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What additional costs should you expect when buying a property in Panama? With our report we would like to give you an overview of the costs when buying a property in Panama. In addition, we show you the ongoing monthly costs.

Closing Costs in Panama:

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

• As a rule, the legal, notary and land registry costs in Panama together are approx. 5.000 USD (calculated for a 400.000 USD property / depending on property value).
• The buyer usually pays the notary and land registry costs in Panama. The lawyer’s fees are borne by each party.
• There is NO land acquisition and inheritance tax in Panama.
• Any broker’s commission (usually 3-5%) is paid by the seller.
• For the purchase of a property in Panama it is advisable to apply for a payment cheque at your bank in Panama in order to handle the transfer of ownership in a legally secure and risk-free way. The fee for a payment cheque is 0.25% – 1% depending on the bank.
• The buyer does not pay taxes when buying a property in Panama.
• The seller pays a sales tax of 2% and a capital gain tax of 10% (on the profit). Click here for more information on taxes in Panama.

Running costs of a property in Panama:

What running costs should you expect for an apartment in Panama City? We give you an overview.

• In every tower building in Panama City there is a property management company that takes care of the day-to-day running of the building (building insurance, concierge, pool, lift, cleaning, gym, etc.). For this, you pay a monthly property management fee of usually 1.50 – 2.00 USD per sqm per month.
• A rental management company that takes care of your flat and your tenant usually costs 10% of the monthly rent. Click here for more information about our property management in Panama.
• Insurance for an apartment in Panama costs about 0.1% p.a. of the purchase value. In the old town Casco Viejo approx. 0.2% p.a.
• Property tax in Panama depends on various factors (old town vs. new town, year of construction, use, etc). Often, real estate in Panama is exempt from property tax. For an insight, see taxes in Panama.
• If you are looking for a tenant in Panama, the agent receives one month’s rent as a commission for the successful brokerage.

We are happy to accompany you with our experience in the purchase process in Panama.

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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

Our annual report on real estate in Panama is a guide for anyone interested in purchasing residential property in Panama, whether as an investment or a home. Are you looking for a Plan B in Panama or a high-yield investment opportunity? As real estate experts in Panama who have been helping clients find the perfect properties for many years, we present below our real estate market report for Panama City and the Coronado Beach area 2022 / 2023.

If you are also interested in the reports from previous years, feel free to check them out here.

In 2022, some normality has returned, the borders of most countries are now open without restrictions and people are travelling abroad more. However, in addition to the aftermath of travel restrictions due to Covid, there have also been economic problems on a global scale. A weakened euro, rising interest rates, high inflation and steadily increasing energy prices have unsettled many people in Europe or even prompted them to find an (additional) residence outside the EU. Likewise, European and especially German politics have suffered a high loss of confidence and many citizens are starting to think of a plan B. A popular destination country – for both private individuals and companies – is Panama.

Price development of real estate in Panama 2022

The year 2022 has seen a steady growing trend for housing demand in Panama City and surrounding areas. With occupancy rates of 90% in prime locations in Panama City, the city by the sea is now enjoying great popularity. One of the consequences of this is that more and more investors are putting capital into rental properties. The luxury segment is seeing rising prices and both private sellers and developers are less willing to engage in price negotiations. Rental prices in Panama City are also rising again, as the demand for housing, especially in Panama City’s prime locations, is high.

In particular, Panama’s stable economic situation and the USD as the national currency have attracted many interested parties for private property, but also multinational companies, which house employees in the surrounding residential towers. Unlike many other nations, Panama’s economy grew again by about 9% in 2022, with another 5% growth forecast for 2023.

More and more people have a Plan B in Panama

Visa options in Panama have also contributed to Panama’s growing popularity. The investment amount of at least USD 300,000 for a residence permit in Panama in the form of the Golden Investor Visa has been maintained, contrary to the government’s original plans.

Especially for investors who have capital freely available, the real estate market in Panama is very interesting. However, should you consider taking out a loan, be prepared for a difficult banking process and high interest rates of 7% – 8%. An option to buy a property with less equity at the beginning could be to invest in new construction projects in Panama City like Armonia or Oceana. Because here you pay the purchase sum over the construction progress. More information on this can be found below.

Panama invests in tourism

The government of Panama is planning to greatly expand the tourism sector in the coming years and is focusing especially on attracting Europeans to the country. The focus is on ecotourism and luxury travel; an increased flight offer covering more routes will attract a variety of new target groups. In addition, many international tourists are arriving at the new cruise terminal in Panama City.

Forecast for the real estate market in Panama for 2023

While demand in the North American and European real estate markets has declined in the past year, Panama continues to enjoy an increasing number of prospective buyers from abroad. This is due to the much more favourable purchase and construction prices, the USD and the country’s geopolitical situation. In addition, the political situation in some South American countries has become more uncertain, which increases Panama’s relative attractiveness. There are many new and very attractive construction projects in Panama, mostly in the luxury segment, which are usually sold during the construction phase or before.

Also, more and more multinational companies are settling in Panama City, leading to the creation of more jobs and rental demand.

The increased demand for rental flats in Panama City means that there are currently only 5-10% vacancies in prime locations. 

Interesting construction projects in Panama City and the surrounding area

From our point of view, the prime locations in Panama City are the old town Casco Viejo, Avenida Balboa, Punta Pacifica and Costa del Este. In addition, of course, the Ocean Reef Islands (cover photo), which occupy a special position and on which we will report.

In Costa del Este there is still a very high demand for rentals due to the many large corporations that often have their headquarters here. Avenida Balboa is also very popular with tenants because of its prime location in the first row on the Pacific. It offers many jobs as well as nightlife and leisure opportunities in the immediate vicinity. The good buildings in Punta Pacificas are also in high demand due to their quiet and exclusive residential location. Rental prices in Panama City in the locations and qualities mentioned are currently around 14-16 USD per square metre.

Generally, 2-bedroom flats continue to experience the highest rental demand in Panama City, as the second bedroom can be used individually as a home office, guest room, etc. The “Wanders & Yoo” flats are also in high demand.

Wanders & Yoo” – The special home 

The “Wanders & Yoo” is a very promising building project, which is a very interesting investment now that Tower 1 has been completed. The quality of the construction as well as the great location in Bella Vista, one of the most popular districts of Panama City, will create an enormous demand for rentals.

Both residential towers were designed by the internationally renowned designer Marcel Wanders and are characterised by a lively and special interior. Of course, the residents of the 2- and 3-bedroom flats have access to a swimming pool on a roof terrace, various social areas, a spa with sauna and a fitness gym.

Currently, one of the residential towers is already in the final phase of construction. Although a large number of the flats have already been sold, there are still exciting opportunities. The price per square metre is around US$3,500.

Other high-end construction projects in Panama City are the apartment complexes “Armonia” in Bella Vista and “Oceana” in Santa Maria. Both are located in prime locations within the modern city and are being built by one of Panama’s most renowned developers.

Construction on both residences is scheduled to begin in the first half of 2023 and the purchase price will be staggered based on the progress of construction. Due to the lower purchase prices in the Armonia project, it is also possible to buy in 1A location with a lower budget.

For more detailed information you can follow the respective links or contact us directly. We will be happy to assist you and guide you through the entire purchase process.

The Ocean Reef Islands – Pure Luxury in the Middle of Panama City

In addition, for the first time there are resales on the Ocean Reef Islands, i.e. flats that have already been completed and are now being resold for first-time occupancy.

Here we can offer two great flats directly at the marina:

• Ocean Reef RESALES: 2-bedroom flat
• Ocean Reef RESALES: 3-bedroom flat

The Ocean Reef Islands in the middle of Panama City are particularly noteworthy for their unique location and quality. You will not find a comparable project in all of Latin America. Buyers are international and many investors buy repeatedly on Ocean Reef because they are satisfied with their previous investments. Over the past two years, sales prices have steadily increased and are currently around USD 6,000 per square metre. Since there are only a few available building plots left and no more island may be created, prices will probably continue to rise.

Casa Antigua Domingo – From “old” to “new

The UNESCO old town of Casco Viejo is attracting more and more investors and offers a special charm with its historic facades and old streets. About 40% of the flats currently being built in our construction project “Casa Antigua Domingo” have been sold or reserved. Comparable projects on site, which are currently being built, range between 4,500 – 7,500 USD per sqm, depending on location and quality. We start at 4,100 USD per sqm including air conditioning, kitchen appliances and built-in wardrobes. The cheapest flat costs approximately 290,000 USD. From our point of view, the apartments offer the best value for money for an investment between 250,000 USD – 750,000 USD in the entire UNESCO Old Town. More details about the construction project at Plaza Santa Ana can be found here. By the way, buying one of the properties is suitable for applying for a residence permit in Panama!

Both the Hyatt Hotel and Sofitel have opened in close proximity and the government’s increasing investment in tourism is drawing more and more travellers to the Old City. Investment in Panama’s Old Town is rewarded with the following tax incentives:

• 30 years no property tax
• 10 years no income tax on rental income

Beach properties near Panama City are in vogue

Properties in the beach area of Coronado continue to be popular. Due to the proximity to Panama City and the good infrastructure, the area is a popular destination for renters, holidaymakers and buyers. The advantage is that AirBnB rentals are allowed here, unlike in Panama City, which allows one to use the property partly oneself while it produces additional income. Panama is currently experiencing a strong recovery of the tourism sector, which is positive for the entire real estate market in Panama. This is because many tourists in the past have experienced the uniqueness of Panama during their holidays and have subsequently become interested in buying real estate. The strong tourist recovery can be seen and felt in Panama. Furthermore, Panama’s airline “Copa Airlines” has been able to increase its turnover. The capital’s airport has also reached pre-Corona flight numbers again in 2022; Terminal 2 has opened.

On one of Panama’s longest sandy beaches, in Punta Chame, a new beach community has been developing for several years. The place is a popular destination for windsurfers and the coast offers breathtaking views of the sea. Many Panama City residents head to the town, about an hour’s drive away, for the weekend to relax and enjoy their water sports. In the newest apartment complex in the Playa Caracol beach project, there are flats for sale with 2 and 3 bedrooms and a size of 70 – 90 sqm. These are suitable as your own holiday home, but also as an investment.

What to look for when buying a property in Panama

If you decide to buy a property in Panama – whether as an investment or as a plan B – we would like to give you some advice.

Choose a good property manager in Panama who will take care of your needs and keep the tenant happy. A good property manager usually costs 10% of the monthly rent. We offer such property management in Panama City to our clients.

Seek assistance with the purchase process in order to keep an eye on possible incidental purchase costs in Panama from the beginning. Experience shows that it takes on average about 3 months from price agreement to registration in the land register – it is worth a lot to have someone with the necessary know-how at your side.

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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

With our real estate market report Panama City 2021 / 2022 we want to give you an overview of the development of real estate in Panama City and what moves the real estate prices in Panama City. As in previous years, we focus only on the prime locations in Panama City, because we have been active in purchasing and property management here ourselves for years and have the corresponding experience. In addition, we also report on real estate in Coronados beach area.

By clicking on the link you will find our reports about the real estate market in Panama City of the last years.

Let’s start by taking a look at Panama’s economy. Like everywhere else in the world, the Corona crisis has left its impact on the economy and also on the real estate market in Panama. After Panama’s economic growth fell by 17% in 2020, there was a recovery of around 10% in 2021, according to the World Bank. This growth should continue in 2022 with 7.8%. This makes Panama the fastest growing economy in Central and South America in 2021 and 2022, according to the World Bank (info link). The unemployment rate in Panama had skyrocketed to 18% in 2020 and should fall below 10% in 2022, but is still at a high level. Panama’s main source of revenue, the Panama Canal, had another record year in 2021. Revenues were 8.7% above 2020 and even 10% above the pre-Corona year of 2019. Together with Panama’s copper mine, these two sectors in particular have contributed to the stabilisation of Panama’s economy.

From our point of view, the prime locations in Panama City are the old town Casco Viejo, Avenida Balboa, Punta Pacifica and Costa del Este. In addition, of course, the Ocean Reef Islands (photo above), which occupy a special position and on which we will report.

As in the Real Estate Market Report 2020 / 2021, rents in prime locations in Panama City had fallen by 10-15% due to Corona. With the recovery of the economy, the easing of the Corona restrictions and the continued arrival of large multinationals, rental demand in Panama City’s prime locations has increased again and vacancy rates have declined. The largest property management company in Panama City reported vacancy rates in some of its buildings of 15-20% in 2020. This has now dropped to around 5%, it said. Rental bargains in the good buildings are almost non-existent and accordingly rents are moving back towards pre-crisis levels.

Rents have recovered fastest in Costa del Este. Here, the demand for rent is highest due to the many large corporations that often have their headquarters here and their employees. However, there are still many vacant building plots here, which will mean further supply and thus competition for properties in the future. We also see a recovery in rental prices in Avenida Balboa (only 3-4 vacant building plots left) and in Punta Pacifica’s good buildings. Be sure to buy your Panama City flat in the front row on the Pacific, have unobstructed sea views and furnish your flats attractively to stand out from the competition. Today, rental prices in Panama City in the locations and qualities mentioned are around 12 – 14 USD per square metre. The highest rental demand is currently experienced by 2-bedroom apartments, as the second bedroom can also be used as a home office in Corona times.

Choose a good property manager who will take care of your interests in the long term and keep the tenant happy. A good property manager usually charges 10% of the monthly rent. We offer our clients such a property management in Panama City (info link).

A good indicator for an improving rental market is also that many tours of relocation providers in Panama City are currently fully booked. Furthermore, the situation in many other Latin American countries has worsened considerably in recent months. The Corona crisis and left-leaning elections were often the trigger in many countries (Chile, Peru, Colombia, among others). It is currently observed that very wealthy people, e.g. from Peru, are looking for investment and residence in Panama. Both have a positive influence on the real estate market in Panama.

Property prices for residential flats in Panama City in the above-mentioned locations of Avenida Balboa, Punta Pacifica and Costa del Este are still 10 – 15% below the pre-crisis level, depending on location and quality, but have recovered from the interim low prices. Purchase prices here are currently around 2,300 – 2,500 USD per square metre. In Punta Pacifica, some are higher.

The following drone video of Avenida Balboa gives a good impression of the waterfront street in Panama City.

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Casco Viejo in Panama City (info link) is a niche within a niche. Panama is a niche in Latin America, and Casco is a niche within Panama City. As a historic UNESCO site, it behaves somewhat differently from a modern city and is more similar to other UNESCO World Heritage Cities. One of the main differences is the limited number of buildings, with around 850 buildings located on a peninsula just in front of the city skyline. For those looking for long-term value, Casco Viejo has always been an interesting market: a walkable neighbourhood by the sea, in an urban setting with many cultural attractions.

Currently, there are new building developments, especially around Plaza Santa Ana. New residential buildings are being restored here, but also commercial areas. In 2021, Panama’s Fashion Week and Panama’s Film Festival (IFF) were held in Santa Ana for the first time. Santa Ana is the less developed part of the old town, where many developers have secured plots and prices are even cheaper than in the already more developed part of the old town of San Felipe. We started construction work on our restoration project at Plaza Santa Ana in September and are looking into new projects with our local partners.

San Felipe is about to enter a new phase. The Sofitel with 159 rooms and the Hyatt with a similar number of rooms will open here in 2022. The old town and its real estate market have always been very dependent on tourism. This came to a standstill due to the Corona crisis and is just now recovering. The planned connecting road between the new cruise terminal and the new exhibition centre into the old town should give the property market in Casco Viejo a new boost. On the residential side, there are also new projects in San Felipe that are moving into the luxury segment. Prices for the new projects range from USD 4,500 – 6,000 per square metre, depending on the location. Good existing properties can be bought for around 3,000 – 3,500 USD per square metre.

If you buy in the old town in Panama City, you should pay attention to the location. The old town can be very noisy due to street noise and bars. Parking spaces are in short supply. Furthermore, when buying existing real estate, you should make a very careful technical inspection of the construction quality. After all, we are talking about old properties in an old town. Prices and rents have come down due to the Corona crisis, which had risen constantly in previous years. If one believes in the advantages of such a UNSECO old town with naturally limited inventory, you should find very interesting investment opportunities here in the long term.

Ocean Reef Islands (info link) takes a special position due to its exceptional location, quality and prices. You will probably not find a comparable project in all of Latin America. On Island 2, the construction development is progressing very well and the sale of the flats in the different apartment buildings is much faster than expected. These are international buyers and often investors are buying for the second time on Ocean Reef because they are satisfied with their inventory. We have assisted various investors with their purchases in different projects on Ocean Reef. Sales prices have steadily increased over the last two years and are currently around USD 6,000 per square metre. Since there are not many available building plots left and no more islands may be built, prices should probably continue to rise due to the limited supply. Please feel free to contact us if you are interested.

Properties in Coronado or the beach area of Coronado (Info – Link) are still popular. Due to the closeness to Panama City and the good infrastructure, the area is a popular destination for tenants, tourists and buyers. However, due to the Corona crisis, rental demand from foreign tourists has dropped sharply, which often represented a larger part of the income. This is also recovering in the current tourist season, but is far from being back to pre-crisis levels. The majority of tenants currently come from Panama City and spend their weekends or parts of their annual holidays here. The advantage is that AirBnB rentals are allowed here, unlike in Panama City, which allows you to use the property partly yourself while it produces additional income. With significantly more effort (short-term rental), one can achieve similar rental income as with a comparable long-term rental in Panama City. Long-term rentals are more difficult in Coronado. The purchase prices in the best residential areas have fallen by approx. 10-20% compared to the pre-Corona level due to the crisis. Here you can currently find very attractive offers for approx. 2,000 – 2,200 USD per square meter.

In general, a recovering tourism sector is positive for the entire real estate market in Panama. Both for holiday rentals and for the buyer’s market. In the past, many tourists got to know the uniqueness of Panama during their holidays and were then interested in buying real estate. A few weeks ago the new cruise terminal as well as the new convention centre opened in Panama City and brought new people to Panama. Let’s hope that this development continues.

In August 2021, the popular Friendly Nations visa was changed. Until then, it was possible to obtain a second residence in Panama with little financial effort and a few documents. Now, an investment of at least USD 200,000 is required to obtain a residence permit in Panama. What impact does this have on real estate prices in Panama? With the old regulation a large number of foreigners had been given the opportunity to settle in Panama. Most of them will not have made major investments in Panama and will not live in Panama constantly. Some of them will have stimulated the rental market and possibly bought a property later. The new regulation attracts a much smaller number of foreigners who are able to apply for residence in Panama. However, they directly invest at least USD 200,000 in the real estate market in Panama. Which variant will have the better impact on real estate prices in Panama is difficult to say at the moment. In addition to the investor visa, there is still the pensioner visa in Panama (overview of visa types).

While in most parts of the world you find an overheated and very expensive real estate market, in Panama you can still buy property at a reasonable price if you compare the purchase price with the rental income. With rents currently in a recovery phase, purchase prices should probably follow the rising rents. This has happened before in 2020 / 2021 when rents started to fall (info link to Prices follow rents).

We are happy to help you find your suitable property in Panama.

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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