In Panama city, homes of the middle to lower-end variety, are doing well though, showing strong signs of growth. Unlike downgraded Brexit Britain, Panama enjoyed a 5% GDP growth in the first quarter of 2017, according to the World Bank. The country's economic boom is partly driven by government-led infrastructure projects, but also fuelled by a recovery of the logistics industry, the World Bank's report stated. What has affected the markets negatively is a downturn in tourist numbers, but new campaigns to attract tourists from Europe and the US should begin to show results by the end of the fourth quarter.
Most residential property sold in Panama city was in the below $120,000 segment. On average, the pre-construction market sees around 1,300 sales per month. Of these 65% are for the lower end of the property market.
At the other end of the scale, the $600,000 plus market segment saw an average of 50 properties a month sold in the first quarter of 2017 and this trend was forecast to continue. Compared to the same quarter in 2016, this was a 29% increase. According to developers, most of these properties were purchased by affluent young Panamanian families, with a reassuring return of buyers from Colombia, Mexico and Venezuela adding the the upward trend.
Most luxury sales happened in Panama city's most popular districts, Santa Maria and Costa del Este, where numerous housing projects were under way this year. Up-and-coming areas outside Panama city include Pedasi.
In an article run by the New York Times in August 2017, luxury properties such as 6-bed beach houses can easily costs $4.5 million in Pedasi, which lies on the south-eastern tip of the Azuero Peninsula of Panama. The former fishing village attracts wealthy buyers because the Peninsula is becoming very popular as a holiday destination. Pedasi is now a town with around 4,000 permanent residents. Famous for its pristine beaches, fantastic surfing, sport fishing and diving, Pedasi is also a favourite with retirees, because it is close to several national parks and nature reserves such as the Isla Iguana Wildlife Refuge. This means they can run a lucrative tourism business in their "retirement".
New homes and hotels have been built along the coast in recent years to attract more tourism. Tocumen International Airport, which is not only a regional hub but also one of Central America's busiest airports, is ca. 225 miles away, but the smaller Pedasi Airport lies just outside the town.
Real estate agents Sotheby's predicted sales would rise by ca. 6% this year, as buyers, especially overseas house buyers, were returning in greater numbers and with more confidence. Luxury properties near Pedasi Beach start at around $800,00, according to Sotheby's, but further inland it gets a lot cheaper. Here two-bedroom, two-bathroom houses can be found for less than $200,000.
Who buys Panamanian residential real estate?
Mainly overseas buyers from the USA, Canada, Europe and Latin America. There are no restrictions to buy real estate in Panama as a foreigner. The Panamanian government has introduced various incentives such as property tax exemptions to stimulate investment and new developments.
However, finding a local mortgage lender can be problematic, according to estate agents. Loan terms are typically less attractive than those offered in the US for example. Buyers in search of local finance must have Panamanian residency, or Panamanian banks are not keen to grant mortgage approval.
Buyers can purchase as an individual or via a corporation established in Panama. Estate agents recommend that buyers hire a real estate lawyer who can guide them through the whole process, which typically takes one to three months to complete.
The Global Property Guide reported at the end of 2016 that, "despite high taxes, prices are firm and yields are good" in Panama. Although generally gross rental yields had declined a little over the past few years, in Panama city they were still good by international considerations. Here yields ranged from 5.7% to 7.3% in the final quarter of 2016, with smaller beach front apartments tending to yield more, as they are typically rented by tourists.
Buyers should make sure a clear title comes with the property before parting with any money, and should verify if the government is offering any property tax exemptions on that particular property, as this can vastly reduce buying costs. Ownership is usually completed once a deed is recorded at the Public Registry Office.