All sources have been thoroughly verified for credibility. Furthermore, an industry specialist has reviewed and approved the final article.
Everything you need to know is included in our Panama Property Pack
Are you thinking of investing in property in Panama? Are you thinking about when to take action?
Market timing is a subject where opinions vary among individuals. Your Panamanian acquaintance might suggest that now is the opportune time to buy property, whereas your spouse, who is originally from Panama City, might have a different view and recommend waiting for more stability.
At TheLatinvestor, when we create articles or update our pack of documents related to the real estate market in Panama, we prioritize facts and data over opinions and rumors.
We have thoroughly examined all the official reports and statistics available on government websites. Now, we have a comprehensive database of reliable information and we can help you determining whether it is currently advantageous to purchase real estate in Panama.
Ready? Let's go!
How is the property market in Panama these days?
Panama is known today for being a stable country
Positive
Stability should be the first thing you look at when you want to invest in real estate because it is crucial for long-term growth and profitability. It is an information you need as a foreigner looking to buy a property in Panama.
Good news for you, Panama is known for its stability. The last Fragile State Index reported for this country is 47.5, which is a remarkable score.
Panama has a strong and stable economy, which is bolstered by its strategic location, making it a major international trading hub. Additionally, Panama has been politically stable for several decades, with peaceful transitions of power and a strong democratic system.
Real estate investors can count on the country's stable foundation for investment. Let's review the economic outlook.
Panama is poised for strong growth
Positive
Before buying a property, consider the economic well-being of the country.
In accordance with IMF projections, Panama will, in 2023, grow by 5%, which illustrates the country's rapid development. As for 2024, we're talking 4%.
The growth will continue to be there for more years to come since Panama's economy is expected to increase by 19.2% during the next 5 years, resulting in an average GDP growth rate of 3.8%.
The expected sustainable growth rate in Panama is a good thing for investors because it indicates that the country's economy is stable and has potential for future growth, making real estate investments a viable option for long-term wealth building.
However, there are other factors to consider beyond GDP growth.
Panama's population is growing and getting (a bit) richer
Positive
When you're looking to buy real estate, population growth and GDP per capita deserve careful consideration because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Panama, the average GDP per capita has changed by 3.1% over the last 5 years. The growth, although minimal, is still present. Furthermore, the Panamanian population is growing (+3% in 5 years).
This means that, if you purchase an oceanfront apartment in Panama City and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, there might be an increase in rental demand in Panamanian cities like Panama City, Bocas del Toro, or Boquete in 2024.
Rental yields are really attractive in Panama
Positive
If you're considering a property investment, evaluate its profitability by examining the expected rental yields.
Rental yield is the amount of money you can make from renting out a property, relative to the property's value.
According to Numbeo, rental properties in Panama offer gross rental yields ranging from 6.8% and 9.5%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Panama.
Yields like these are rare to come by.
Everything you need to know is included in our Panama Property Pack
In Panama, inflation is projected to remain moderate
Neutral
Inflation is when the prices of goods and services keep getting higher.
It's when your regular cup of Panamanian coffee costs 3.50 Panamanian balboas instead of 3 Panamanian balboas a couple of years ago.
If you're considering investing in a property, high inflation can bring you several advantages:
- Property values tend to increase over time, potentially leading to capital appreciation.
- Inflation can result in higher rental rates, increasing the property's cash flow.
- Inflation decreases the real value of debt, making mortgage payments more affordable.
- Real estate can act as a hedge against inflation, helping preserve the investment's value.
- Diversifying into real estate provides stability during periods of inflation.
As projected by the IMF, over the next 5 years, Panama will have an inflation rate of 10.5%, which gives us an average yearly increase of 2.1%.
This data shows that Panama might experience inflation soon, so it's worth thinking about buying property now.
Is it a good time to buy real estate in Panama then?
Time to conclude !
2024 presents a promising opportunity for property investment in Panama, driven by a combination of favorable signals that indicate a conducive environment for real estate endeavors. Panama's reputation for stability in today's world is a significant advantage for property buyers. This stable environment provides a strong foundation for property ownership, minimizing risks in Panama and uncertainties for investors.
The anticipation of strong growth in Panama further reinforces the case for property investment. As the country experiences economic expansion, there is a potential surge in demand for housing and properties, contributing to the potential appreciation of property values over time.
The growing population and improving financial status of Panama's residents contribute to the attractiveness of property investment. The combination of these factors can fuel an increase in housing demand, creating opportunities for both capital appreciation and potential rental income.
The prospect of really attractive rental yields in Panama enhances the appeal of property investment. High rental yields imply the potential for substantial returns on investment through rental income, making real estate an appealing option for those seeking consistent returns.
With projected moderate inflation and the collection of favorable signals, including stability, growth potential, population prosperity, and attractive rental yields, 2024 presents a promising year to explore property investment opportunities in Panama.
We hope this article has been helpful!. If you need to know more, you can check our our pack of documents related to the real estate market in Panama.
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This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
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