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Yes, the analysis of Panama City's property market is included in our pack
Panama City's property market is showing mixed signals as we enter 2026, with residential prices experiencing moderate growth amid strong economic fundamentals. While property values increased by 2.38% in 2024-2025, this represents a significant slowdown from the dramatic 122.85% price surge seen over the past decade, suggesting the market is entering a more stable phase.
Property prices in Panama City are likely to continue increasing in 2026, though at a more measured pace than previous years. Strong GDP growth projections of 4.5% for 2026, major infrastructure projects like Metro Line 3, and sustained population growth of approximately 38,000 new residents annually create favorable conditions for continued appreciation. However, rising construction costs, elevated mortgage rates, and increased housing supply will likely moderate price growth to 3-5% annually.
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Panama City's residential property market is positioned for continued but moderate growth in 2026, driven by strong economic fundamentals and infrastructure development.
Current market conditions include average apartment prices of USD 2,483 per square meter, rental yields of 7.8%, and new housing supply of 8,000-10,000 units expected by late 2026.
| Market Indicator | Current Status (2025) | 2026 Outlook |
|---|---|---|
| Average Price per m² (Apartments) | USD 2,483 | Expected increase of 3-5% |
| Annual Population Growth | 38,800 new residents | Continuing at similar pace |
| Rental Yields (Central Areas) | 7.8% | Stable to slightly declining |
| Time on Market | 94 days (3 months) | May increase slightly |
| GDP Growth Rate | 4% projected for 2025 | 4.5% projected for 2026 |
| Mortgage Rates | 5.84% (locals), up to 8% (foreigners) | Expected to remain elevated |
| New Housing Supply | 8,000-10,000 units by late 2026 | Moderate oversupply in luxury segment |
What is the current average price per square meter for residential properties in Panama City, and how has it changed over the past 10 years?
As of September 2025, the average price per square meter for residential apartments in Panama City stands at USD 2,483.
This figure represents the culmination of a dramatic price surge over the past decade. From 2015 to 2025, residential property prices in Panama City increased by 122.85%, meaning property values more than doubled during this period. The most significant acceleration occurred from 2020 to 2025, when prices rose by 59.83%, largely driven by pandemic-related demand and low interest rates.
However, the pace of price growth has moderated significantly in recent years. The annual price increase for 2024-2025 was 2.38%, representing a substantial cooldown from the stronger years immediately following the pandemic. Houses in Panama City currently average around USD 1,603 per square meter, while luxury areas like Casco Viejo command premium prices ranging from USD 2,720 to USD 4,150 per square meter.
Different property types show varying price points across the city. New developments targeting expatriates and international buyers typically fall within the higher end of this range, while established residential areas offer more moderate pricing for local buyers.
This price trajectory reflects Panama City's emergence as Central America's most expensive urban real estate market, supported by strong economic fundamentals and increasing international interest.
What is the projected population growth of Panama City between 2025 and 2030, and how many new residents are expected each year?
Panama City's urban agglomeration is projected to grow from 2,054,540 residents in 2025 to approximately 2.25 million by 2030.
The city has been experiencing consistent annual growth of about 38,800 new residents, representing a 1.92% annual population increase. This translates to an estimated 38,000 to 40,000 new residents arriving each year through 2030, maintaining the current growth trajectory.
This sustained population growth is driven by several factors including rural-to-urban migration within Panama, international immigration attracted by the country's favorable business climate, and natural population increase. The city's role as Central America's financial hub and the presence of the Panama Canal continue to attract both domestic and international residents.
The steady influx of new residents creates continuous demand for housing across all segments, from affordable units for local families to luxury accommodations for international professionals and retirees. This population growth pattern supports the underlying demand fundamentals for Panama City's residential real estate market.
It's something we develop in our Panama property pack.
How many new housing units are currently being built or planned for delivery by 2026, and how does this compare to expected demand?
Panama City has between 8,000 and 10,000 new housing units currently under construction or planned for delivery by late 2026.
Major residential projects contributing to this supply include developments like Vintage Lake Powell, West Lake, and various West End projects, each adding hundreds of units to the market. Nationwide, the latest reports show 16,519 units as new inventory in 2025, with a significant portion concentrated in Panama City.
When comparing this supply to demand, the market shows signs of balance in most segments but potential oversupply in the luxury sector. With approximately 38,000 new residents arriving annually and existing low vacancy rates below 2% in central apartments, the basic demand fundamentals remain strong. However, there's evidence of oversupply and price stabilization in upper-end segments where international buyers and luxury developments are concentrated.
The mid-market segment appears well-balanced, with steady absorption rates and continued price appreciation. The affordable housing segment shows the strongest demand relative to supply, driven by local population growth and first-time homebuyers.
This supply-demand dynamic suggests that while overall price growth will continue, the pace may moderate as new inventory comes online, particularly in premium areas where developers have been most active.
What is the current rental yield percentage for apartments in central Panama City, and how has it moved in the past five years?
Rental yields for apartments in central Panama City currently average 7.8% as of September 2025, representing an increase from 6.8% just one year prior.
This yield is notably higher than the national average of 6.8%, reflecting the strong rental demand in Panama City's core areas. The improvement in yields over the past year indicates that rental prices have grown faster than purchase prices, creating a more favorable environment for rental property investors.
Over the past five years, rental yields have shown a modest upward trend, particularly in mid-market neighborhoods like El Cangrejo and Costa del Este. These areas have benefited from steady rental demand from both local professionals and international residents working in Panama City's financial district.
Premium areas, however, show a different pattern with slightly declining yields as purchase prices have outpaced rent growth. High-end properties in areas like Casco Viejo and luxury towers face slower absorption rates and more selective tenant demand, putting pressure on rental returns.
The strong rental yields in central Panama City reflect the city's position as a regional business hub, creating consistent demand from professionals who prefer renting in prime locations rather than purchasing. This dynamic supports the investment case for buy-to-let properties in well-located areas.
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How many international buyers purchased property in Panama City in 2024, and what percentage of total transactions did they represent?
While exact 2024 transaction numbers aren't specified in available data, international buyer demand in Panama City jumped 20.7% in 2023 and is projected to increase by another 25% by the end of 2025.
International buyers have become a major driving force in Panama City's real estate market, particularly in central areas and luxury developments. Foreign demand is especially concentrated in premium neighborhoods like Casco Viejo, Costa del Este, and high-rise developments along the coastline.
The strong international interest stems from Panama's favorable residency programs, the use of the US dollar as currency, political stability, and the country's strategic location. Many international buyers are seeking either investment properties for rental income or primary residences for relocation or retirement.
Most high-end and international transactions are conducted as cash purchases, which helps explain the resilience of luxury market segments even as mortgage rates have risen. This cash-heavy international demand provides stability to the upper end of the market and supports continued price appreciation in premium areas.
The sustained growth in international buyer interest indicates that Panama City's real estate market has strong external demand drivers beyond local economic conditions, which helps support property values and rental demand.
What is the average household income in Panama City, and how does it compare to the average mortgage cost for a mid-range apartment?
The median household income in Panama City is approximately USD 67,880 for the 25-44 age bracket, with the broader median slightly lower across all age groups.
For a typical mid-range apartment of 100 square meters, the purchase price would be approximately USD 248,300 at current market rates. The median home value in Panama City stands at USD 337,645, indicating that many properties require significant financial resources relative to local incomes.
At current mortgage rates of 5.84% for Panamanian residents (up to 8% for foreigners), a 20-year mortgage on a mid-range apartment would result in monthly payments well above USD 1,200, depending on the down payment amount. This represents a substantial portion of the median household income, highlighting affordability challenges for local buyers.
The income-to-mortgage ratio suggests that many local buyers either require substantial down payments, longer mortgage terms, or dual-income households to afford property purchases. This dynamic explains why much of the local demand focuses on smaller apartments or properties in less central locations.
This affordability gap also explains the strong rental market in Panama City, as many residents find renting more financially viable than purchasing, particularly for properties in prime locations. It also supports the case for international buyers who often have access to foreign income or cash resources.
How much has the cost of construction materials increased annually since 2020, and what percentage increase is expected by 2026?
Construction material prices in Panama have risen by an average of 19% from 2020 to 2025, with steel and wood showing yearly increases ranging from 6% to 22%.
Cement prices experienced particularly dramatic increases during the pandemic, surging by 15-25% and peaking in 2022 before moderating in 2024-2025. These price increases significantly impacted development costs and contributed to higher property prices across all segments.
Looking ahead to 2026, moderate further increases are expected, with wood and composite materials projected to rise by up to 6.5% annually. No significant drop in overall construction input costs is forecasted, meaning developers will continue facing elevated building expenses.
These ongoing cost pressures affect both new development pricing and renovation costs for existing properties. Developers have generally passed these increased costs to end buyers, contributing to the overall upward pressure on property prices.
The persistent elevation in construction costs supports the value of existing properties and creates a floor for new development pricing, making significant price decreases unlikely even if demand softens. This cost inflation also favors renovation and improvement of existing properties over new construction in some market segments.
What is the current interest rate on 20-year mortgages in Panama, and what are analysts projecting for 2026?
As of September 2025, 20-year mortgage rates in Panama stand at 5.84% for Panamanian residents and up to 8% for foreign buyers.
These rates represent a significant increase from the low-rate environment that prevailed during the pandemic years. The higher rates for foreign buyers reflect both increased risk assessment and regulatory requirements for non-resident borrowers.
Analysts project that mortgage rates will remain elevated through 2026, with no sharp decrease expected. This outlook reflects global monetary tightening trends and local banking policies that have become more conservative following the pandemic period.
The elevated rate environment has shifted market dynamics toward cash purchases, particularly among international buyers, and has reduced affordability for local buyers dependent on financing. This has contributed to longer time on market for some properties and more selective buyer behavior.
It's something we develop in our Panama property pack.
Sustained higher mortgage rates support the rental market as potential buyers delay purchases, but they also create headwinds for overall transaction volume and price appreciation, particularly in segments dependent on local buyer financing.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Panama versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
How many major infrastructure projects are scheduled for completion before 2026, and how close are they to high-demand neighborhoods?
The most significant infrastructure project scheduled for 2026 completion is Metro Line 3, a 34-kilometer monorail connecting Albrook and Ciudad del Futuro.
This project represents the largest infrastructure development since the Panama Canal expansion and will significantly improve connectivity between Western suburbs and the city center. The new line will relieve traffic congestion and provide direct links to several high-demand residential areas.
Additional infrastructure improvements include expanded metro and bus services, as well as upgraded water services with the recently completed Gamboa Plant. Many of these transportation improvements directly serve growth areas popular with both local residents and expatriates.
The Metro Line 3 project is particularly significant for property values as it will make previously less accessible areas more attractive for residential development and increase property values along the route. Areas near planned stations are already seeing increased development interest and pre-construction sales activity.
These infrastructure investments demonstrate the government's commitment to supporting urban growth and improving quality of life, which enhances Panama City's attractiveness for both residents and investors. The completion of major projects in 2026 should provide additional support for property value appreciation.
What percentage of real estate sales in Panama City are cash purchases versus financed purchases today, and how has this split evolved?
Most high-end and international transactions in Panama City are conducted as cash purchases, while mid-tier local buyers typically rely on financing, though exact percentages aren't specified in available market data.
The trend has shifted toward more cash purchases compared to pre-pandemic years, driven by several factors including rising mortgage rates, increased international buyer activity, and more conservative lending practices by local banks.
International buyers, who represent a growing portion of the market, predominantly use cash for their purchases. This reflects both their access to foreign currency resources and the complexity of obtaining local financing as non-residents.
Local buyers in the mid-market segment continue to rely heavily on financing, but higher interest rates have reduced their purchasing power and extended decision-making timelines. This has created a two-tier market with different dynamics for cash versus financed transactions.
The higher proportion of cash transactions provides market stability during periods of interest rate volatility but also means that price movements are less sensitive to local credit conditions. This dynamic supports continued price appreciation even when financing becomes more expensive for local buyers.
How many months on average do properties stay on the market before selling, and how has this indicator changed over the past three years?
Properties in Panama City currently stay on the market for an average of 94 days (approximately 3 months) as of September 2025.
This represents a significant increase from 54 days in 2024, nearly doubling the time required to complete sales. This change reflects increased supply coming to market and more selective buyer behavior as market conditions have shifted.
Hot properties in prime locations or with competitive pricing still move quickly, typically going under contract within 30-52 days. However, properties that are overpriced or in less desirable locations are experiencing much longer marketing periods.
The increase in time on market indicates a shift from the seller's market conditions that prevailed during the pandemic period to a more balanced market where buyers have more choices and negotiating power. This trend is consistent with increased inventory levels and more measured price appreciation.
For sellers, this means that realistic pricing and proper property presentation have become more important for achieving timely sales. For buyers, the longer marketing periods provide more opportunity for negotiation and careful property selection.
What is the forecasted GDP growth rate for Panama in 2025 and 2026, and how does it historically correlate with property price increases?
Panama's GDP growth is projected at 4% for 2025 and 4.5% for 2026, making it the third fastest-growing economy in Latin America according to IMF projections.
| Year | GDP Growth Rate | Property Price Correlation |
|---|---|---|
| 2024 | 2.5% | Moderate price growth (2.38%) |
| 2025 | 4.0% (projected) | Expected acceleration in price growth |
| 2026 | 4.5% (projected) | Continued robust price appreciation |
| Historical Average | 3-5% | Strong positive correlation |
| Pandemic Period | Variable | Unusual price surge due to external factors |
Historically, higher GDP growth rates in Panama have coincided with strong property price appreciation. The relationship reflects increased employment, higher incomes, greater business investment, and overall economic confidence that translates into real estate demand.
The projected acceleration in economic growth for 2025-2026 should provide fundamental support for continued property price increases. This economic expansion typically drives demand across all property segments, from affordable housing for growing middle-class families to luxury properties for business executives and investors.
Panama's economic growth is supported by its strategic position in international trade, the continued expansion of the Panama Canal's capacity, and growing financial services sector. These factors create sustainable demand drivers for real estate beyond short-term market fluctuations.
It's something we develop in our Panama property pack.
Conclusion
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.
Based on current market fundamentals, Panama City properties are positioned for continued price appreciation in 2026, albeit at a more moderate pace than the dramatic increases seen over the past decade.
The combination of strong GDP growth projections, major infrastructure completion, and sustained population growth creates favorable conditions for property value increases, though rising costs and elevated interest rates will likely moderate the pace to 3-5% annually.
Sources
- Global Property Guide - Panama Price History
- The LatinVestor - Panama City Price Forecasts
- World Population Review - Panama City
- The LatinVestor - Panama Price Forecasts
- Autodesk - Panama Metro
- Liz Larroquette - Panama Coming of Age
- Frapan Invest - Real Estate Market Report
- Digitude - IMF Panama Growth Outlook