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Everything you need to know before buying real estate is included in our Panama Property Pack
What do the latest numbers reveal about Panama’s real estate market? Are property prices on the rise, or are they stabilizing? Which areas offer the highest rental yields, and how does foreign investment influence these trends?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with developers, real estate agents, and clients who invest in Panama, we’ve gained firsthand insights into these trends. Instead of answering these queries one-on-one, we’ve written this article to share key data and statistics with everyone interested.
Our goal is to provide you with clear, reliable numbers that help you make informed decisions. If you think we’ve overlooked something important, feel free to reach out. Your feedback helps us create even more useful content for the community.
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1) Panama City’s residential rental yield is expected to stabilize at around 6% by 2026
In 2024, the average gross rental yield in Panama City was around 6.78%.
Panama City’s rental market is shaped by its economic landscape. The International Monetary Fund (IMF) expects Panama's GDP to grow by 19.2% over the next five years. This growth could push property values up, potentially causing rental yields to dip slightly as property prices outpace rent increases.
Panama's economy is known for its stability, which is a boon for real estate. However, factors like global economic shifts and local protests can still shake things up. Despite these challenges, the market's overall stability suggests that rental yields might stabilize around 6% by 2026.
Investors eyeing Panama City should consider these dynamics. The city’s economic growth and stability make it an attractive option, but it's crucial to keep an eye on how property values and rents evolve. The expected stabilization of rental yields at around 6% by 2026 offers a promising outlook for potential buyers.
Understanding the local market is key. While Panama's economy supports real estate growth, external factors can influence outcomes. The anticipated stabilization of rental yields reflects a balance between rising property values and rental rates.
For those considering property investment in Panama City, the projected rental yield stabilization at around 6% by 2026 is a significant factor. This trend highlights the city's potential for steady returns amidst economic growth.
Sources: Global Property Guide, Global Property Guide, Latam News
2) Residential property insurance costs in Panama are expected to rise by 4% by 2025
The average cost of residential property insurance in Panama is expected to increase by 4% by 2025.
In 2024, Panama's insurance industry saw a notable growth, especially in the non-life sector, which includes property insurance. This sector grew at a rate of 8.8%, reaching PAB1.5 billion and making up 76.5% of the insurance market. This growth is largely driven by the expanding health insurance segment and broader economic conditions.
While the specific 4% increase in residential property insurance isn't directly mentioned in the sources, the overall growth trends in the insurance market suggest a rise in costs. As the market expands, insurance providers may adjust their pricing to reflect increased demand and economic changes.
As the market expands, insurance providers may adjust their pricing to reflect increased demand and economic changes. This means that as a potential property buyer, you might see a slight uptick in your insurance premiums over the next few years.
Understanding these trends can help you make informed decisions when purchasing property in Panama. It's essential to consider how these changes might impact your overall investment.
Sources: Fitch Solutions, Central America Second Homes, Statista
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’s residential property tax rate is expected to stay around 1% for the next three years
In Panama, the average property tax rate for residential properties is expected to stay around 1% over the next three years.
This stability is largely due to Panama's structured tax system, where property tax rates are progressive. Essentially, the more your property is worth, the higher the tax rate. For example, if your property is valued over $500,001, you’ll be looking at a tax rate of 1%, which is right in line with the expected average.
There are also some perks for homeowners. If your property is your primary residence, you’re in luck. Properties declared as Primary Residence are exempt from taxes up to $120,000. For values above that, the rates are reduced, making it easier on your wallet and helping keep the average rate stable.
Panama also offers a payment schedule with incentives. Discounts for early payments encourage timely tax payments, which helps maintain the consistency of these rates. This setup creates a predictable tax environment, which is a big plus if you're considering buying property there.
All these factors combined mean that the tax burden is manageable for most homeowners. This structured approach ensures that the average property tax rate remains stable, making Panama an attractive option for potential property buyers.
Sources: Cedeymen, ReloFirm, Kraemer Law
4) By 2027, 30% of new residential developments in Panama will feature smart home technology
The smart home market in Panama is booming, with rapid growth fueled by demand for energy-efficient solutions and enhanced home security.
By 2024, the market had already hit $28.1 million, and it's on track to keep expanding at an annual rate of 13.53%. This means more Panamanian households are embracing smart home technologies, which offer both convenience and energy savings.
Looking ahead to 2028, the market is expected to reach $46.7 million. This trend shows that smart home features are becoming a staple in Panamanian homes, driven by the need for modern living solutions.
From 2024 to 2029, the market is forecasted to grow at a rate of 12.88%, with a projected market volume of $51.5 million by 2029. This growth is largely due to increasing consumer awareness and the benefits of smart technologies in everyday life.
By 2027, around 30% of new residential developments in Panama will incorporate smart home technology, reflecting a significant shift in how homes are built and lived in.
As more people recognize the advantages of smart homes, such as improved security and energy efficiency, the adoption rate is expected to rise, making these technologies a common feature in new homes.
Sources: Panacrypto, Statista
5) Foreign buyers in Panama’s residential real estate market are expected to increase by 25% by 2025
The number of foreign buyers in Panama's residential real estate market is projected to increase by 25% by 2025.
Panama has long been a magnet for foreign investors, thanks to its attractive tax laws and strategic location. The pensionado visa program, offering retirees discounts and incentives, has been a significant draw for foreign buyers over the years.
Panama's economy is stable, with a strong service sector and a booming tourism industry, making it a hot spot for real estate investment. The government has been proactive, implementing policies that encourage foreign investment, such as special economic zones and streamlined property purchase procedures.
These factors make Panama an appealing choice for those looking to invest in real estate. The country's strategic location between North and South America adds to its allure, providing easy access to both continents.
Moreover, the government’s efforts to simplify property transactions have made it easier for foreign buyers to enter the market. This, combined with the flourishing tourism industry, enhances Panama's attractiveness as a real estate destination.
With these advantages, it's no surprise that the number of foreign buyers is expected to rise significantly. The combination of economic stability and government incentives continues to draw interest from international investors.
Sources: Knight Frank's Global Residential Cities Index 2023, Colliers International Reports, CBRE Research Reports
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6) Luxury residential properties in Panama are expected to grow by 15% by 2027
The number of luxury residential properties in Panama is expected to increase by 15% by 2027.
This growth is fueled by a rising demand from high-net-worth individuals and a burgeoning middle class. Panama's strategic location, stable economy, and favorable investment policies make it an attractive destination for property buyers. Developers are responding by focusing on high-end amenities like swimming pools, gyms, and smart home technology, which are increasingly popular among buyers.
In urban areas, the trend of constructing residential towers and condominiums is gaining momentum. Developers aim to meet the demand for modern and luxurious living spaces, which is driving the growth of luxury properties. Economic factors also play a significant role in this expansion.
Panama's strong economic growth and stability have led to higher disposable incomes, making it easier for individuals to invest in real estate. With low interest rates and favorable mortgage conditions, property purchases are more accessible. The growing tourism industry in Panama also contributes to the demand for residential properties.
Many visitors are choosing to invest in vacation homes or rental properties, further boosting the market. The combination of these factors creates a robust environment for luxury real estate development. As a result, the number of luxury residential properties is set to rise significantly.
Sources: Statista Market Forecast, Global Property Guide
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.