Authored by the expert who managed and guided the team behind the Panama Property Pack
Yes, the analysis of Panama City's property market is included in our pack
Why is Panama City emerging as a prime destination for property investment in 2025? Is it the attractive rental returns, the thriving expat community, or the competitive pricing compared to other international markets? What are the key benefits for investors?
We frequently encounter these questions because we are actively engaged with developers, real estate agents, and investors like you. Given the growing interest in this market, we've decided to compile our insights into a comprehensive article for everyone's benefit.
Our aim is to present a compelling case for investing in Panama City's real estate market, supported by our firsthand experience and market expertise.
If you feel we've overlooked an important aspect or want more information, please reach out (we respond very quickly). Your feedback enhances our content.
Finally, please remember that this is not financial or investment advice. Real estate investment involves inherent risks, and market conditions can change unexpectedly. We strongly recommend conducting thorough research and consulting with a qualified financial advisor before making any investment decisions.
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1) With tourism on the rise, Panama City is perfect for short-term rental investments
Panama City is seeing a surge in tourism, opening doors for short-term rental investments.
In early 2024, the city welcomed over 1.4 million international tourists, marking an 8.7% increase from the previous year. This trend gained momentum with an 11.8% rise in visitors during just the first two months of 2024. The buzz around Panama City is palpable, with more travelers eager to explore its vibrant culture and stunning landscapes.
A major driver of this boom is the expansion of Tocumen International Airport, which saw a 15.8% increase in travelers in the first half of 2024. This expansion has made the city more accessible, drawing in tourists from around the globe. The government and private sector are also playing their part by actively promoting Panama in key international markets, making it a hot spot for travelers.
Travelers today crave unique and local experiences, and Panama City is perfectly positioned to deliver. The demand for short-term rentals is rising as visitors seek authentic and personalized stays. This aligns with the global shift towards cultural and eco-tourism, where tourists are looking for more than just a place to sleep—they want an experience.
Panama City's reputation as a travel destination is growing, thanks to positive reviews and ratings from those who have visited. The city offers a mix of modern amenities and rich cultural heritage, making it a favorite among tourists. This reputation is a key factor in the increasing interest in short-term rental properties.
For those considering investing in property, Panama City's thriving tourism sector presents a promising opportunity. The city's appeal is not just in its attractions but also in its ability to offer visitors a taste of local life, which is increasingly what travelers are seeking.
Sources: The Rio Times, Visit Latin America
2) With metro expansion and infrastructure upgrades, Panama City’s property values are on the rise
Panama City is buzzing with major infrastructure upgrades, especially the metro system expansion.
Picture this: a city where getting around is a breeze, thanks to the ambitious "National Master Plan." This plan is not just about adding a few metro lines; it's a full-scale transformation with new rapid transit, monorail, tram, and aerial lift lines in the works. By 2035 or 2040, the metro system is set to expand to nine lines, making commuting a whole lot easier.
One of the standout projects is Line 3, a 34km-long monorail line. This line will bridge Panama Oeste and Panama, slashing travel times and accommodating 20,000 passengers each way during rush hours. Imagine cutting through traffic like a hot knife through butter, reducing pollution, and boosting the city's vibe.
Now, let's talk real estate. With these metro improvements, property values in areas with better access have been on the rise. Take neighborhoods like Via España and El Cangrejo, for example. They've seen property values jump by 10% to 20%. The allure of easy metro access is pulling in homebuyers and renters, driving up demand for properties near these transit hubs.
For those eyeing a property investment, this metro expansion is a game-changer. It's not just about convenience; it's about being part of a city that's evolving, where every new metro line adds a layer of connectivity and opportunity. The metro is more than just a way to get around; it's a catalyst for growth and a magnet for real estate interest.
So, if you're considering buying property in Panama City, keep an eye on these metro developments. They are reshaping the landscape, making certain areas more desirable and potentially more lucrative. The city's commitment to improving transportation is a clear signal of its growth trajectory, and being part of this transformation could be a smart move.
Sources: Wikipedia, Panama Realty Zone, Ayesa, Railway Technology
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.
3) Panama City’s location makes it a key gateway between the Americas, attracting international buyers
Panama City is a prime spot for international buyers, acting as a gateway between North and South America.
With the Panama Canal handling 6% of global maritime trade, its expansion has been a game-changer. This upgrade has slashed shipping costs by $8 billion each year, making Panama even more crucial in the world of trade.
On the travel front, Tocumen International Airport is a key player. As one of Central America's busiest airports, its recent expansion has boosted Panama City's connectivity, making it a breeze for travelers and businesses to reach the city.
Panama City is not just about trade and travel; it's a vibrant hub for international business. The city's strategic location and improved infrastructure make it a magnet for companies looking to tap into both American continents.
For those considering property investment, Panama City offers a unique blend of business opportunities and cultural experiences. The city's growth and development are attracting a diverse range of international buyers.
Whether you're a business mogul or a frequent traveler, Panama City's strategic position and enhanced connectivity make it an attractive destination. The city's role as a central hub is only set to grow, offering exciting prospects for property buyers.
Sources: World Economic Forum, LAC Geo
4) In Panama City, you’ll benefit from no property tax on the first $120,000 of your primary home
Panama City is a real estate investor's dream, thanks to its favorable tax regime.
One of the standout perks is the property tax exemption on the first $120,000 of a primary residence. This means if your home is valued at $120,000 or less, you won't pay any property tax. This policy is part of a broader strategy to attract both local and foreign investors, making Panama City a hot spot for real estate.
The government has rolled out laws like Law 66, which offers tax breaks for primary residences. These initiatives have made Panama City even more appealing, leading to a noticeable uptick in foreign investment. In fact, there was a 20% increase in home sales to foreign investors in the first half of 2023, showing just how attractive the market has become.
Looking back at the historical data, Panama City's property tax policies have become increasingly investor-friendly. Before 2019, only properties valued up to $30,000 were exempt from taxes. But now, the exemption threshold has been raised to $120,000, with reduced tax rates for higher property values. This shift has made the city a more competitive market, catching the eye of international real estate agencies.
Insider knowledge suggests that these tax benefits are not just for show; they are part of a calculated move to boost the local economy by drawing in foreign capital. The city's strategic location and growing infrastructure further enhance its appeal, making it a prime choice for investors looking for a stable yet dynamic market.
With these investor-friendly policies, Panama City is not just a place to buy property; it's a smart investment choice. The combination of tax breaks and a thriving real estate market makes it an attractive option for those looking to invest in a city with a promising future.
Sources: Kraemer Law, Quijano, Bankrate
5) Panama’s dollarized economy lowers currency risk for investors from countries with weaker currencies
In Panama, the economy is dollarized, meaning it uses both the US dollar and its own currency, the Balboa.
This system has been in place since 1904, with the Balboa pegged 1:1 to the US dollar, ensuring economic stability and low inflation rates. This setup eliminates exchange rate risk, which is a big plus for Panama's small economy that relies heavily on international trade and investment.
Having both the Balboa and the US dollar makes international transactions smoother by providing a widely accepted medium of exchange. This setup reduces transaction costs and removes currency conversion uncertainties for global businesses operating in or with Panama.
Compared to its neighbors with non-dollarized economies, Panama enjoys significantly lower currency volatility. This stability is crucial for attracting foreign investment and maintaining a favorable business environment.
Foreign investors often highlight currency stability as a key factor in their decisions. For instance, Huawei chose Panama for its first Cybersecurity and Transparency Center, showing confidence in the country's stable economic environment.
The use of the US dollar in Panama reduces transaction costs and exchange rate risks for dollar-based investments, helping integrate Panama into global markets, enhancing trade fluidity, and encouraging foreign investment.
Sources: Papers with Backtest, Global Finance Magazine
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6) Panama City offers incentives for foreign retirees, increasing demand for homes
Panama is the top choice for retirees in 2025, according to International Living’s Annual Global Retirement Index.
Thanks to the government's incentives, like the Pensionado Program, retirees are flocking to Panama. This program offers exclusive discounts on leisure activities and utility bills, making it a big draw. In just the first five months of 2024, 819 retirees took advantage of these benefits.
With more retirees moving in, there's a noticeable uptick in demand for commercial properties. Areas with high retiree populations are seeing a boom in medical clinics and grocery stores, which is driving up property values and spurring infrastructure development.
Retirees are loving life in Panama, with surveys showing high satisfaction rates. The country offers an affordable cost of living, excellent healthcare, and a vibrant yet relaxed lifestyle, making it an attractive retirement spot.
These factors are not just attracting retirees but also boosting the real estate market. The influx of foreign retirees is creating a ripple effect, increasing demand for both residential and commercial properties.
Panama's commitment to providing a high quality of life for retirees is evident in its growing popularity. The combination of financial benefits and a welcoming environment is hard to resist.
Sources: Limitless Legal, Panama Realty Zone, Embassy of Panama
7) In Panama City, limited land supply can increase property values over time
Panama City is bustling, with over 65% of its people living in urban areas.
Imagine a city where 1.5 million people are packed into a tight space, including the city and its suburbs. This means there's not much room left for new projects, making land a hot commodity.
Every year, the city grows by 1.97%, adding even more people to this already crowded urban landscape. This growth makes it even tougher to find available land for new developments.
With so many people in such a small area, the demand for property is high, and the limited space only adds to the challenge. This scarcity can drive up property values over time.
For those looking to invest, the city's limited land supply is a key factor to consider. It means that properties here could become more valuable as space becomes even scarcer.
So, if you're thinking about buying property in Panama City, remember that the competition for land is fierce, and this could impact your investment.
Sources: World Population Review, Earth Site
8) Panama’s political stability ensures a secure environment for long-term property investments
Panama's political stability makes it an attractive option for real estate investors.
With its long-standing democratic governance, Panama offers a reliable environment for those looking to invest in property. This consistency is a big draw for investors who want to feel secure about their investments. The country's political climate is not just stable; it's a foundation that supports economic growth and development.
Panama's economy is on the rise, with sectors like commerce, construction, tourism, and transportation fueling its growth. In 2023, the country is expected to see a 6% GDP growth, which is a promising sign for the real estate market. This economic boom is complemented by low inflation rates, making it easier for investors to plan for the long term without worrying about sudden economic shifts.
Investors can also feel secure knowing that Panama has strong legal protections for property rights. These laws ensure that your investment is safe and protected, giving you peace of mind. Additionally, the Panamanian Balboa is pegged to the U.S. dollar, which means you won't have to worry about currency fluctuations affecting your investment.
Panama's real estate market is not just about numbers; it's about a stable and secure environment that supports growth. The combination of political stability, economic growth, and legal protections makes it a compelling choice for anyone looking to invest in property.
Sources: Lloyds Bank Trade, Latam News
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.