The Evolving Real Estate Market of Panama

Just a few years ago Panama was considered the second best real estate market in the world behind Dubai mainly because of its strong new condominiums construction and sales.  Since then Dubai’s real estate market collapsed.  While Panama’s condominium sales peaked it never collapsed.  Today there are over 200 new condominium buildings under construction in its capitol Panama City.

While investing in Panama condominiums may no longer be a great opportunity, other chances to make a good investment in Panama real estate exist.

Panama has a long history of attracting foreign investors

Panama Pacifico Free Zone Housing

One opportunity is to provide the much needed future housing for employees of the Panama Pacifico Free Zone being developed by the largest property developer in the United Kingdom, London & Regional Properties (L&R).  L&R is the developer, owner and manager of more than US$20 billion of real estate on five continents.  The Panama Pacifico Free Zone is a 1,400 hectare (3,459 acres) site with an 8,500 foot runway cargo airfield located next to the Panama Canal.  By the time it is completed it will become a small city with corporate and bank offices, high tech manufacturing, call centers, aircraft repair and maintenance services, and export companies.

There are over 125 multinational companies now established there, with over 50 more coming soon.  However, there is little to no residential housing inside of Panama Pacifico for the employees of these companies.

Whenever a large commercial real estate development exists, there is always a need for housing its employees.

Panama City Metro Subway Housing and Commercial Real Estate

Another opportunity arrives in one year when Panama City completes the construction of its new US$1.5 billion subway system.  If you look at major cities around the world with subway systems, you will find that the apartments closest to the subway train stations fetch the highest rents due to the convenience of walking to the subway.  Panama City’s first subway line will be 14 kilometers (8.6 miles) long.  There is a lot of cheap real estate near most of the 16 subway stations.  Invest now and complete the apartment buildings in a year or so to capitalize on the demand to live near a subway station.  Commercial real estate investments will also pay off as businesses surrounding the 16 stations will benefit from increased pedestrian traffic.

Panama’s Rising Tourist Industry

According to Panama’s Ministry of Tourism, the number of tourists who visited Panama rose by 43% between 2006 and 2010.

Panama received 1.7 million visitors in 2010 and received at least 2 million in 2011.  During the first two months of 2012 Panama’s tourism grew by 5.7% compared to the same period in 2011.  Panama expects more than 2.1 million tourists in 2012.

A country whose tourism is growing is a good bet for tourism investments.

Panama offers both Pacific and Atlantic beaches, making it a tourist hot spot

Panama Beach Developments

Opportunities still exist with Panama’s beaches, both on the Pacific and Atlantic side. Some are being developed as resorts with room for more developments.  Because Panama is only between 60 and 177 kilometers (37 to 109 miles) wide both oceans are easily accessible.  There are many sleepy fishing villages next to beautiful beaches waiting to be developed.  Some of these villages are located just a short drive from a small local airport.  Panama has hundreds of islands with pristine beaches waiting to be developed.  Because Panama’s tourism numbers are increasing every year, the sleepy beach towns and villages will eventually be experiencing new resort projects.

Panama Infrastructure Improvements

Panama’s infrastructure is improving which will help all types of investments.  The infrastructure improvements include doubling the passenger capacity with a new terminal at Tocumen International Airport in Panama City which also includes improved cargo terminals for better importation and exportation of goods.  The Panama Canal expansion of a third set of locks to handle bigger ships is expected to be completed in 2014 which will deliver larger cruise ships, depositing more tourists spending additional money for local businesses.  The Canal expansion will also allow larger cargo ships for greater importing and exporting of goods.  Panama’s interior small airports will be expanded. Recently the city of David’s (population of 100,000) local airport was expanded to become an international airport.

Protecting Foreign Investments

Panama is a safe country to invest in.  There are specific laws protecting foreign investors.

Panama’s Constitution Article 44 guarantees the protection of private ownership of real property and private investments: “Private property is guaranteed as long as it is acquired in accordance with the law by natural person or legal entity.”

The Civil Code of Panama regulates all contracts and specifies that Panamanian law applies equally to foreigners and citizens.

In addition, Panama enacted several laws protecting foreign investments.

For instance, Law 54 of 1998 clearly states that foreign investors and the businesses in which they participate in have the same rights as national investors and enterprises, including the freedom of trade, industry, export and import.

Panama has sustained an average 8% yearly GDP growth over the last 5 years

Panama’s Strong Economy

According to an April, 2012 report by the world’s largest bank, HSBC, Panama has sustained an average 8% yearly GDP growth over the past five years making it one of the strongest economies in all of Latin America.

The HSBC report also mentioned that when the Panama Canal expansion is completed in 2014 it is estimated to generate up to 40,000 jobs, increase cargo volume by 35%, and increase toll revenue by US$1.2 billion.  All of these will result in further domestic demand, greater tourism, a stronger international presence and more business opportunities.

It makes sense to invest in a country whose economy is strong and continues to grow.

Real estate investors should be able to make successful investments in a country with a strong economy, rising tourism, good infrastructure, laws protecting foreign investments, beautiful undeveloped beaches and islands, a new metro subway system whose 16 stations will need new businesses and housing, and a small city under construction with a need for housing.

You can’t go wrong by wisely investing in Panama real estate.

For more information on investing opportunities in Panama, check out www.twooceansproperties.com and www.swissmetalassets.com.

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13 Comments

  1. chuck strong January 20, 2013 at 3:49 pm

    Nice information. It would be nice to buy a building from a private owner, or even property from a hectare owner. I have a business in mind, about 20 miles from Panama City, and is looking to buy raw Hectares from a owner. Do you think this is possible.

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