What is the outlook for the real estate market in Panama?

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We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Panama. If you'd like to learn more about us, you can check our presentation page.

What's the current state of property prices in Panama right now?

Property prices in Panama are showing steady recovery as of September 2025, with the Panama City residential market averaging USD 1,804-2,483 per square meter.

Apartments command higher prices at approximately PAB 2,394 per square meter, while houses average PAB 1,399 per square meter. Luxury districts like Casco Viejo, Punta Pacifica, and Costa del Este are experiencing the strongest appreciation rates at 2-4% annually, driven by limited supply and high international demand.

The market has segmented significantly, with premium properties over $250,000 maintaining strong liquidity while affordable and mid-range segments face slower sales due to tighter mortgage approvals and the end of government subsidies. Commercial real estate remains stable with projected overall value at US$51.68 billion in 2025, though showing minimal growth potential.

Vacation and beachfront properties are commanding premium prices, particularly in areas like Playa Bonita, Playa Blanca, and mountain towns like Boquete, where international retiree demand continues to drive appreciation above market averages.

How have prices changed over the past year, and what are the short-term trends?

Panama's property market experienced modest but positive price growth in 2025, with most central neighborhoods seeing increases between 0.8% and 2.4% compared to 2024.

The luxury segment significantly outperformed the broader market, with high-end neighborhoods posting 2-4% annual appreciation rates. However, affordable housing sales dropped 20% in 2024 due to the elimination of government subsidies and stricter lending criteria, though this segment is showing signs of stabilization in 2025.

Rental rates have surged over 10% in many popular neighborhoods, driven by a growing international renter base and limited quality inventory. This rental growth has helped boost gross rental yields to 6-7% citywide, up from 6.4% in 2024.

International buyer demand has increased an estimated 25% since 2023, particularly benefiting from Panama's investor visa programs and the pensionado retiree program. New infrastructure projects, including Metro Line 3, are making previously less accessible areas more attractive to investors.

It's something we develop in our Panama property pack.

What are experts projecting for property prices over the next three to five years?

Expert consensus forecasts moderate growth of 1-2% annual appreciation for most residential properties through 2028-2030, with luxury and prime neighborhoods expected to outperform this average.

The dramatic price growth of over 59% in the past five years is moderating as market excesses have been largely worked out. Rental yields are projected to stabilize around 6% by 2026, with gross yields remaining higher for smaller apartments and properties in high-demand districts.

Commercial real estate faces a very low growth trajectory with only 0.01% CAGR projected through 2029, reflecting a mature but currently unspectacular market. The vacation and resort property segment is expected to maintain above-average appreciation, especially in branded developments and established expat communities.

Market analysts expect the segmentation between luxury and affordable housing to continue, with properties over $250,000 maintaining better liquidity and appreciation potential compared to lower-priced segments that may face ongoing financing challenges.

How does the outlook differ between residential, commercial, and vacation properties?

Which areas of Panama are showing the strongest growth, and which are slowing down?

The strongest growth areas in Panama are concentrated in established central neighborhoods and premium destinations that attract international buyers.

High-growth areas include Panama City's central districts like El Cangrejo, San Francisco, Obarrio, and Costa del Este, which benefit from new transportation infrastructure and business investment. Luxury neighborhoods such as Casco Viejo, Punta Pacifica, and Santa Maria continue to post the highest appreciation rates with prices exceeding $4,000 per square meter.

Coastal and mountain vacation destinations are also experiencing strong growth, particularly Playa Blanca, Playa Bonita, Rio Hato along the coast, and Boquete in the highlands. These areas benefit from sustained international retiree and vacation home demand.

Conversely, suburban sprawl developments and some new luxury condo projects are experiencing slower growth or oversupply conditions. Pre-construction units and poorly located projects often require significant discounts to attract buyers, particularly in areas lacking established infrastructure or community amenities.

How do rental yields vary by neighborhood and property type?

Rental yields in Panama vary significantly by location and property type, with the citywide average gross yield reaching 6.84% in Q2 2025, up from 6.4% in 2024.

Studios and one-bedroom apartments typically generate the highest yields at 5-12% depending on neighborhood, with the wide range reflecting location quality and tenant demand. Two-bedroom properties generally yield 4-8%, while larger units may see lower percentage returns despite higher absolute rental income.

Mid-range apartments in established neighborhoods often provide the best risk-adjusted returns due to very low vacancy rates and steady tenant demand. Central Panama City neighborhoods consistently outperform suburban areas for rental yields, benefiting from proximity to business districts and transportation.

Beach and vacation rental properties can generate higher yields but with greater seasonality and management complexity. Mountain retirement communities like Boquete show steady rental demand from long-term expatriate tenants, though yields may be lower than urban properties.

Properties targeting the international renter market, particularly those with modern amenities and English-speaking property management, command premium rents and typically achieve yields at the higher end of their respective ranges.

What are the current levels of demand from international buyers compared to locals?

International buyer demand has surged dramatically, increasing an estimated 25% since 2023 and now representing a significant portion of premium property transactions in Panama.

The demand is primarily driven by U.S., Canadian, and European buyers taking advantage of Panama's investor visa programs and the pensionado retiree program. These buyers particularly favor luxury properties in Panama City, beachfront developments, and mountain retirement communities like Boquete.

Local demand has been more constrained, especially in the affordable and mid-range segments where tighter mortgage approvals and the end of government subsidies have reduced purchasing power. However, local buyers remain active in established neighborhoods and continue to drive demand for rental properties.

The international buyer preference for turnkey properties, modern amenities, and properties with clear title has created a two-tier market where international-grade properties significantly outperform those targeted primarily at local buyers. This trend is expected to continue as Panama's residency programs remain attractive to foreign investors and retirees.

How are new construction projects and government policies likely to impact supply?

New construction activity in Panama continues at a measured pace, with developers focusing more on quality over quantity compared to the pre-2020 building boom that created oversupply in certain segments.

Government infrastructure investments, particularly Metro Line 3 and road improvements, are opening new areas for development and increasing property values in previously less accessible neighborhoods. However, stricter environmental regulations and permitting processes have slowed the pace of new coastal developments.

The government's continued support for investor visa programs and the pensionado retiree program is maintaining steady demand that helps absorb new supply, particularly in the luxury and expat-targeted segments. Banking regulations have tightened lending standards, which reduces speculative construction but ensures more sustainable development.

Current oversupply exists primarily in luxury high-rise condominiums and some pre-construction projects, but inventory is tightening in central and mid-range segments. Developers are increasingly focusing on smaller, well-located projects rather than large-scale developments that contributed to previous oversupply.

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What are the financing options and typical mortgage rates available to buyers today?

Mortgage rates in Panama currently range from 6-8% for qualified borrowers, with banks requiring substantial down payments typically ranging from 20-30% for foreign buyers.

Local banks such as Banco General, Banistmo, and Banco Nacional offer mortgages to foreigners, but require extensive documentation including proof of income, bank statements, and often a Panamanian guarantor. The loan-to-value ratios are typically more conservative for non-residents.

International banks with operations in Panama may offer more favorable terms to existing customers, and some developers provide direct financing options for new construction projects, though these often carry higher interest rates.

Alternative financing through developer financing programs can range from 8-12% interest rates but may offer more flexible qualification criteria. Cash purchases remain common among international buyers and often result in better negotiating positions and faster closings.

It's something we develop in our Panama property pack.

If I want to buy to live in, which areas and property types make the most sense right now?

For primary residence purposes, established neighborhoods in Panama City offer the best combination of amenities, infrastructure, and long-term value retention.

El Cangrejo, San Francisco, and Obarrio provide excellent access to business districts, shopping, and healthcare while maintaining reasonable price points compared to ultra-luxury areas. These neighborhoods offer modern apartments and condominiums with good rental potential if circumstances change.

For retirees or those seeking a quieter lifestyle, Boquete in the mountains provides a well-established expat community, cooler climate, and significantly lower cost of living. Coastal areas like Playa Blanca offer beachfront living but require careful consideration of hurricane exposure and infrastructure limitations.

Modern apartments in 10-20 story buildings generally offer the best value for money, providing security, amenities, and lower maintenance compared to houses. Properties built after 2010 typically feature better construction standards and modern electrical/plumbing systems that meet international standards.

If I want to buy to rent out, what budget range and locations are likely to give the best returns?

For rental investment purposes, mid-range apartments in central Panama City neighborhoods typically provide the best risk-adjusted returns with gross yields of 6-8%.

The optimal budget range appears to be $150,000-$300,000 for apartments that attract both local and international tenants. One and two-bedroom units in this range maintain the highest occupancy rates and lowest vacancy periods.

Neighborhoods like El Cangrejo, Via España, and areas near the business district consistently generate strong rental demand. Properties near Metro stations command premium rents and have lower vacancy rates due to improved accessibility.

Short-term vacation rentals in beach areas like Playa Blanca or mountain areas like Boquete can generate higher yields but require active management and face greater seasonal fluctuations. The emerging digital nomad market is creating demand for furnished, well-equipped apartments in central locations with reliable internet infrastructure.

If I want to buy to resell later, what are the most promising strategies and time horizons?

For capital appreciation strategies, luxury properties in established neighborhoods offer the most promising long-term prospects with 3-5 year minimum holding periods recommended.

Properties in Casco Viejo, Punta Pacifica, and Costa del Este have demonstrated consistent appreciation and maintain strong international buyer interest. These areas benefit from limited supply and continued infrastructure improvements that support long-term value growth.

Pre-construction purchases in well-located projects can offer significant upside potential, but require careful developer selection and market timing. Properties near planned infrastructure improvements, particularly new Metro lines, present opportunities for appreciation as accessibility improves.

Beach and vacation properties in established destinations like Playa Blanca offer good appreciation potential for 5-10 year holds, particularly as Panama's tourism infrastructure continues developing. However, these markets can be more volatile and require longer holding periods to realize optimal returns.

It's something we develop in our Panama property pack.

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.

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.

Sources

1. Global Property Guide - Panama Price History
2. The LatinVestor - Panama City Price Forecasts
3. Properstar - Panama House Prices
4. Statista - Panama Commercial Real Estate
5. Panama Sovereign - Real Estate Market Forecast
6. Expat-tations - Panama Real Estate Q1 2025
7. Limitless Legal - Best Areas to Invest Panama 2025
8. The LatinVestor - Panama Real Estate Market
9. Ingwe - Panama Property ROI Analysis
10. The LatinVestor - Panama Price Forecasts