Anyone investing in Panama?
Investor · Chiang mai, Chiang Mai · Member since 2016 · 7 posts · 5 votes
In Panama city, or smaller towns in the country. I've been looking into it recently and checking several options, talking to some locals and expats who invested here. There is a big plus that everything is in USD and taxes are low.
What do you think?
2021 Update on Panama:
Investing in Real Estate here is very different than in the U.S. The Panama City market has been sliding forever thus why I never recommend buying much in the city except if you want to move here (still...renting makes more sense at the moment)
Investing in the city really only comes down to doing a STR business based either on leverage or co-hosting models as rents are extremely low and there is SO MANY apartments and houses that are empty, doing nothing for 2 or more years.
In fact I started investing in this until 2020 of course.
For the moment I would recommend doing your homework, calling people up, make some connections, hire a RE lawyer and start looking at prices for STRs WHEN the lockdown is over, which is impossible to know as of today.
This is not the time to invest, it is the time to research and have negotiations down for when the pandemic is over.
If you are more of a developer there is affordable housing projects that makes sense to participate or build with a group as more people need affordable houses and regrettablely a high percentage will have to "downgrade"
Vacant land is usually a good long term business. Never buy a Right of Possession, just never do that. As an investor that is WAY too early and extremely complicated to achieve the transition to a Title.
If you guys need a call with me to clarify anything let´s share a virtual coffee (or beer, depending on time) and talk some Real Estate.
@micheal bereslavsky
Good afternoon,
I would also be interested to find out if there is anyone who could shine some light on there experience in investing in Panama. I am also a Panama resident, and have been trying to secure some additional properties in America, but it would be nice to keep it closer to "home". Have you had any luck?
My husband and I just made a trip down and toured a number of what seemed like attractive options, spanning neighborhoods including Avenida Balboa, Costa del Este, and Clayton (among others). While rental ROI appears to be attractive even after carrying costs, the 11% transfer tax when you sell seems like a turn off. I haven't been able to find any like-minded folks to discuss their view on this, and would LOVE to connect if there are any out there!!
Hello. I am a venezuelan living in Panama for 10 years now. I work in Real estate and have broad experience helping expats and investors to find the best properties that suit their needs. 10 years ago, anything you could buy was a great investment, in terms of return, valuation, and resale opportunity. Things have changed a lot. Market is right now at a historic low, so its time to invest. There are still superb oportunities, but if you come and buy without advise, it could end to a disaster.
I worked as a Panama real estate agent for several years and provide content writing and marketing services for Keller Williams (KW) Panama.
The property transfer sales tax is actually 2% of the total value of the property and not 11% as another comment suggested.
Yes, the Panama real estate market is low after experiencing a boom for nearly 10 years. Which many real estate experts claim is the best time for investors to buy and hold onto until the market rebounds.
With the Panama Canal reporting record income and numerous infrastructure projects in the works (like a 2nd Metro Subway line in Panama City) along with highways and the main airport expansion; the market should rebound in a year or two.
My projection is: Market will continue to slide until presidential election in mid 2019. There is a strong negative sentiment with current government that will be instantly overcome with new government whoever will be.
There are great opportunities nowadays. Buyers are offering way lower prices than actual, and sellers are accepting. This means you can buy now at next year´s price and start profiting.
There are also amazing foreclosure deals. But these generally must be in cash.
2021 Update on Panama:
Investing in Real Estate here is very different than in the U.S. The Panama City market has been sliding forever thus why I never recommend buying much in the city except if you want to move here (still...renting makes more sense at the moment)
Investing in the city really only comes down to doing a STR business based either on leverage or co-hosting models as rents are extremely low and there is SO MANY apartments and houses that are empty, doing nothing for 2 or more years.
In fact I started investing in this until 2020 of course.
For the moment I would recommend doing your homework, calling people up, make some connections, hire a RE lawyer and start looking at prices for STRs WHEN the lockdown is over, which is impossible to know as of today.
This is not the time to invest, it is the time to research and have negotiations down for when the pandemic is over.
If you are more of a developer there is affordable housing projects that makes sense to participate or build with a group as more people need affordable houses and regrettablely a high percentage will have to "downgrade"
Vacant land is usually a good long term business. Never buy a Right of Possession, just never do that. As an investor that is WAY too early and extremely complicated to achieve the transition to a Title.
If you guys need a call with me to clarify anything let´s share a virtual coffee (or beer, depending on time) and talk some Real Estate.
Investing in Panama City would work out for short term rentals because you could pay for the holding costs and maybe profit nicely while hopefully the value of your property increases over the long term.
Unfortunately, it’s illegal to rent for less than 45 days and personally I’d never suggest anybody gets into an illegal business overseas.
I’ve come across a couple rare buildings in Costa del Este who have a permit but, as you could expect, it’s reflected in the price.
What about smaller beach towns? It sounds like more people are beginning to leave the city for smaller towns both coastal and in the mountains. That, coupled with a growing ex-pat presence, makes smaller coastal and mountain towns seem like a great place to buy land. What are your guy's thoughts?
It looks like land value has gone down over the last few years in some towns - what would explain this?
Investing in Panama City would work out for short term rentals because you could pay for the holding costs and maybe profit nicely while hopefully the value of your property increases over the long term.
Unfortunately, it’s illegal to rent for less than 45 days and personally I’d never suggest anybody gets into an illegal business overseas.
I’ve come across a couple rare buildings in Costa del Este who have a permit but, as you could expect, it’s reflected in the price.
That is absolutely true, it is illegal in the City of Panama for less than 45 days. The good news is that you can put it in airbnb and such for 45 days and it would be fine, legal and before 2020 the most asked about "short terms" where for three to six months. Still very good.
The buildings in Costa del Este will have hotel permits when (and if) they are finished, they are under construction but yes, the high price I do not think justifies the purchase.
The other thing is I wouldn´t buy except that you come across a rent to buy deal which are more common everyday.
Any information about beachfront pacific beaches in Chiriqui would be helpful. Thanks!
What about smaller beach towns? It sounds like more people are beginning to leave the city for smaller towns both coastal and in the mountains. That, coupled with a growing ex-pat presence, makes smaller coastal and mountain towns seem like a great place to buy land. What are your guy's thoughts?
Hey Scott,
That is what I recommend if you want to buy: smaller towns.
The prices are already fair and they are sliding every day. Why?
The short answer is that the prices although low did not justify for a proper business model.
The long version is that since the early 2000s there was a boom in Panama City which followed a frenzy of buying land for no reason other than to buy land, buyers from across the globe where buying tons of land for no business purpose but a land investment.
And it was a succesful business model for the "land flipper" until prices soared, then a mix of events bursted the bubble. From Panama Papers to a dwingling economy worldwide it became evident prices where for the most part at their peak.
Farm owners in coastal areas now wanted to sell for prices meant for only big developers. Big developers where not investing as much anymore, land flippers where left with unwanted inventory and if you for example now wanted to do an agricultural business and bought land in some places, the math would never makes sense.
The good thing is as you mentioned some small towns are thriving because of the expat presence, similar to what happens in the US with "gentrification" the expats attract the digital nomad crowd that works from the beach, surfs, love great coffee shops and restaurants etc. So Venao, Pedasí, Boquete, Catalina and newcomers like Nomad Beach, Coco Beach and Torio are making waves.
Any information about beachfront pacific beaches in Chiriqui would be helpful. Thanks!
Hey Damaso,
Most beachfront properties in Chiriqui will be in the Gulf of Chiriqui.
It is a beautiful zone, underdeveloped that will grow to the heights of Venao in a couple years.
As it is underdeveloped the prices should be low, still, there are many developers that have higher prices which begs the question:
Are you asking as a risk taker or a moderate investor?
If you tolerate riskier investments then buying a lot or vacant land (Titled, always titled) has a bigger potential return on the other hand if no more development occurs in the area then you will be left with a more long term investment. Still, a great area to invest in my opinion.
Now if you are a moderate investor then buying vacant land is too risky. You might check Coco Beach, I think they have a good project in this area and the Torio project in the area of the same name might interest you too. It seems like Torio is going to happen sooner than the Gulf, just food for thought there.
Happy to assist
What about smaller beach towns? It sounds like more people are beginning to leave the city for smaller towns both coastal and in the mountains. That, coupled with a growing ex-pat presence, makes smaller coastal and mountain towns seem like a great place to buy land. What are your guy's thoughts?
Hey Scott,
That is what I recommend if you want to buy: smaller towns.
The prices are already fair and they are sliding every day. Why?
The short answer is that the prices although low did not justify for a proper business model.
The long version is that since the early 2000s there was a boom in Panama City which followed a frenzy of buying land for no reason other than to buy land, buyers from across the globe where buying tons of land for no business purpose but a land investment.
And it was a succesful business model for the "land flipper" until prices soared, then a mix of events bursted the bubble. From Panama Papers to a dwingling economy worldwide it became evident prices where for the most part at their peak.
Farm owners in coastal areas now wanted to sell for prices meant for only big developers. Big developers where not investing as much anymore, land flippers where left with unwanted inventory and if you for example now wanted to do an agricultural business and bought land in some places, the math would never makes sense.
The good thing is as you mentioned some small towns are thriving because of the expat presence, similar to what happens in the US with "gentrification" the expats attract the digital nomad crowd that works from the beach, surfs, love great coffee shops and restaurants etc. So Venao, Pedasí, Boquete, Catalina and newcomers like Nomad Beach, Coco Beach and Torio are making waves.
Awesome, thank you for this thought out advice! It seems like Panama went through its own bubble where prices just skyrocketed due to an unwarranted level of demand and eventually it did/is coming back down to reality. Trees can't grow to the sky haha
Those several towns you mentioned - as both a buyer looking for a place to live several months out of the year and then turn into a rental for the unused months - are good spots for exactly that, correct?
Thanks Alex!
What about smaller beach towns? It sounds like more people are beginning to leave the city for smaller towns both coastal and in the mountains. That, coupled with a growing ex-pat presence, makes smaller coastal and mountain towns seem like a great place to buy land. What are your guy's thoughts?
Hey Scott,
That is what I recommend if you want to buy: smaller towns.
The prices are already fair and they are sliding every day. Why?
The short answer is that the prices although low did not justify for a proper business model.
The long version is that since the early 2000s there was a boom in Panama City which followed a frenzy of buying land for no reason other than to buy land, buyers from across the globe where buying tons of land for no business purpose but a land investment.
And it was a succesful business model for the "land flipper" until prices soared, then a mix of events bursted the bubble. From Panama Papers to a dwingling economy worldwide it became evident prices where for the most part at their peak.
Farm owners in coastal areas now wanted to sell for prices meant for only big developers. Big developers where not investing as much anymore, land flippers where left with unwanted inventory and if you for example now wanted to do an agricultural business and bought land in some places, the math would never makes sense.
The good thing is as you mentioned some small towns are thriving because of the expat presence, similar to what happens in the US with "gentrification" the expats attract the digital nomad crowd that works from the beach, surfs, love great coffee shops and restaurants etc. So Venao, Pedasí, Boquete, Catalina and newcomers like Nomad Beach, Coco Beach and Torio are making waves.
Awesome, thank you for this thought out advice! It seems like Panama went through its own bubble where prices just skyrocketed due to an unwarranted level of demand and eventually it did/is coming back down to reality. Trees can't grow to the sky haha
Those several towns you mentioned - as both a buyer looking for a place to live several months out of the year and then turn into a rental for the unused months - are good spots for exactly that, correct?
That´s correct Scott! In those towns is where the STRs entrepreneurs usually invest, they are mostly digital nomads as well and they come for the summer go when it rains, and when it rains locals fill the spot with some tourist to boot.
What about smaller beach towns? It sounds like more people are beginning to leave the city for smaller towns both coastal and in the mountains. That, coupled with a growing ex-pat presence, makes smaller coastal and mountain towns seem like a great place to buy land. What are your guy's thoughts?
Hey Scott,
That is what I recommend if you want to buy: smaller towns.
The prices are already fair and they are sliding every day. Why?
The short answer is that the prices although low did not justify for a proper business model.
The long version is that since the early 2000s there was a boom in Panama City which followed a frenzy of buying land for no reason other than to buy land, buyers from across the globe where buying tons of land for no business purpose but a land investment.
And it was a succesful business model for the "land flipper" until prices soared, then a mix of events bursted the bubble. From Panama Papers to a dwingling economy worldwide it became evident prices where for the most part at their peak.
Farm owners in coastal areas now wanted to sell for prices meant for only big developers. Big developers where not investing as much anymore, land flippers where left with unwanted inventory and if you for example now wanted to do an agricultural business and bought land in some places, the math would never makes sense.
The good thing is as you mentioned some small towns are thriving because of the expat presence, similar to what happens in the US with "gentrification" the expats attract the digital nomad crowd that works from the beach, surfs, love great coffee shops and restaurants etc. So Venao, Pedasí, Boquete, Catalina and newcomers like Nomad Beach, Coco Beach and Torio are making waves.
Awesome, thank you for this thought out advice! It seems like Panama went through its own bubble where prices just skyrocketed due to an unwarranted level of demand and eventually it did/is coming back down to reality. Trees can't grow to the sky haha
Those several towns you mentioned - as both a buyer looking for a place to live several months out of the year and then turn into a rental for the unused months - are good spots for exactly that, correct?
That´s correct Scott! In those towns is where the STRs entrepreneurs usually invest, they are mostly digital nomads as well and they come for the summer go when it rains, and when it rains locals fill the spot with some tourist to boot.
Perfect! That's good news, as that is exactly what we aim to do. How important is it to have something that is beachfront or very close versus a property that is roughly within walking distance (under a mile to the beach)?
Investing in Panama City would work out for short term rentals because you could pay for the holding costs and maybe profit nicely while hopefully the value of your property increases over the long term.
Unfortunately, it’s illegal to rent for less than 45 days and personally I’d never suggest anybody gets into an illegal business overseas.
I’ve come across a couple rare buildings in Costa del Este who have a permit but, as you could expect, it’s reflected in the price.
That is absolutely true, it is illegal in the City of Panama for less than 45 days. The good news is that you can put it in airbnb and such for 45 days and it would be fine, legal and before 2020 the most asked about "short terms" where for three to six months. Still very good.
The buildings in Costa del Este will have hotel permits when (and if) they are finished, they are under construction but yes, the high price I do not think justifies the purchase.
The other thing is I wouldn´t buy except that you come across a rent to buy deal which are more common everyday.
@Alex Garrido
Thanks for that Alex. I assume your suggestion of rent to buy is because you expect prices to drop further? Thanks
Investing in Panama City would work out for short term rentals because you could pay for the holding costs and maybe profit nicely while hopefully the value of your property increases over the long term.
Unfortunately, it’s illegal to rent for less than 45 days and personally I’d never suggest anybody gets into an illegal business overseas.
I’ve come across a couple rare buildings in Costa del Este who have a permit but, as you could expect, it’s reflected in the price.
That is absolutely true, it is illegal in the City of Panama for less than 45 days. The good news is that you can put it in airbnb and such for 45 days and it would be fine, legal and before 2020 the most asked about "short terms" where for three to six months. Still very good.
The buildings in Costa del Este will have hotel permits when (and if) they are finished, they are under construction but yes, the high price I do not think justifies the purchase.
The other thing is I wouldn´t buy except that you come across a rent to buy deal which are more common everyday.
@Alex Garrido
Thanks for that Alex. I assume your suggestion of rent to buy is because you expect prices to drop further? Thanks
Hey Mike it seems I missed that last question! I expect prices to drop further and the rents have dropped already. I think we will see a selling frenzy by August maybe earlier which leads us to think there will be more of these "rent to buy" deals as most owners will be looking for cash.
Thanks Alex! Great Info
Thanks Alex! Great Info
My pleasure Damaso!
Hi Michael,
I live, work and invest in Panama and think it is an emerging market. I noticed this post was 7 years ago. Are you still considering or have you invested here? I am located in Bocas del Tor and happy to chat.
I can discuss this. Where did you come up with 11%? The transfer tax is 5% and composed of 2% transfer tax and 3% capital gains. Maybe you are including the realtor commissions which can be 5% or more.
Dylan, I live, work and invest in Panama and would be happy to discuss