Property prices in Panama City have declined slightly in some districts in recent months, following the trend in rents. With this report we would like to give a short update to our detailed “Real Estate Market Report Panama City 2020 / 2021“.
We exclusively report on high quality properties in prime locations in Panama City, located in the UNESCO Old Town “Casco Viejo”, in the promenade street “Avenida Balboa”, in Punta Pacifica and on Ocean Reef.
With the beginning of the Corona crisis in Panama, the government announced a hard lockdown in March 2020, which was then gradually relaxed from June 2020 and ended in October 2020 with the reopening of the international airport. The aim was to protect the health of the population. But this ultimately led to a hard shutdown of economic activity and a decline in government and private revenues. According to current estimates, Panama’s economy will grow by +9,9% in 2021, but it will take time to make up for the negative GDP growth of -17% in 2020.
Meanwhile, the government is taking a more business-friendly Corona course (Corona update 26 March 2021), but keeping an eye on the health aspects.
During the hard lockdown in 2020, many expats from the large multinationals had temporarily returned to their home countries and property viewings were very difficult due to the exit restrictions. Some property owners also rented at much lower prices than before to generate income. This, combined with smaller budgets due to the tight economy, led to 10-15% lower rents for new rentals.
While in 2020 most owners were not willing to sell at lower prices than before, this has gradually changed in recent months. On Avenida Balboa we see that purchase prices have followed rental prices. Buyers have been able to realise prices about 10-15% lower than before the Corona crisis. The best locations and qualities on Avenida Balboa can therefore currently be bought for between USD 2,000 – 2,500 per sqm and rental yields of approx. 7% p.a. can therefore be achieved again. With the advantage that one can take advantage of lower entry prices and the favourable Euro / USD exchange rate. The decline in prices is also related to the fact that in June 2021 the credit moratorium (as Corona aid) will expire and then loans will have to be paid again, which could put some people under pressure. It should be taken into account here that the credit share is not particularly high.
In the meantime, it seems, rents have found a bottom and are picking up again. This is probably also due to the fact that the rental bargains of unsettled owners have now been absorbed by the market. This should, in consequence, also lead to rising purchase prices again.
Ocean Reef Islands
The price drop mentioned was not observed in our preferred locations in Punta Pacifica. The price decline does not apply to the two artificial islands Ocean Reef either, because here the demand has rather increased due to the Corona crisis. This is due to the special island location and the fact that the very tense economic and social situation in some other Latin American countries is causing very wealthy people from these countries to look for new locations, such as Panama City.
Furthermore, 2-bedroom appartments remain attractive, as it is very convenient to integrate a home office.
The increased demand for beach appartments near Panama City continues (info link).
Casco Viejo Panama
In the UNESCO old town “Casco Viejo” (info link), the purchase prices have remained at about the same level as before Corona and renovation work is in full swing. Unfortunately, many shops and hotels that live off tourism are still closed. Basically, Casco Viejo is a very unique and stable value real estate location, as the approx. 850 buildings on the peninsula in front of the skyline cannot be duplicated.
We are happy to help with our experience in negotiating the purchase price in the current dynamic and exciting market environment.
The real estate market in Panama is internationally one of the most interesting locations for real estate investments and we would like to be your local representative and take care of your real estate in Panama on a sustainable basis.
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Investments in Panama