Rights of Possession (ROP): This is a form of land ownership where the Panamanian government allows individuals to own and use government-owned land. While ROP properties can be cheaper, they carry more risk for investors.
  • Titled Property: These are properties that come with a formal title registered in the Public Registry of Panama. A titled property is by far the most secure form of land ownership in Panama. It is similar to what you may be accustomed to in countries like the US or Canada.
The Maritime Zone refers to the first 200 meters of land from the high tide line along Panama’s coast. This zone is divided into two areas:
  • Public Zone: The first 50 meters of beachfront, which cannot be owned or sold.
  • Concession Zone: The next 150 meters, which can be leased from the government for a period of up to 20 years. The lease is renewable.
Lastly, it’s important to understand the difference between the three major types of properties in Panama:
  • Freehold Property: This is a type of ownership where you fully own the property and the land on which it stands. It offers the greatest security and flexibility for investors.
  • Leasehold Property: This refers to properties where the land is leased for a period, often 99 years. After the lease period, ownership reverts back to the landowner.
  • Concession Property: These are usually located in the maritime zone. While they’re technically not owned, they can be used and profited from for a specific period. This period is typically up to 20 years, upon governmental approval.

beach property build a house in panama


3. Finding The Ideal Location For Your New Home

When it comes to building your dream home, location is key. Here are some top regions in Panama that have gained strong popularity among expats and newcomers:
  • Real Estate In Panama City: Panama City stands as an ideal choice for city lovers and businesspeople. It offers the highest quality properties in Panama and gives you easy access to all kinds of amenities and public services. Properties in Panama City range from condos and penthouses to spacious family homes.
  • Real Estate In Bocas Del Toro: Bocas Del Toro is a paradise for those seeking a tropical seaside environment. It is famous for its beautiful beaches, lush rainforests, and a laid-back Caribbean lifestyle. Properties range from beachfront condos in Bocas Town to spectacular private islands and farms.
  • Real Estate In Boquete: Boquete is known for its cooler climate, stunning mountain views, and a strong community of expats. It is the greenest and most densely vegetated area in Panama and is one of Panama’s most popular retirement destinations. Properties in the Boquete area range from mountain homes to coffee farms and everything in between.
Different areas present different advantages and challenges for your home build. When deciding on a location to live in, consider the following aspects:
  • Climate & Geography: Panama’s climate varies from tropical rainforests to cooler highlands. Choose a location that suits your lifestyle and preferences to make the most out of your investment. Also, if you don’t have a 4×4, certain areas in Panama might be difficult to access.
  • Amenities & Public Services: Depending on your lifestyle, you might want to be close to good infrastructure and public services. They include healthcare facilities, supermarkets, schools, or recreational venues. Living in Panama City or David gives you by far the best access to these services.
  • Community: Consider the local community and whether it will meet your social or cultural needs. For example, some areas have a large expat community, which can ease the transition for newcomers. Especially if your Spanish is not on point yet, expat communities offer you the best place to start integrating.
home planning and design with architect in panama


4. Navigating The Process Of Building A Home In Panama



Constructing a house in Panama should follow a clear path. Understanding the building process can save you significant time, money and nerves. So here are a few things to think about before building a house in Panama:

  • Land Purchase: Once you’ve found the perfect location, the first step is to secure the property. Ensure the land title is clear, and all necessary legal paperwork is in order. At this point, having a lawyer by your side might be a good idea.

  • Planning and Design: Hiring an architect is crucial for any larger home build. They can modify your chosen plans to suit Panama’s building codes, which emphasize concrete block construction for earthquake resistance.

  • Obtaining Permissions: After finalizing the design, the next step is to apply for building permits from local authorities. This may take some time, so factor this into your project timeline.

  • Hiring Contractors: Select a reliable local contractor who’s familiar with local building practices and regulations. If you’re planning to manage the project yourself, you will need to hire subcontractors for the different tasks involved.

  • Construction: With all preparations complete, the building phase can begin. Frequent site visits will help you keep track of progress and maintain quality control. If you’re not in the country for the most time, you might think about hiring someone to keep an eye on the construction process for you.

  • Completion: Once construction is finished, you will need to obtain an occupancy permit before you can move in. This is more of a formality, and your general contractor usually assists with this process.



When sourcing building materials, consider both quality and availability. Using locally available materials can significantly reduce costs and ensure quicker delivery. This is especially true for island properties and areas with poor infrastructure.

Communication is crucial. Regularly check in with your architect and contractor to ensure everything is going as planned. In Panama, it’s also important to plan for delays. Weather conditions, permit approvals, and other circumstances can affect the construction timeline.

Remember, building a home is a marathon, not a sprint. By understanding the building process and staying involved during the construction, you can ensure your home is built to your satisfaction.

construction guidelines panama


5. Understanding Panama’s Construction Norms

In Panama, following certain construction codes and standards is not a choice, but a must. These guidelines ensure that the built environment is safe and resilient. They apply to all types of construction, from residential homes to large commercial buildings.
Some rules are more important than others. Here are some of the fundamental aspects of Panama’s construction standards:
  • Earthquake & Hurricane Resistance: Given its geographical location, Panama has to plan for seismic activity. Thus, larger homes must be built with concrete blocks or other suitable materials to withstand earthquakes. Similarly, in coastal areas, construction must be robust enough to resist hurricanes.
  • Quality of Materials: The use of high-quality, durable materials is a must. Panama’s warm and tropical climate can be harsh on buildings. That’s why it is important to choose materials that can withstand heat, humidity, as well as heavy, prolonged rains.
  • Environmental Considerations: Panama’s construction code emphasizes sustainability. New buildings should aim to minimize their environmental footprint. For instance, this can be achieved through energy-efficient design and use of sustainable materials like hard woods.
In the long run, a well-built home will save you money on maintenance and repairs. Also, the better the construction quality of your home, the better you can sleep at night. Cutting costs on the wrong end can really backfire in the future, so make sure to take your time and come up with a solid plan!
home budget build a home house in panama

6. Budgeting For Your Build

Understanding the expenses associated with building a home in Panama can help you prevent budget surprises. Here’s a broad overview of some important factors to consider:
  • Land Acquisition: The location and type of the land you buy will have a significant impact on the total cost. Prices vary widely, based on proximity to amenities, type of views you want (beachfront, mountain, etc.), and the type of land ownership.
  • Construction Materials: High-quality, durable materials might cost more upfront but will definetely save you money in long-term maintenance and repair. Local materials like tropical hard woods also come at an attractive price, considering their renewable nature and shorter transport routes being involved.
  • Labor: The cost of skilled labor can significantly influence your budget. Yet, it’s important not to skimp on this, as quality workmanship ensures a durable and well-constructed home.
  • Legal & Permitting Costs: Don’t overlook costs like attorney fees, notary fees, included taxes, and permit costs in your budget. Although they won’t make up the majority of costs, they can amount to 5-10% of your home build.
When building a house, budgeting is key. There is nothing more distressing than running low on your budget and not being sure if the construction can even be completed. So to avoid any unpleasant situations, keep the following aspects in mind:
  • Keep A Contingency Fund: Construction projects often go over budget. Keep an extra 10-20% of your total budget aside for unforeseen expenses. This will give you more flexibility and security when building your new home.
  • Track Expenditures: Review your budget and expenses regularly to ensure you’re staying on track. If problems should arise, it’s always best to know about them early on in the process.
  • Negotiate Where Possible: This could include everything from the cost of the land to architect fees to building materials. In Panama, the power of negotiating prices shouldn’t be underestimated.
  • Work With A Local Expert: Local builders or real estate experts can provide insights about saving costs without compromising quality. Choose someone with a good track record and authority among locals.
Remember, a good home is not one that leaves you in financial distress. Plan well, budget wisely, and build a house that is comfortable and affordable.
legal and financial considerations when building a home in panama

7. Legal & Financial Considerations When Building A House

Starting a construction project in Panama comes with its own legal obligations and processes. Understanding these beforehand ensures you’re not caught off-guard at some point. To make sure everything goes as planned, consider the following aspects:
  • Notarization & Registration: All property transactions in Panama need to be notarized and registered at the Public Registry. The buyer and seller usually share the cost of notarization, while the buyer covers all registration costs.
  • Legal Representation: It’s wise to hire a competent law firm that understands Panamanian property laws and can guide you through the process of property acquisition and construction permits.
  • Due Diligence: Before buying land, it’s crucial to verify its title status. Also check for any existing liens or liabilities, and confirm the property is free of disputes.
Understanding the financial aspects of your construction project is just as important as the legal side. Here are some key financial considerations to make before building a house in Panama:
  • Property Tax: Panama has a progressive property tax system based on the type and value of the property. Your lawyer can help you understand how much you’ll be liable for each year.
  • Capital Gains Tax: Capital gains tax applies only when you sell the property with profit. The rate depends on various factors, including how long you’ve owned the property and the profit you make from the sale. Generally speaking, the capital gains tax in Panama is around 10%.
  • Financing Options: If you need financing to build your home, several options are available in Panama. They include loans from local banks, international lenders, or even private financing.
Remember, these points are not exhaustive, and legal & financial requirements can change. Always seek professional advice to ensure you follow all legal & financial obligations.
planning to build a house in panama home

8. Tips For A Smooth Construction Process

Building a house can be a complex and sometimes stressful process. To help you navigate it in the best way possible, here are some practical tips to consider:
Clear communication with your architect, contractor and workers is crucial for the successful completion of your construction project!
  • Establish clear lines of communication from the beginning. This will make sure that all contractors and possible subcontractors are working in line.
  • Use language translation apps or hire a translator if you don’t speak Spanish fluently. Clear communication is important when building a house, and should never be compromised.
  • Regularly check-in and request updates on the construction progress. Ask for weekly updates, or visit the construction site yourself, if possible.
Delays and quality issues can derail your project and cause costs to surge. Here’s how you can mitigate these risks in the best way possible:
  • Create a realistic construction timeline with your contractor, and hold them accountable to it. This includes a signed contract that clearly states responsibilities and timelines.
  • Regularly inspect the construction site to ensure quality standards are being met. If you can’t visit the site yourself for some reason, hire someone independent to do it for you.
  • Have contingency plans for potential delays, such as bad weather or material shortages. As building a home is a lenghty process, issues may eventually show up. Make sure to have some flexibility in your plans, and avoid overly tight budgets, if possible.
Building in a foreign country may com with unique challenges. Here are some ways to tackle them:
  • Get familiar with the local culture and customs to build good relationships with your construction team and neighbors.
  • Be prepared for cultural differences in work attitudes and practices, as Panama’s warm climate and “tranquilo” lifestyle can have an effect on work ethic and reliability.
  • Use your expat community as a resource for advice and recommendations. Most expats are happy to help you out and share their experiences with you.
Remember, patience and flexibility are key in any construction project. Things may not always go as planned, but with good planning and management, you’ll be well on your way to successfully building your dream home in Panama.
luxury home in panama build a house in panama

9. Build Your Dream Home In Panama: Key Points & Prices

Building your home in Panama is an adventurous journey that’s filled with opportunities and challenges. From understanding the different types of land ownership to navigating the intricacies of Panama’s construction guidelines, each step is crucial in realizing your dream build.
It’s a process that requires careful planning, thorough research, efficient budgeting, and open communication. Here’s a quick recap of some essential points to remember, along with a general price guide:
  • Types of Land Ownership: Get familiar with Rights of Possession (ROP), Titled Property, the Maritime Zone, and the distinctions between freehold, leasehold, and concession properties.
  • Choosing a Location: Always keep your lifestyle preferences in mind. Consider the climate, geographical characteristics, accessibility to amenities, and the local community in the area.
  • Building Process: Be ready to hire professionals such as architects and contractors and secure the necessary approvals from local authorities. Also consider hiring a lawyer specialized in the real estate sector.
  • Construction Codes & Standards: Complying with Panama’s construction standards is non-negotiable. Also, consider climate-related factors like earthquake and hurricane proofing.
  • Budgeting: Keep a tab on costs related to location, materials, labor, and size of the construction to avoid financial mishaps.
  • Legal & Financial Considerations: Be aware of property and capital gains taxes. Also keep in mind the legal processes involved in property purchase and construction.
  • Smooth Construction Process: Maintain open and clear communication with your construction team to manage timelines and ensure quality.
Remember: These prices are estimates and can vary widely, based on your project’s scale. Feel free to contact us to get the most accurate and updated prices and costs!
  • Land Prices: Depending on location and type of land, prices can range from $1 in the countryside to hundreds of Dollars in the metropolitan area.
  • Architect Fees: Usually amount to 5-10% of the total construction cost.
  • Construction Costs: Generally, costs for building a house range from $800 to $1500 per square meter. This depends on your location and choice of materials, for the most part.
  • Legal Fees: Usually 1-2% of the property price.
  • Notary Fees: Approximately $200-$500.
  • Property Tax: Between 0.6% and 1% of the property’s registered value annually.
  • Capital Gains Tax: Up to 10% of the gains from property sales.
In the end, the journey of building your own home in Panama is likely to be a rewarding experience. Approach it with careful preparation, adequate knowledge, and embrace the unique adventure it brings.
To get a better overview of the different property types for sale in Panama, make sure to check out our Panama real estate listings or land for sale in Panama!
Also, to find out more about Panama’s real estate landscape, immigration laws, and other interesting topics, feel free have a look at our blog section.
What's the best place to build a house in Panama?
Choosing the best place to build a house in Panama largely depends on your lifestyle preferences. If you are drawn to city life with all its modern conveniences, then Panama City may be the best option. The city has a booming economy, a vibrant cultural scene, and a range of restaurants and entertainment venues to enjoy. If you prefer a more relaxed lifestyle, consider the highland town of Boquete, best known for its cool, year-round temperatures, diverse landscapes and small-town charm. For beach lovers, areas like Coronado, Bocas del Toro and Pedasi offer beautiful coastlines and laid-back atmospheres.
Can I build a home on an island in Panama?
Yes, you can build a home on an island in Panama, but it comes with certain challenges and considerations. Many islands in Panama are classified under Rights of Possession (ROP) or are part of the Maritime Zone. Therefore, it's important to consult with a local real estate attorney to understand the implications of land ownership. Infrastructure can also be a challenge on some islands. For example, utilities such as electricity and water may not be readily available, and the cost of transporting construction materials to the island can significantly increase the overall cost of building your home. In terms of logistics, obtaining permits and approvals can also be a lengthy process due to the environmental considerations associated with island construction.
What are the best materials for building a house in Panama?
Building a home in Panama, especially considering the local climate and geographical conditions, requires careful selection of materials. Here are some of the best materials commonly used in Panama: 1. Concrete Blocks: These are the standard building material in Panama due to their durability, strength, and resistance to environmental factors such as earthquakes and humidity. 2. Reinforced Concrete: This is typically used for the main structural elements of the house like beams, columns, and slabs. It offers robustness and resilience against natural disasters. 3. Teak/ Hard Wood: Due to their resistance to termites and decay, Teak and other tropical hard woods are a popular choice for various parts of the home, including flooring, furniture, and finishing touches. Building an entire house out of pure wood is also possible. 4. Ceramic Tiles: Ceramic tiles are commonly used for flooring and wall cladding in bathrooms and kitchens. They are easy to maintain, durable and quite resistant to moisture and heat.
How long does it take to build a home in Panama?
The timeline for building a home in Panama can vary greatly based on a range of factors including the complexity of the design, the size of the property, the location, weather conditions, and the efficiency of your construction crew. All in all, the process from start to finish can take anywhere from 6 months to well over a year. Here's a rough timeline: 1. Land purchase, due diligence, and finalizing paperwork: 1-2 months 2. Design and planning with architects: 2-3 months 3. Obtaining construction permits: 1-2 months 4. Actual construction: 4-18 months depending on the size and complexity of the home. These are only general estimates, and the timeline could be longer if any issues or delays arise.
What's the cheapest way to build a house in Panama?
Finding the cheapest way to build a house in Panama depends on a variety of factors including the location, type of property, and your personal preferences. However, here are some general strategies that can help you to minimize costs: 1. Choosing an Affordable Location: Land prices vary significantly across Panama. Rural areas or less developed regions typically have cheaper land prices compared to popular expat communities or beachfront locations. 2. Simplifying the Design: A simple, functional design typically costs less than a complex or luxurious one. Reducing the overall square footage, choosing a simple roof design, and minimizing the number of rooms can all help to cut costs. 3. Using Locally Sourced Materials: Transporting materials from far away can add significantly to the cost of your build. Using local materials not only saves money, but it can also give your home an authentic Panamanian feel. 4. Doing Some of the Work Yourself: If you have the skills and time, you can save on labor costs by doing some of the construction or finishing work yourself. 5. Hiring a Local Builder: Local builders often have connections with local suppliers and know where to get the best deals on materials. They are also familiar with local building codes and regulations, which can help to avoid costly mistakes or delays. 6. Build 'In the Gray': This involves building just the shell of the house and completing the interior work yourself.
Is it expensive to build a house from scratch in Panama?
Building a house from scratch in Panama can be more cost-effective than in many other countries, but the exact cost can vary widely based on several factors. These include the size of the house, location of the property, design complexity, quality of materials used, and whether you're doing some of the work yourself or hiring professionals for all stages. On average, as of 2023, you can expect to pay somewhere between $800 and $1,600 per square meter to build a house from scratch in Panama. This includes the costs of labor and materials but excludes the cost of land. So, for a 185-square-meter house (approximately 2,000 square feet), you're looking at a construction cost in the range of $150,000 to $300,000. However, these costs can be significantly higher if you choose high-end finishes, luxury features, or if your property is in a remote location where logistics are more complex. Remember, in addition to these construction costs, you will also need to budget for the cost of land, legal fees, taxes, and potentially for the services of architects and project managers. While building a house from scratch can require a significant initial investment, it does provide the opportunity to design a home to your exact specifications.
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