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
What will happen in Panama City’s real estate market? Will prices go up or down? Is Panama City still a hotspot for foreign investors? How is Panama’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with notaries, real estate agents, and clients who buy properties in Panama City, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Luxury apartment yields in Panama City will drop as the market gets flooded with high-end properties
The yield on luxury apartments in Panama City is expected to decline due to an oversaturation of high-end developments.
In 2024, Panama City saw a flood of luxury condos, with over 352 brand-new, unsold units and 293 already built, making up more than 80% of the total luxury inventory. This paints a clear picture of an oversupply issue.
In popular areas like Costa del Este, rental prices for luxury apartments were projected to rise by just 5-10% in 2024. This modest increase is a far cry from previous years, indicating that demand isn't keeping up with the abundant supply, which is putting pressure on yields.
Consumer surveys reveal a growing preference for more affordable housing, leading to a boom in new affordable developments in Panama City. This shift is likely to further reduce the appeal and profitability of luxury apartments.
Real estate agencies have noticed the saturation of luxury condos, especially those priced at $800,000 and above. This has forced developers to offer these properties at reduced prices, which directly impacts yields.
With over 80% of new luxury condos still unsold, the severe oversupply problem is evident. This situation is causing developers to rethink their strategies and adjust prices to attract buyers.
Source: Panama Equity
2) Demand for gated communities in Panama City will grow due to their security and exclusivity
Panama City has seen a 54% rise in crime rates, making safety a top concern for residents.
With the media spotlighting these safety issues, many locals now view the city as unsafe, pushing them to consider gated communities as a secure living option.
Surveys reveal that 53% of residents feel unsafe, showing a clear preference for environments with controlled access and enhanced security.
In response, property values in these communities are climbing, with condos in AAA buildings seeing a 13% price increase per meter over the last two years.
Expatriates moving to Panama City are also drawn to these areas, seeking the security and exclusivity that gated communities offer.
Developers are ramping up the number of gated communities, heavily marketing their security features to meet this growing demand.
Consumer trends highlight a desire for privacy and exclusivity, which is especially appealing in a city with rising crime rates.
Sources: AreaVibes, Neighborhood Scout
We have made this infographic to give you a quick and clear snapshot of the property market in Panama. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
3) Rental prices in Panama City will drop as more affordable housing options emerge
In 2023 and 2024, Panama City saw a boom in affordable housing construction, with over 1,100 units completed and another 2,100 on the way.
This surge is set to increase the housing market's inventory by 18.2%, offering more homes for potential buyers. As these new, affordable options become available, renters might lean towards these modern spaces, leaving older properties with higher vacancy rates.
Panama City is actively addressing housing needs through initiatives like the Hurricane Housing Recovery and the State Housing Incentive Partnership. These programs are pumping funds into the market, and the First-Time Homebuyers Program offers up to $50,000 to help people purchase their first home, easing rental market pressure as more people can afford to buy instead of rent.
There's also a noticeable increase in rental supply, driven by new projects from previous years, which could lead to an oversupply. This often results in lower rental prices as landlords compete for tenants.
Looking at similar neighborhoods, like Costa del Este, we see that an increase in supply usually leads to lower rental prices, suggesting Panama City might follow this trend.
With more affordable housing options, the rental market in Panama City is likely to see a decline in prices, making it a great time for potential buyers to explore their options.
Sources: Panama City Government, Panama City Housing Assistance
4) Panama’s property prices will rise due to better infrastructure and new transport links
Panama's real estate market is booming, thanks to major infrastructure upgrades and new transport links.
The completion of the Panama Metro Line 3 is a game-changer for connectivity. It links Panama Oeste with Panama City, slashing travel time and serving around 160,000 passengers each year. This makes daily commutes easier and boosts the appeal of nearby neighborhoods, which in turn drives up property values.
Another key development is the expansion of the Panamericana Oeste highway. This has made suburban living more attractive by significantly reducing commute times. Areas like Costa del Este, known for their modern infrastructure, are becoming popular among buyers, further pushing up real estate prices.
Historically, new transportation links have consistently led to increased property demand and value in cities worldwide. Panama is no exception, as these improvements make it a hot spot for both residents and investors.
With these changes, Panama is not just more accessible but also more desirable, making it a prime location for real estate investment. The ongoing infrastructure projects are expected to continue this upward trend, offering promising opportunities for potential buyers.
Sources: Premier Casa, Latam News, Citigroup
5) Short-term rental yields in Panama City will rise as vacation rentals become more popular
The yield on short-term rental properties in Panama City is on the rise thanks to the booming vacation rental market.
Imagine your property being booked for 237 nights a year with a solid 65% occupancy rate. That's the current trend as of September 2024, making it a great time to invest in Panama City.
Tourism is thriving here, with 1.8 million visitors expected this season, a huge jump from last year's 800,000. Even Panama City Beach saw a 4.7% increase in visitors in 2023, adding to the area's allure.
Hosts are cashing in with an average daily rate of $140 for short-term rentals, which means more money in your pocket annually. The government is also pitching in, investing $171 million in sustainable tourism infrastructure to make the city even more attractive.
With new landing strips and improved roads, the tourism experience is getting a major upgrade, supporting this growth. It's a win-win for both tourists and property owners.
Sources: Travel2Latam, Airbtics, Airbtics
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6) Rental prices in Bella Vista will drop as new housing projects boost supply
Rental prices in Bella Vista are set to drop as new residential projects flood the market.
In Bella Vista, there's been a noticeable uptick in building permits for new homes, signaling a construction boom. This means more rental options are on the horizon, and when supply outpaces demand, prices usually fall.
From January to September 2024, Panama City saw a wave of new residential units, many in Bella Vista. This trend is expected to persist, increasing the rental stock by fall 2025. With more units available, landlords might need to cut rents to attract tenants.
In 2023 and 2024, over 1,100 affordable housing units were completed, with more coming soon. This surge in inventory is putting pressure on rental prices as landlords vie for tenants.
As more homes hit the market, landlords are likely to offer competitive rates to fill their properties. This is great news for potential renters looking for a deal.
With the ongoing construction and new units, the rental landscape in Bella Vista is changing, making it a prime time to explore housing options.
Sources: Activentas, Realtor.com
7) Fewer North American buyers will invest in Panama City as they look into other emerging markets
North American buyers are showing less interest in Panama City properties lately.
One reason is the slight drop in median home prices in 2024, which makes the market less attractive for those seeking strong returns. When property values dip, investors often look elsewhere for better opportunities.
There's also been a decrease in the number of homes sold in Panama City this year compared to last. This suggests that fewer North American buyers are keen on purchasing properties there. They're eyeing other emerging markets, hoping for better returns and more favorable economic conditions.
Many North American investors are now diversifying their portfolios, spreading their investments across multiple markets. They're on the hunt for places with higher rental yields or faster property value appreciation. This shift means Panama City might be losing its shine as investors chase these more promising prospects.
As these investors explore new territories, Panama City could see a continued decline in demand from North American buyers. The allure of emerging markets with potentially higher returns is hard to resist.
Sources: Redfin, The Wandering Investor
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.