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.
Don't wait. We are heading to another boom
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?
Yes, the growing expat communities in the mountains and beaches are the way to go.
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?
I think Bocas del Toro is a perfect place to have a place to live for several months and then rent it out the rest of the time. With good management in place, it can be profitable.
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)?
It is very important to choose on or close to the beach or sea. In Bocas beachfront building is limited. You can however, build with ocean views, within walking distance or even over the sea on pilings.
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.
Hi Mike, Yes I was here for the first Boom and now it is ready to take off again over the next 10 to 20 years. In my opinion, there is still a lot of opportunity here. Do you live here?
Hi Anne-Michelle, I guess neither of us (and nobody for that matter) know what's going to happen in the next 10 - 20 years. I don't live in Panama but I know people who invest there and I've visited to form my own opinion. There are opportunities indeed but it really depends on what people are looking for, as it always does. Personally, I was looking for a second market in Central America, being mostly active in Mexico but I decided to keep my focus on Mexico within the region and clearly that was the right decision to make.
Mike,
I'm glad Mexico was the right decision for you. Everyone has their own dream and criteria. I did some investing there and made some money but I just didn't like the government or the cartels. I do live here and have for a long time. Panama has been good to me and I'm sticking with what I know and have been successful with..
@Anne-Michelle Wand I was replying to your question from a personal point of view and was in no way suggesting that you should switch investing in Panama for Mexico. To each their one indeed.
On another note, I'm surprised about your comment about the cartels, especially since you lived in Mexico and I don't see the connection with real estate investing. I don't deal with drugs and neither do the many investors and other people I know who live or spend time there, whether locals or foreigners. As a result, none of us has had anything to do with them and I don't remember ever having a discussion with anyone about the cartels when in Mexico. But I know many people who haven't invested over the last few years because of the cartels and who bitterly regret it given what the market has done there.
As to the government, I'm not sure what your issue is and when you lived there. Since 2018, Mexico has had its most leftist government in decades and yet it's been very friendly to foreign investors. Don't you love a country in which even the left (so basically everybody in total) supports and welcomes foreign investors? Moreover, Mexico recently has had one of the world's best economic performances, with an unemployment rate well below that of the US.
I applaud your detailed knowledge of Mexico and was just expressing my preferences too. In reference to the cartels, I have friends in Mexico who say that in certain areas, the cartels are taking properties from foreign buyers with no recourse. My son lived there for 8 years and we invested successfully. I do appreciate when a country welcomes foreign investors and it sounds like Mexico and Panama both do. Panama's GDP is positive and its inflation low. So as you said, to each his own. Thanks for your reply.
@Anne-Michelle Wand You're welcome. There's no question that Panama is a country that has done extremely well for itself. It's implemented smart policies and is very welcoming to foreigners, to say the least. It's a great place to live and/or retire for the right kind of people. That doesn't necessarily translate in high real estate investment returns but you can make some money investing in real estate there (like it seems you do) and so it makes perfect sense that you do that since you live there.
Those like me who don't live in Panama are likely purely looking at figures and comparing risk-adjusted returns with other countries where they can invest. We might consider the lifestyle aspect if it's a place where we want to go back regularly.
Speaking of Mexican cartels, I've been going to Mexico for more than 20 years, know a huge number of people who invest and work in real estate across the country and I've never heard about cartels taking over properties. I would always take comments like "I have friends who say..." and probably heard from someone else with the necessary pinch of salt. The rules in Mexico when it comes to cartels are pretty simple: 1) you don't go in the (well-known) areas that they kind of control and 2) you don't deal with them or with things like drugs in which they are heavily involved. If you plan to respect these rules, cartels shouldn't be a concern. If you don't, getting your property taken over might end up being the least of your worries, if you see what I mean.
Makes total sense Mike. Thanks for the conversation.