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 Europeansto 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:
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.
"FRAPAN-Invest" under the direction of Klaus Happ, will be happy to assist you in finding the right property in Panama. We offer investors advice on real estate investments and on the subject of "emigrating to Panama".