During last few years a lot of existing units were absorbed and finally we can see some really interesting projects both high-rise and low-rise appearing on the market. Nevertheless, the strongest sector of the market is made up mostly of resales in buildings in waterfront areas that have little or no more land to build on, such as Punta Pacifica.
Of more than 80 new projects underway throughout Panama City, about 20 percent are luxury high-rises. The luxury market begins around $350,000, the average price for a one-bedroom apartment at the Trump Tower.
Five percent of the market is above $1 million. Ten percent falls in the $500,000 to $1 million range, and 85 percent is under $500,000. What is most notable, from a global perspective, is what $1 million buys in Panama compared to what $1 million buys in the U.S. or in other corners of the globe.
From 2005 to 2010, Panama experienced an unprecedented construction and economic boom. During those years the real estate market was overheated, the projects were even before the construction phase began. From 2010 to 2013 we saw a substantial price correction, and the market has had time to cool down and recover. Since then the middle class and high-end market has stable appreciation 4 to 7% annually depending on each project. Given the steady growth of the economy, as well as major changes in the country's infrastructure, we see no reason for the situation to change or become worse in the coming years. In all likelihood, real estate investments will remain a secure investment with a moderate value growth.
Perhaps we could expect a sharp inrease from US buyers in the beginning of 2017. A lot of them are now waiting for the the results of upcoming elections in November.
Who buys in Panama City
Most foreign buyers come from the United States, Canada, Venezuela and Colombia. The majority are investors, though he has seen a recent uptick in buyers from Spain and Italy, but they tend to relocate to Panama with an idea of starting their own business.
For expatriates, the lower cost of living, getting “out of the rat race” and political factors are major motivators.
Basic information about buying real estate in Panama
- Foreign buyers have the same property rights as Panamanians.
- Panama encourages foreign direct investment in real estate, with incentives such as property tax exemptions.
- Mortgages can be difficult to obtain, and the process can take two to three months. More than 80 percent of transactions involving foreign buyers are in cash.
- Real estate commissions, paid by the seller, are 5.35 percent of the sales price, covering the broker fee and the sales tax on it. Sellers pay a 2 percent transfer tax and 3 percent for capital gains tax.
