The country is determined to increase its tourism capacity and since 1997, the number of hotel rooms in Panama City alone has increased from 1,400 to more than 15,000, according to STR Global. The country currently receives around 2.1 million tourists each year and initial projections for 2013 suggest the there will be ten per cent growth.
According to the Global Property Guide, the average cost of an apartment in Panama stands at $2,015 (£1,249 approximately) per square foot. With rents at $1,692, yields are high at 8.4 per cent. Demand levels are also likely to improve as economic growth becomes more stable. Government figures show Panama's economy expanded by 7.6 per cent in the second quarter of the year, led by activity in transport and communications, Reuters reported. Increased activity in the construction and mining sectors is also helping drive growth.
While growth in Q2 2013 is below that experienced in 2012 when the economy expanded by 10.8 per cent, the global financial crisis and the delay of the opening of the Panama Canal expansion has been largely to blame. Once this is turned around in the future, growth is likely ramp up.
Of course there are still risks in the economy that investors need to be aware of, Reuters explained. Panama has been affected by the dispute between its trading partners Columbia and Venezuela. This has disrupted the Colon Free Trade Zone, which is the largest duty-free area after Hong Kong.
However, Frank De Lima, finance minister for Panama, isn't too worried about future prospects: "Compared to global and regional growth, Panama has been growing almost three times as much. We see a soft landing expected in the near future, but still higher than average growth in the next couple of years."