Category: Real Estate

How to buy real estate in Panama

We have realised many different real estate purchases in Panama. With this article we would like to give you an overview of the most important steps when buying a property in Panama. Furthermore, you will find a description of the transaction costs in Panama.

Purchase Process in Panama:

Existing property

  1. Purchase offer and price agreement
  2. Reservation agreement (Usually digital signature, 15 working days, 1% deposit)
  3. Legal Due Diligence
  4. Technical inspection of the property
  5. Purchase contract (45-60 days closing, 10% deposit)
  6. Buyer: Application of an irrevocable letter of payment with his bank in Panama (amount must be in the account)
  7. Seller: Pay relevant taxes & obtain water and electricity certificates
  8. Notary appointment and handing over of the payment cheque
  9. Registration in the land register
  10. Cashing the payment cheque

Property in a real estate development

  1. Purchase offer and price agreement
  2. Reservation (Usually digital signature / e.g. 2 weeks, 10,000 USD deposit)
  3. Legal due diligence
  4. Purchase contract (Usually digital signature, 10% – 30% down payment, depending on project)
  5. Remaining deposits (up to a total of 50%) according to construction progress
  6. Buyer: Application of an irrevocable letter of payment with his bank in Panama (amount must be in the account)
  7. Seller: Completion of the property
  8. Notary appointment and handing over of the payment cheque
  9. Registration in the land register
  10. Cashing of the payment cheque

Once you have found your property, you can also complete the property purchase in Panama from home. Because you do not have to be in Panama for the above points, because you can do some of them online or with a power of attorney for your lawyer in Panama. Your lawyer will then represent you in the purchase process with a special power of attorney, which is best given to him during your trip to Panama. You must be there in person to open your bank account in Panama. Take the help of our lawyers to ensure that everything runs smoothly.

We accompany you through the entire buying process in Panama.

Our experience shows that our efficient process takes us about 3 months from price agreement to registration in the land register.

Transaction costs in Panama:

What are the transaction costs when buying a property in Panama? We would like to give you a brief overview of the costs involved in buying real estate in Panama.

  • Usually the legal, notary and land registry costs together amount to approx. 0.8% – 1% of the purchase price (assuming a purchase value of 400,000 USD)
  • The buyer usually pays the notary and property registry fees in Panama. The lawyer’s fees are to be paid by each party
  • The bank fee for the above mentioned irrevocable letter of payment is 0.25% – 1% depending on the bank
  • There is NO inheritance tax
  • Exemption from property tax until 2031 for properties completed before 2011 / thereafter 0.6% – 1.0% p.a.
  • Sales tax is 2% and capital gain tax 10% (on profits)
  • Any brokerage fee (usually 3-5%) is paid by the seller
 
We are more than happy to help you with our experience when buying a property in Panama.
 

FRAPAN-Invest

Klaus Happ’s company “FRAPAN-Invest” advises investors who want to invest in real estate in Panama. He offers advice on all aspects of living in Panama.

The real estate market in Panama is internationally one of the most interesting for investments. We would like to be your trusted local partner and assist you with the initial purchase. Additionally, we can take care of your real estate in Panama in a sustainable way.

Profitable, safe and beautiful:
Investments in Panama

Real estate portfolio & strategy in Panama

After “FRAPAN-Invest” and “arsago Real Estate” from Frankfurt established a partnership for real estate investments in Panama in July 2017, we started to build up a diversified and profitable real estate portfolio (Link) in Panama in January 2018, in which investors participate as limited partners.

With the following presentation we would like to present the real estate market in Panama, our strategy and our current real estate portfolio. By clicking on the link you will be taken to the corresponding presentation ( Link).

The real estate market in Panama counts internationally as one of the most interesting locations for property investment. We would like to be your local trusted adviser and to take care of your investments in Panama.

 


FRAPAN-Invest

Klaus Happ’s company “FRAPAN-Invest” advises investors who want to invest in real estate in Panama. He offers advice on all aspects of living in Panama.

The real estate market in Panama is internationally one of the most interesting for investments. We would like to be your trusted local partner and assist you with the initial purchase. Additionally, we can take care of your real estate in Panama in a sustainable way.

Profitable, safe and beautiful:
Investments in Panama

Property management in Panama City

Since April 2018, we offer to real estate owners property management in Panama City. This allows us to offer real estate investors an all-in service for their properties in Panama (consulting, brokerage, purchase processing, management and investor trips to Panama).

As part of our management of properties in Panama City, we offer the following services:

  • AirBnb service (marketing, administration, customer care, cleaning, etc)
  • Long-term rental
  • Furnishing and turnkey solutions
  • Tenant search
  • Organisation and supervision of necessary repairs
  • Network of reliable tradesmen
  • Coordination of air conditioning maintenance
  • Coordination of access to public service providers (water, electricity, etc.)
  • Control of incoming rent and expenses
  • Inspections
  • Participation in owners’ meetings
  • Monthly reporting


FRAPAN-Invest

Klaus Happ’s company “FRAPAN-Invest” advises investors who want to invest in real estate in Panama. He offers advice on all aspects of living in Panama.

The real estate market in Panama is internationally one of the most interesting for investments. We would like to be your trusted local partner and assist you with the initial purchase. Additionally, we can take care of your real estate in Panama in a sustainable way.

Profitable, safe and beautiful:
Investments in Panama

Investment in real estate portfolio

Investors participate in Panama real estate portfolio.
In July 2017 “FRAPAN-Invest” and “arsago Real Estate” from Frankfurt have entered into a partnership for real estate investments in Panama (Link). We combine decades of real estate management experience with local market access and network in Panama. Now investors are investing in a diversified and profitable real estate portfolio.

In December 2017, we began to build up a diversified and profitable real estate portfolio in Panama, in which investors as limited partners participate. This portfolio enables investors to achieve steady and attractive rental returns in USD.

The planned allocation of the real estate portfolio in Panama is as follows:

Portfolio Allocation

We are currently buying in Panama’s prime locations, where employees of multinational corporations such as Nestle, Adidas, the United Nations (and another 250 multinational corporations in Panama) are looking for rentals. Our investments so far have focused on modern apartments in the skyline in the front row of the Pacific Ocean and on apartments in the unique UNESCO Old Town. The gross rental yields to be achieved in USD are around 7%.

Enclosed photos of a purchased UNESCO-Altstadt-Apartment (Link) and a purchased modern apartment (Link) to get an impression of our investments.

And this is the view of another apartment that we are about to buy:

Skyline Panama City

When selecting apartments, we pay attention not only to finding reliable and long-term tenants, but also to the value of the properties and their locations. We are currently buying modern apartments in the first row on the Pacific Ocean for about 2,500 USD per square meter. At the current exchange rate this is approximately 2,000 euros per square meter. Such prices in comparable locations will be difficult to find in other parts of the world. Against this backdrop, we will continue to focus on achieving lucrative price increases in the future when selecting properties for sale.

The demand for apartments is currently increasing in Panama City. This applies to both buyers and tenants. On the one hand, this is due to the low purchasing costs compared with other countries and the weak USD. For example, many Canadian investors are currently using the strong CAD vs. USD for their purchases and want to buy before the arrival of Chinese investors (who will soon receive their tourist visa). In addition, there are major infrastructure projects (2nd airport terminal, new cruise port, new metro line, new canal bridge, new event centre), which means that many new employees are looking for rented accommodation.

 


FRAPAN-Invest

Klaus Happ’s company “FRAPAN-Invest” advises investors who want to invest in real estate in Panama. He offers advice on all aspects of living in Panama.

The real estate market in Panama is internationally one of the most interesting for investments. We would like to be your trusted local partner and assist you with the initial purchase. Additionally, we can take care of your real estate in Panama in a sustainable way.

Profitable, safe and beautiful:
Investments in Panama

FRAPAN-Invest obtains broker licence in Panama

There is a slow bureaucracy all over the world, including in Panama… After countless documentaries and references, our company “FRAPAN-Invest” has officially received the real estate agent license in Panama. This should make us the only German real estate company with its own broker license in Panama.

 


FRAPAN-Invest

Klaus Happ’s company “FRAPAN-Invest” advises investors who want to invest in real estate in Panama. He offers advice on all aspects of living in Panama.

The real estate market in Panama is internationally one of the most interesting for investments. We would like to be your trusted local partner and assist you with the initial purchase. Additionally, we can take care of your real estate in Panama in a sustainable way.

Profitable, safe and beautiful:
Investments in Panama

Reduced property tax in Panama

Panama’s government has passed a new property tax law, which has brought the greatest tax benefits to real estate in Panama for years. Property tax is progressive and is based on the value of the property in Panama. As a result of the new regulations, the tax rate for an apartment with a value of e.g. USD 400,000 is reduced by 70% to an average of 0.63% per annum.

This is of course good news for property owners and investors in Panama, as it significantly reduces the tax burden and makes an investment even more lucrative.

 


FRAPAN-Invest

Klaus Happ’s company “FRAPAN-Invest” advises investors who want to invest in real estate in Panama. He offers advice on all aspects of living in Panama.

The real estate market in Panama is internationally one of the most interesting for investments. We would like to be your trusted local partner and assist you with the initial purchase. Additionally, we can take care of your real estate in Panama in a sustainable way.

Profitable, safe and beautiful:
Investments in Panama

Game Changer for our island project

The current developments and new contracts between Panama and China are an absolutely positive “Game Changer” for our island project “Isla Boca Brava”, which will increase the demand for our property immensely. During his trip to China last week, the President of Panama Juan Varela and the Chinese Head of State Xi Jinping signed a total of 19 agreements involving economic, political and tourist cooperation. Panama is supposed to be the gateway for China’s activities on the American continent and a free trade agreement between the two countries is also being negotiated. This is a milestone in the economic development of Panama, which is already considered to be the fastest growing country in the western world.

An important point within the agreements is that both countries want to build the first high-speed train in Panama and this represents a new stage in our island project “Isla Boca Brava”. Both countries have signed a joint agreement on this and are now starting a feasibility study.

This train will connect Panama City with our island project region “Chiriqui” and cover 450km in 2,5 hours. It is said to be a passenger and freight train. This will put our island region next to Panama City at the centre of tourism and economic activities. Our island property is only 40 minutes away from David, the provincial capital of Chiriqui, where is already an international airport and a train station in the future.

This will enable Chinese goods to be distributed from Panama to the countries of Central and South America, and the new railway line will play an important role in this topic. China estimates the volume of freight and economic activity that this new Silk Road between China and Panama entails at approximately $18 billion annually. For a country with 4 million inhabitants a large number…

This means that in the future our island region will have a completely different economic significance and will be much easier reached by considerably more people. This will increase the demand for good hotels, apartments and land. This is very good news for our “island project”, as this is exactly what we offer and we expect prices to rise.

Architecture Isla Boca Brava

Air China also announced during the Panama government’s visit to China that it will be flying twice a week from March 2018. Further Chinese airlines are to follow.

 


FRAPAN-Invest

Klaus Happ’s company “FRAPAN-Invest” advises investors who want to invest in real estate in Panama. He offers advice on all aspects of living in Panama.

The real estate market in Panama is internationally one of the most interesting for investments. We would like to be your trusted local partner and assist you with the initial purchase. Additionally, we can take care of your real estate in Panama in a sustainable way.

Profitable, safe and beautiful:
Investments in Panama

Partnership between FRAPAN-Invest and arsago Real Estate

FRAPAN-Invest and arsago Real Estate have formed a partnership for property investments in Panama. We therefore combine decades of property management experience with local market access and networks. Our aim is to be able to offer attractive investments in Panama`s real estate market.

arsago Real Estate was founded in 2001 by an experienced management team which had already been successfully working together for a period of 20 years. The company is active as a manager of investment capital and asset manager for residential real estate in Germany and can look back on a successful track record of many years with renowned investors and investments of over 1 billion euros.

FRAPAN-Invest trustfully offers investors the opportunity to diversify their assets in a new and alternative category, namely that of property investments in Panama. The company is continually active with regard to the profitability of Panama real estate.

Panama Casco Viejo Skyline

Europeans and Asians are only just beginning to discover Panama`s real estate market for themselves. Accordingly, we would like to take on a leading role in the German market which until now has not been in the focus of investors.

Why Panama? Simply because the facts are considerably better than Panama`s reputation

  • One of the fastest growing countries in the world (GDP growth of 8.5% per year since 2002)
  • US dollar as the national currency
  • Guaranteed USA protection
  • More than 130 multinational companies and organisations have their head office for Middle and South America in Panama. These include Adidas, Bayer, Nestle, Roche and also the United Nations
  • Newly-discovered investment opportunities from a European and Asian perspective, with commensurately attractive prices and returns
    …an advantage that will change in the future following the onset of diplomatic relations with China and negotiations over a Chinese tourist visa (Link)


FRAPAN-Invest

Klaus Happ’s company “FRAPAN-Invest” advises investors who want to invest in real estate in Panama. He offers advice on all aspects of living in Panama.

The real estate market in Panama is internationally one of the most interesting for investments. We would like to be your trusted local partner and assist you with the initial purchase. Additionally, we can take care of your real estate in Panama in a sustainable way.

Profitable, safe and beautiful:
Investments in Panama

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