Authored by the expert who managed and guided the team behind the Panama Property Pack
Everything you need to know before buying real estate is included in our Panama Property Pack
Are you considering expanding your real estate portfolio internationally? Wondering if Panama's property market offers lucrative opportunities? Curious about the potential returns and risks involved in investing in this Central American gem?
We will lay down recent insights, providing a comprehensive analysis of Panama's real estate landscape. Here, no guesswork, we rely only on solid data to guide your investment decisions.
Actually, we know this market inside and out. We keep tabs on it regularly, and all our discoveries are reflected in the most recent version of the Panama Property Pack
This article gives you valuable insights, but remember, it’s not and will never be investment advice. We pull data from a range of sources to provide you with the most accurate picture possible, yet we can’t guarantee complete accuracy. Markets are difficult to predict. Make sure to do your own research and consult a professional before making any financial moves. Any risks or losses are your own responsibility.
1) Panama is a tax haven for real estate investors, with zero capital gains tax on primary homes
Panama is a real estate investor's dream, thanks to its favorable tax regime.
One of the biggest perks is that there's no capital gains tax on primary residences. So, if you decide to sell your main home, you get to keep all the profit without worrying about taxes. This is a huge relief for anyone looking to make a smart investment in the country.
On top of that, Panama offers some sweet property tax exemptions. For example, primary residences are exempt from property taxes on the first $120,000 of their value. This means more money stays in your pocket, whether you're a homeowner or an investor. Plus, the property tax rate is pretty low, ranging from 0.5% to 0.7%, depending on the property's value.
If you're eyeing newly built properties, you're in luck. In Panama, new constructions can enjoy tax exemptions for up to 15 years. This is a massive incentive for those looking to develop or buy new real estate. It's like getting a head start on your investment.
Combine these tax benefits with Panama's strategic location and economic stability, and you've got a recipe for a very attractive real estate market. The country is not just a pretty face; it's a smart choice for savvy investors.
With all these advantages, it's no wonder Panama is becoming a hotspot for real estate investment. The tax perks alone make it a compelling option for anyone looking to invest in property.
Sources: Panama Property Taxes, Real Estate In Panama: Taxes & Transaction Costs, Panama tax outlook
2) Panama's unmatched political stability makes it the safest investment haven in Latin America
Panama stands out as a stable choice for property investment in Latin America.
In 2023, Panama's political stability ranked at 52.61% on the World Bank's scale, a reassuring figure for investors. This ranking helps gauge how safe it is to invest in different countries, and Panama's position is quite favorable. Even with a slight dip from 0.29 points in 2022 to 0.21 points in 2023, Panama's score is still above the world average of -0.06 points, showing it as more stable than many other places.
Historically, Panama has kept political unrest low, with its stability index ranging from -0.18 points in 2012 to a peak of 0.40 points in 2016. This track record of stability is a big plus for anyone considering buying property there. The country's governance is often highlighted by international organizations like the World Bank, which is a good sign for those looking for a secure investment environment.
Another factor that makes Panama appealing is its relatively low crime rates compared to other Latin American countries. This adds to the overall sense of security, making it an attractive place for foreign investors. In fact, Panama saw a significant increase in foreign direct investment, with 731.9 USD million flowing in by June 2024, reflecting confidence in its stable environment.
For those eyeing property in Panama, these elements of stability and security are crucial. The country's ability to attract foreign investment is a testament to its favorable conditions. With a stable political climate and low crime rates, Panama offers a promising landscape for property buyers.
Sources: World Bank, The Global Economy, CEIC Data
Everything you need to know is included in our Pack for Panama
3) Panama's booming expat community fuels a thriving rental market especially in vibrant urban hubs like Panama City
Panama's expat community is booming, creating a strong rental market in places like Panama City.
With the introduction of the Digital Nomad Visa in 2021, remote workers flocked to Panama, especially to the bustling capital. This surge has made housing a hot commodity, particularly in Panama City, where the demand is palpable.
In 2023 and 2024, Panama City's urban population grew by 1.97%, leading to a housing shortage of 140,000 units. This gap is most felt in the mid- and lower-price ranges, pushing rental prices higher. Areas like Lynn Haven and Panama City North are seeing increased demand due to multinational companies setting up shop nearby.
Panama is also a magnet for foreign retirees who enjoy a mid-range lifestyle, further boosting the rental market. These retirees are on the lookout for comfortable homes, adding to the demand for rentals.
Tax incentives for foreign investors and a competitive cost of living make Panama an attractive option for expats. This combination keeps the rental market thriving, as more people choose Panama over pricier destinations.
Sources: The Latin Investor, A Little Adrift, Trade.gov
4) The Friendly Nations Visa skyrockets foreign residency demand fueling a housing boom in Panama
The Friendly Nations Visa program is making it easier for foreigners to settle in Panama, boosting the demand for housing.
In early 2023, 557 Friendly Nations visas were approved, showing a dip from the previous year but still indicating strong interest. This dip is mainly due to the increased minimum investment requirement, yet the program remains attractive.
In 2022, there were 2,544 approvals, which fell to 2,120 in 2023. By May 2024, 1,312 approvals were recorded, showing a slight decline but still a steady interest. Many foreigners are still eyeing Panama as a new home, with real estate investment visas expected to break records in 2024.
Real estate agents and expat communities are noticing more newcomers, which is likely pushing up occupancy rates in developments targeting foreigners. This aligns with the growing interest in Panamanian real estate, as seen in increased inquiries from foreign buyers.
The government is keeping the $200,000 minimum investment requirement for the visa, underscoring its economic impact. This policy is a key driver of the increased demand for housing, as it attracts foreign investors.
Sources: IMI Daily, IMI Daily, Mundo Expert
5) Panama's booming economy and U.S. dollar currency slash currency risk for investors
Panama's use of the U.S. dollar as its currency makes it an attractive option for investors.
With the dollar being a stable and widely accepted currency, you won't have to worry about exchange rate fluctuations affecting your returns. This is a big plus for anyone considering property investment in Panama. The country's economy has shown steady growth, even during challenging times like the temporary closure of the Cobre Panamá copper mine. Despite this, the services sector has continued to thrive, offering a cushion of stability.
Panama's inflation rates have remained low, which is great news for maintaining a stable economic environment. This low inflation is complemented by consistent credit ratings, which, although they have seen some downgrades, still indicate a relatively secure investment landscape. The use of the U.S. dollar further minimizes currency fluctuation, adding another layer of security for investors.
In 2023 and 2024, Panama's economy demonstrated steady GDP growth rates, a reassuring sign for potential property buyers. The services sector, a key player in the economy, has been a strong support for this growth. This sector's resilience is a positive indicator for those looking to invest in the country.
Even with some economic challenges, Panama's consistent use of the U.S. dollar provides a stable economic environment for investors. This stability is crucial for anyone considering long-term investments, as it reduces the risks associated with currency fluctuations.
Overall, Panama's economic landscape, bolstered by the use of the U.S. dollar, offers a secure and stable investment environment. This makes it an appealing choice for those looking to invest in property in the country.
Sources: World Bank, Bloomberg, IMF, Trading Economics
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6) Panama's stunning beauty and tropical climate lure retirees and tourists, who stay in short-term rentals
Panama's tropical climate and stunning landscapes are a magnet for retirees and tourists, boosting short-term rental opportunities.
Thanks to the Qualified Investor Program, retirees find it easier to settle in Panama, especially in places like Coronado, which has become a hotspot for expats. This influx has driven up real estate sales, with beach apartments being particularly sought after by both locals and international buyers.
Tourism is booming, with Panama welcoming over 1.4 million tourists in the first half of 2024, an 8.7% increase from the previous year. Tocumen International Airport saw a 15.8% rise in arrivals, showcasing the success of improved tourism infrastructure and global marketing efforts.
The surge in tourists has led to high occupancy rates for short-term rentals, with hotels averaging 51.8% occupancy from January to June 2024. The growing demand is outpacing hotel availability, pushing many travelers to opt for Airbnb and vacation rentals, especially families.
This trend of choosing alternative accommodations is expected to continue as more travelers seek unique and flexible lodging options. The shortage of hotel rooms is a clear sign of the booming tourism sector, making short-term rentals a lucrative opportunity.
Sources: Rio Times Online, The Latin Investor, Visit Latin America
7) Panama's top-notch international schools and healthcare make it a magnet for families moving from abroad
Panama is a top choice for families moving from abroad, thanks to its international schools and healthcare facilities.
In Panama City, you'll find a variety of international schools that cater to expat communities, offering curricula from the U.S., Europe, and beyond. This means kids from different backgrounds can continue their education without a hitch, a big plus for families thinking about relocating. The 82.87% gross enrollment ratio for secondary education in 2021 shows growing confidence among expat families in the local education system.
On the healthcare side, Panama shines with facilities like Hospital Punta Pacifica, linked with Johns Hopkins Medicine International. This hospital offers a wide range of services, from specialized surgeries to lab tests, which are vital for families needing reliable medical care. The hospital treats about 650 foreign patients annually, highlighting the trust and demand for quality healthcare among foreigners. Plus, they help with visas, transportation, and insurance, making healthcare access smoother for expat families.
Expat families often rave about the quality of care and easy access to medical services in Panama, boosting its appeal as a relocation spot. Healthcare providers can communicate in both English and Spanish, and the facilities' proximity to the international airport adds to the convenience for families moving here.
Sources: The Global Economy, Health Tourism
8) Panama's prime spot as a global trade hub drives property demand thanks to its closeness to the Panama Canal
Panama's strategic spot as a global trade hub is a major draw for property buyers, thanks to its closeness to the Panama Canal.
The canal is a crucial route for international shipping, and in March 2024, there was a 12.8% rise in transits, showing a boost in shipping traffic. This uptick makes Panama even more attractive as a logistics and trade center, pulling in big companies to set up shop.
Firms like 3M, Dell, and BASF have chosen the Panama Pacifico Special Economic Zone for their regional bases, which is pushing up demand for both commercial and residential properties. This area is becoming a hot spot for business, making it a smart place to invest in real estate.
Plus, the Panama Canal's expansion to handle bigger ships cements its role in global shipping routes. This upgrade is expected to ramp up trade and logistics activities, which in turn fuels the growth of the real estate market in Panama.
For those eyeing property in Panama, the canal's influence is a big deal. It's not just about shipping; it's about the economic ripple effect that boosts the local market. The presence of multinational companies means more jobs and more people looking for homes.
Investing in Panama's real estate is not just about buying property; it's about tapping into a thriving economy driven by its strategic location. The canal's expansion and the influx of global businesses are key factors making Panama a prime spot for real estate investment.
Sources: Lloyd's List, Trade.gov, Latam News
Everything you need to know is included in our Property Investment Pack for Panama
9) Government's infrastructure investments like the metro system skyrocket property values in connected areas
The government's investment in infrastructure, especially the metro system, is transforming property values in connected areas.
In 2023 and 2024, the expansion of Metro Line 3 is expected to significantly boost property values in places like La Chorrera and Chame. This is because improved accessibility and shorter commute times make these areas more attractive for living and business investments. Historically, properties near metro stations in Panama City, such as Via España and El Cangrejo, have seen a value increase of 10% to 20%, showing how proximity to metro stations can enhance property values.
The Panama construction market is projected to grow at an average annual rate of 5% from 2025 to 2028, largely due to infrastructure projects like the metro system expansion. This growth is expected to further boost property values and demand in connected areas. Neighborhoods like Via España, Bella Vista, and Via Argentina are being promoted as prime locations due to their closeness to metro stations, leading to increased demand for residential properties and higher property values.
Additionally, the metro system expansion is anticipated to create retail opportunities at metro stations. Areas like La Chorrera and Chame are likely to see commercial developments driven by improved accessibility and connectivity. This means more shops, restaurants, and services popping up, making these neighborhoods even more appealing.
For those considering buying property in the country, understanding these dynamics is crucial. The metro expansion not only enhances property values but also opens up new business opportunities in these connected areas. It's a win-win for both residents and investors.
Sources: Panama Realty Zone, GlobalData, Panacrypto