Our report about the real estate market in Panama City describes the trends in real estate prices in Panama City in 2019 and gives an outlook for the year 2020. Since the real estate market in Panama City is very diverse, we concentrate in our report on the locations and qualities in which ourselves and our customers are active as buyers. These are the prime locations in Panama City, located in the UNESCO Old Town “Casco Viejo”, in the promenade street “Avenida Balboa” and in Punta Pacifica. These are basically residential properties of very good quality in unique locations.
We concentrate on the locations and districts mentioned because they are unique, stable in value and good to rent.
Apartments in the promenade street “Avenida Balboa” are characterized by the breathtaking view of the Pacific Ocean, the islands and the ocean tankers waiting for the entrance to the Panama Canal. They are close to metro stations, workplaces, shopping malls and are therefore popular with the multinational companies in Panama and their employees who are looking for apartments to rent in Panama City. Panama City is the headquarters of 250 multinational corporations. Most of these companies control their activities in Central and South America from here.
We concentrate on the best quality residential towers in relation to construction quality, property management and amenities. The same applies to selected properties in Punta Pacifica. Properties in the prime seaside locations in metropolises are in demand all over the world and will remain so in the future, as the supply is limited.
We are currently seeing a buyer’s market that, with the right strategy, delivers very interesting return figures. While many locations in the world have to struggle with high purchase prices and correspondingly low rental yields, we buy in the first row at the Pacific for approx. 2,300 – 2,500 USD / sqm and rent furnished for approx. 15 USD / sqm in the prime location mentioned above. This enables us to achieve gross rental yields of approx. 7% in USD in the fastest growing country in the western world.
In general, the supply of living space in the modern city has grown strongly in recent years, which has led to falling prices in some locations. As described above, we focus on a specific part of the Panama City property market, where supply is limited and demand good.
In these locations, the prices for buying and renting have not changed significantly since 2018.
Panama City Town Casco Viejo
Directly in front of the skyline of Panama City you will find the UNESCO Old Town “Casco Viejo” (Info Link), where about 850 buildings are listed as UNESCO World Heritage Sites. Many years ago, the Old Town was considered the most dangerous part of Panama City. But with the beginning of the restorations of the beautiful colonial buildings since 2003, the Casco Viejo has successively transformed into a very charming and popular district, in which meanwhile about 50% of the buildings have been restored or are under restoration. As the buildings vary a lot in terms of location, floor plan, quality and equipment, it is much more difficult to name flat purchase prices and rents. In some streets of the old town of Panama City it can be very noisy due to restaurants, renovation work and traffic, whereas in other locations you can enjoy the charm and peace of the old town on your own roof terrace. It depends very much on the right choice of property. Since the number of buildings on the peninsula is naturally limited, it is basically a very unique and stable property location. In our preferred locations and qualities within the old town of Panama City you pay for used real estate approx. 3,000 – 3,500 USD per square meter and rent at 14-18 USD. New restoration projects are much more expensive and usually range between 4,000 – 5,500 USD per square meter.
Ocean Reef Panama City
Outlook for the year 2020
Since July 2019, the new government of Panama has been in office (Info-Link) and here people are waiting for the new projects that promote the economy and bring new workers to Panama. These have a positive influence on the real estate market in Panama through their rental demand. Among the most important major projects are the construction of the fourth bridge over the Panama Canal, on which Metro Line 3 will run and connect the districts on the other side of the canal with the city center. Construction is scheduled to start in 2020. The first cruise terminal and the new exhibition centre in Panama City will also be completed in 2020. Both will lead to a strong increase in foreign visitors to Panama City. The economy will benefit from this and new real estate investors will arrive in Panama City.
And of course the planned beach for Panama City, which would significantly upgrade the attractiveness of the entire city and have a significant impact on real estate prices on the Pacific Promenade (Info-Link).
Panama serves as a “safe haven” for investors and companies in the USD region. The current crisis in the neighboring South American countries reinforces this effect. Rich people in these crisis countries are looking for safe USD investment locations such as Panama for their capital. And those who want to invest in the Latin American region will probably also have Panama on their agenda right now for lack of alternatives. As real estate investors, we are noticing this these days, as we are facing increasing international competition when buying real estate in Panama. However, this should have a very positive effect on prices.
In Panama, one of the world’s largest copper mines went into operation in 2019, which will further support the already strong GDP growth. So far, the raw materials sector has had little impact on the Panamanian economy. This will change in the future.
Panama’s population is very young with an average age of 26 years (Germany 44 years) and the population is growing with 2% p.a. (Germany 0.2%). As a result, purchasing power will grow again and the demand for residential properties will increase.
Besides all the positive facts, Panama’seconomy continues to struggle with the following difficulties:
Poor education system of the population
Reputation as a tax haven although Panama is no longer on the EU or OECD blacklist
Lack of qualified specialists
According to the IMF, Panama’s economy is growing faster than most of the rest of the world. The economy and government are working to establish Panama as the “Singapore of Latin America“. As the geographical centre of the entire region for business, trade and logistics. These are important elements for the attractiveness of the investment location and the real estate in Panama.
Many of our investors use USD real estate investments in Panama to diversify their assets. Others, however, are also looking for another location outside the euro zone for their lifetime and at the same time apply for a second residence in Panama (Info-Link). Panama and its real estate market have so far been relatively unknown outside the American continent. Due to political developments in many countries around the world, international wealthy investors are increasingly looking for safe new locations.