The growth continues in Panama’s middle and lower end Residential Real Estate market
There is still signs of growth in all sectors of the real estate market in Panama City, enjoying a 5% GDP growth in the first quarter of 2017. This growth has been driven partly by government infrastructure plans and recovery in the logistics industry, however tourism has taken a hit and Panama intends to try to lure the tourists back by the end of the year.
Whilst all the real estate market is showing recovery most of the growth (65%) is within the lower end properties i.e. properties below $120,000, these sales seeing pre-construction at around 1,300 per month as opposed to the higher end $600,000 plus are selling around 50 properties a month, this is however an increase of 29% over the same quarter in 2016, the properties in this range attract affluent Panamanian families and the return of buyers from the neighbouring countries such as Mexico and Colombia. The most popular areas are districts such as Santa Maria, Costa de Este and the Pedasi.
According to an article in the New York Times luxury 6 bed beach houses could cost easily $4,5 million in certain areas, partly because some of these are becoming popular holiday destinations with beautiful beaches and offering many water sports. Retirees like these areas as they are close to a number of nature reserves, some even choose to work in their retirement by running businesses based around these beautiful areas.
Adding to this is the fact new hotels have been built coastal side attracting tourists, house prices vary depending on area of course and one can buy a property inland for less than $200,000 whilst for instance in Pedasi Beach area you are looking to buy at no less than $800,000 plus.
Who are the buyers?
The buyers are multinational’s for instance Latin America, USA and Canada are heading up the investors in Panama as there are no restrictions as to who can buy here, in fact unlike some other countries the government offers various incentives to encourage buyers however they need the funds to be available as to find a mortgage in Panama is certainly not easy – you will need residency and the mortgage rates are not favourable. If you have the funds you can purchase through a company or as an individual using an agent is always recommended – a purchase can take between 1-3 months on average to complete.
If you are purchasing to rent out, there are high taxes to consider but your returns would be good, you would expect to realise between 5.7 – 7.3% which is a reasonable return obviously tourist rentals will return more.
As with any property purchase you have to ensure that the property is not encumbered and all the conditions are clear to you, the buyer, also any offers of tax exemptions that are offered by the government are in place before parting with any money, once purchase has completed the deeds are recorded at the Public Registry Office.
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