Panama’s Real Estate Outlook for 2024: Hotspots and Trending Sectors

Welcome to the future of Panama’s real estate in 2024. Since 2006, this sector has seen highs and lows, notable for projects like the Trump Ocean Club. Despite challenges like oversupply, the market is at a crucial point. In this article, we’ll delve into Panama’s real estate scene, highlighting investment hubs and property types. From bustling Panama City to Boquete and Bocas del Toro, we’ll reveal secure opportunities for investors, expats, and retirees. Delving Panama City’s real estate, we find rising property values and reduced inventory, especially in apartment buildings, creating investment potential. The allure of rental yields adds to Panama’s appeal. Beyond statistics, we’ll uncover the driving factors behind Panamanian real estate, including infrastructure development and its strategic location with the Panama Canal, establishing it as a global trade hub. Panama City offers a blend of old-world charm and modern excitement. Lastly, we’ll explore the relationship between population growth, GDP trends, and the real estate market. Despite recent challenges, the market is linked to an increase in population and robust GDP forecasts, anticipates a rebound in 2024. Join us as we navigate Panama’s 2024 real estate outlook, ripe with dynamic opportunities for daring investors.

 

 

Best Locations and Property Types for Real Estate Investments

From various destinations to the diverse array of real estate options available, the current trends in the real estate market in Panama offer valuable insights not only to investors but also to expatriates and retirees considering to relocate. In this section, we delve into prime locations and property types that promise a secure and lucrative investment for your future.

 

The Best Locations

  • Panama City
    Panama City’s location is nothing short of a strategic asset. With the Panama Canal, being a vital element for global trade, along with its well-connected Tocumen International airport, boosts its appeal for international business and logistics. Panama City is one of the wealthiest cities in Central America. Panama City’s diverse landscape, culture, and open economy make it an attractive tourist and retirement destination. The growing tourism sector increases demand for vacation homes, hotels, and rental properties​. The government’s investment in infrastructure, including road expansions and the new Metro Line 3 are amplifying the city’s allure and contributes to the real estate market’s appeal by improving quality of life and property appreciation. Panama City real estate has a lot to offer, from a nice 2-bedroom 100m2 apartment for $200,000 all the way to luxury 1,400m2 penthouses for over $5,000,000. Of course, you can find all major property types here, including living at a golf course in the Santa Maria neighborhood.

 

  • Boquete
    In the dynamic world of real estate investment, Boquete, Panama, emerges in 2024 as a particularly promising destination for those eyeing substantial returns on investment. This charming highland town is rapidly gaining traction among North American and European expatriates and retirees, a trend that’s inflating demand for quality housing. For investors, this spells opportunity: the growing need for upscale residential properties ensures healthy rental yields and a positive trajectory in property value appreciation. Even big real estate developers have started enormous residential projects like the Bern Group with their project “Pino Alto”. The tourism sector in Boquete, driven by its lush landscapes and unique offerings like coffee plantation tours and eco-adventures, opens up lucrative avenues in short-term rental properties and holiday homes. Investors can leverage the increasing tourist influx to secure higher rental rates and occupancy, particularly during peak travel seasons.An intriguing aspect for potential investors is Boquete’s renowned coffee industry. By investing in agricultural land or forming alliances with local coffee growers, investors can diversify their portfolios, tapping into the global surge in demand for specialty coffee. This approach not only promises financial returns but also provides a sustainable and community-supportive investment angle.Panama’s pro-investment stance, manifested through enticing tax benefits and a streamlined process for foreign property ownership, significantly lowers entry barriers, making Boquete an accessible market for international investors. The anticipated continued growth in both the expatriate and tourist populations in Boquete fortifies the potential for property value escalation and steady rental income, marking it as an alluring spot for investors keen on robust ROI. This blend of opportunity, security, and growth potential positions Boquete as a standout choice for savvy real estate investors in 2024.

 

  • Bocas del Toro
    In 2024, Bocas del Toro stands out as a uniquely promising destination for real estate investment, primarily due to its varied natural landscapes, and tourism-driven economy accounting 95% of its economic activity. Unlike other regions in Panama, Bocas del Toro offers a rare blend of untouched rainforests and stunning beaches that are increasingly attracting eco-tourists and adventure travelers. This surge in tourism is driving demand for vacation rentals, boutique hotels, and sustainable lodgings, presenting an opportune market for investors. Furthermore, the local government’s commitment to sustainable development ensures that investments in this area are future-proof, adhering to eco-friendly practices that are becoming more vital to global consumers. The region’s expanding expat community also indicates a growing international interest, enhancing the potential for diverse and stable rental income. Even major hotel chains have started buying up land in the past 2-3 years and are currently developing large-scale hotel complexes. Additionally, Bocas del Toro’s relatively lower property prices compared to more developed areas in Panama provide an attractive entry point for investors seeking high capital appreciation potential. With its unique combination of natural allure, growing tourism, and sustainable development, Bocas del Toro is not just a picturesque location but a strategic choice for investors seeking robust returns on investment in 2024.

 

 

The Best Property Types

  • Fincas
    Panama tropical climate is very favorable for agricultural activities making farm investment one of many opportunities to invest in Panama.  On the countryside, Panama’s economy strongly depends on the agricultural sector making Fincas a great resource for investors looking for a steady long-term income, having an average annual appreciation rate of 3.5%. An analysis showed that most prices on fincas in Panama have no rational foundation, which we found is linked to the owner’s lack of motivation to sell most of the time. For savvy investors, this means that you can expect a negotiation to yield a reduction in price of around 10% to 30% on average. A Finca in Panama can be an excellent investment choice, as it is one of the most overlooked places on earth where you can get in comparison to other developed countries very good prices for land that you can transform it into tourist accommodations, private getaways or even a coffee farm, depending on the zoning regulations.

 

  • Apartments
    The apartment market in Panama is expected to cool down in prices in 2024 due to international monetary policy decisions, especially influencing borrowers, but still stays a prevalent destination for both long-term and short-term rentals. The most popular areas for rentals are Panama City and the beach towns like Bocas del Toro, as these are the most popular areas for foreigners to live and stay for vacation. Apartments are increasingly popular among retirees and expats, offering a comfortable cosmopolitan lifestyle. In Costa del Este, the banking district of Panama City, big multinationals occupy a majority of newly built towers with their workforce from abroad and also attract many Panamanians. With Panama’s robust rental market offering gross rental yields hovering around 7%, Panama’s real estate market is set to thrive, powered by substantial infrastructure investment, persistent tourism and retirement demand. This, combined with fewer anticipated construction starts of residential complexes in the next two years, make apartments an interesting opportunity.

 

  • Townhouses
    While the market for apartment is showing signs of settling prices, the market for townhouses in Panama City looks a little different. While one drawback of apartments is the recently increased supply due to new developments, town houses are becoming more and more relevant again. There have not been as many new developments for this property type, particularly for middle- and high-class clientele, resulting in reduced inventory and constantly rising prices even during times of monetary contraction in the US-Dollar. However, the little inventory that is available, presents itself as a major opportunity. Most notably, developments in Santa Maria are very sought-after due to the neighborhood’s safety, quality of life and proximity to the Tucan Country Club & Resort, all while being located near the city center. The trend of rising interest in townhouses is most likely to continue this year.

 

 

Panama has become a hot spot for both seasoned and amateur real estate enthusiasts. Intriguingly, the average number of transactions per building has surged by an impressive A standout example of this upward trajectory can be witnessed in the condominium market, particularly in top notch buildings such as Allure at the Park. These high-end condos have witnessed a noteworthy surge in the price per square meter, with prices escalating from an average of $1,890/m2 in 2021 to an impressive $2,139/m2 – marking a significant 13% increase over the past 24 months. Furthermore, reports from Galeria Inmobiliaria International’s April update reveal a 20% reduction in new inventory, which includes the completion of homes and condos available for sale in Panama City. This reduction, coupled with a slowdown in new construction project initiations, sets the stage for an engaging prospect in the real estate market over the next 2 years. Investors and real estate enthusiasts should keep a close eye on this dynamic market, as Panama City continues to emphasize itself as a prime destination for property investment, characterized by a potent blend of decreasing inventory, soaring property values, and promising future prospects.

 

Investors seeking opportunities in the Panamanian real estate market can look forward to the prospect of enticing rental yields. The yield potential becomes particularly appealing in the urban centers and popular tourist destinations, where the demand for rental properties consistently thrives. Average rental yields across the nation are at 6.7%, while in Panama City typical yields range from 6.2% to 9.3%, marking high demand.

 

Key Drivers of Real Estate Investment in Panama

In 2024, Panama City is a top destination for expats and travelers worldwide, recommended by travel experts and even the Forbes Magazine. Panama has committed $19.5 billion over the next five years, focusing on infrastructure development, allocating 15.2% to roads and 18.9% to water and sanitation projects. This investment is vital, given the significant amount of jobs and opportunities generated by the improved infrastructure. Strategically located with the Panama Canal, Panama is a global hub for trade and logistics. About 1,000 vessels pass through the canal monthly, moving over 40 million tons of goods, constituting 5% of global maritime trade. By 2021, the canal’s net income reached approximately $2 billion, contributing 3% to Panama’s GDP. Panama is also one of the best choices for retirees and expats as indicated by the Forbes Magazine. With expat communities, retirees find it easy to integrate and build connections while having the perfect climate and cheap cost of living. Furthermore, the Panamanian government is dedicated to fostering economic growth, and also the thriving tourism sector has created a substantial demand for diverse vacation properties, ranging from beachfront resorts to eco-friendly BNB lodges and luxurious villas. Of course, when talking about Panama, highlighting the tax benefits and strong investor protection has to be mentioned as well.

 

 

Panama’s Global Economic Influence

Panama is known as the Hub of the Americas, being one of the world’s most connected countries and having the Panama Canal connecting the Atlantic and Pacific Ocean. The Canal is the main economic resource of the Republic of Panama. The Panama Canal, a channel for over 3% of global trade, acts as a bellwether for international operations. Any shift in its functionality can echo across several sectors, markedly affecting the trade flow between Asian manufacturers and North American markets. The dynamic economic growth and excellent prospects, create an advantageous environment to invest in Panama. The country receives more than 45% of Foreign Direct Investment in Central America and has the largest number of Regional Trade Agreements in the area. Recent studies show that the growth of the tourism sector has contributed to overall economic growth and development in all Latin American countries. Problems like the global pandemic resulted in a global economic recession and made the tourism industry in Panama affected, however, Panama’s recovery has been robust and GDP expanded by 15.3 percent in 2021 and an expected 9 percent in 2022. The country has a well-developed banking-sector and Panama City is a major world center for international banking and related financial activity. Furthermore, the absence of currency exchange controls allows cash to flow in and out of Panama freely, enticing investors to bring their banking activities to Panama. Cryptocurrencies are expected to get regulated after the elections later this year with the new government, further driving investors into the central American gem. Panama’s economy is intricately connected to the global economic landscape.

 

Challenges for Real Estate Investors

One of the main drivers of flat commercial property appreciation is oversupply in the market. This oversupply has triggered competition, and benefitted renters but caused a remarkable 15% to 20% decline in rental prices for commercial and office spaces. For investors prioritizing rental income, this trend poses a hurdle, however not all areas in Panama face the same challenges and residential properties are not affected nearly as much.

The Panamanian banking sector’s conservative approach to real estate financing presents challenges, especially for foreign investors. Banks in Panama have traditionally offered better terms for new construction projects than for existing inventory, and the terms have not been as attractive as those in the U.S. and Europe.  Mortgage terms are conservative, with high interest rates and substantial down payments (for foreigners typically 30%). This conservative stance has kept the market stable but has also limited real estate activity, as many potential investors struggle to secure financing. However, there has been a recent easing of lending restrictions for non-resident buyers, which might influence the market dynamics.

 

 

Panama’s real estate market is dynamically influenced by the country’s population growth and GDP trends. Since 2017, Panama’s population has grown by 7.5%, and GDP by 23%, leading to an increasing demand for housing​. As the population continues to surge, Panama continues to work hard to meet growth for relocation and international investment. Also, jobs have continued to grow, and unemployment is less than 5%, which is practically unheard of in Central American economies. If Panama can continue to provide new jobs and new opportunities for living and investment, this growth should be sustainable for the immediate future. Over the past thirty years, the country thrives in generating employment opportunities, resulting in a remarkable reduction in poverty rates from 48.2% in 1991 to 12.1% in 2019. Yet, rising unemployment and informality contributed to an increase in poverty between 2017 and 2019 as the pace of growth slowed down and further worsened during COVID-19. It is estimated that poverty in 2023 decreased by 0.3% points. Governments and subsidies have partially mitigated the impact of external shocks on poverty. This trend of decreasing poverty is crucial for investors, as it points to an increasing consumer base and potential demand across various market segments​​.

 

Regulatory Considerations for Real Estate Investments

Panama’s regulations for foreign real estate investments offer a promising opportunity for international investors. The country is known for its investor-friendly laws and proactive government, encouraging foreign capital, however Panama is not what it used to be in terms of anonymity. A key aspect is the requirement for beneficial owner registration, enhancing financial transparency when purchasing a property or opening a bank account.

 

Understanding zoning regulations is vital in Panama, if real estate investors are looking to buy undeveloped land. Managed by the Ministry of Housing and Land Management, these rules define property uses like residential, touristic or maritime and can vary by region. Investors need to grasp these zoning guidelines for well-informed decisions.

 

Transferring property titles in Panama follows a structured process but involves obligations. A 2% government-imposed property title transfer tax and a 3% advance on capital gains tax are part of this procedure. Foreign investors can legally own titled property personally or through a Panamanian corporation, providing flexibility. Panama’s legal framework safeguards foreign investments, ensuring a secure environment. Regulatory changes, like Law No. 129 or potential alterations to the Qualified Investor Visa’s minimum investment in November 2024, are not uncommon, so investors must stay vigilant and informed about evolving regulations that may impact their investments. This dynamic environment, coupled with Panama’s favorable investment climate, makes it an attractive destination for profitable real estate opportunities.

 

Conclusion

In 2024, Panama’s real estate scene presents a mix of opportunities and challenges, forming an exciting prospect for investors and real estate enthusiasts. Our exploration of this vibrant sector has revealed a range of possibilities. Panama City leads in price trends and rental yields, signaling growth amidst a reduction of inventory. Infrastructure development and the strategic Panama Canal position Panama as a global trade hub, blending old-world charm with modern excitement. Population growth and wealth trends drive housing demand, especially in urban hubs. Despite recent challenges, the real estate sector is on the rebound, with demand steadily increasing.

 

Panama’s investor-friendly environment is evident in regulatory considerations, ensuring transparency and secure property transactions for international investors. Staying informed about evolving regulations is crucial in this dynamic market. In summary, Panama’s real estate outlook for 2024 offers a symphony of opportunities through strategic planning and informed decisions. Navigating this thriving landscape can lead to sustainable and lucrative investments for those exploring Panama’s real estate horizon with careful consideration and due diligence.

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