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Panama is fast becoming one of the best options for international investment, both for internal and global situations. Diversity and vastness are its main features, besides its really low prices, compared to the global market.
When comparing a property in Europe, with another one with exactly the same features in Latin America, we can talk about prices differences that range from four, six, or even ten times cheaper. For example, a two bedrooms apartment in London costs about US$600,000, while a similar one in Panama City, is around US$150,000.
In the long term, terrorism and environmental issues are just some of the reasons to see the whole of Latin America as one of the most safe and sustainable resources in the world.
The Prices for Property in Panama
Property prices in developed countries can’t grow forever. They are more likely to stabilise, if not, to drop after the well known “real estate bubble” bursts.
On the other hand, in Latin America property prices have just started to react to the increase of demand. Despite circumstantial economic ups and downs, price tendencies are definitively on the raise.
Profits for Panama Properties
The average rental yield for a property in Panama is about 10% to 12% a year, over the value of the property, for permanent rentals. For holiday rentals, it may vary, depending on the area the property is located and the demand it faces in a particular period of time. It is commonly higher, but seasonal variations it make it harder to estimate average profits.
In case you need more information or have doubts on any of these issues, the specialised staff in January First Real Estate will be glad to answer all your questions, click here.
Buying Real Estate in Panama
A surge of foreign interest
Mick Jagger has bought on Panama’s Azuerros peninsula (which includes Herrera, Los Santos and Verraguas), so have Bruce Willis and Tommy Lee Jones.
Over the last three years Panama (pop. 2.8 million, GDP/cap US$3,200) has seen an enormous surge of foreign buying interest, pushing up the value of property by 25% per annum, or 60% the three years.
Foreigners love the mild climate, low cost of living, hillside resorts, and sense of peace and security. Plus, Panama has 2,800 kilometers of coasts, extraordinary natural wild life diversity (more bird species than any other country) and more than 1,000 islands of magnificent beaches.
But the country’s reputation as a hot new destination – there are frequent comparisons to Costa Rica of a dozen years ago – is as much based on the fast-paced life-style of Panama City (pop. 800,000) as it is on the beautiful beaches.
Panama City and Donald Trump
Panama City is a city of skyscrapers. Donald Trump is building the 62-story Trump Ocean Club with more than 300 hotel rooms, 500 luxury apartments as well as a casino, yacht club and a private beach.
There is also a race between two rival projects aimed at becoming the tallest building in Latin America. The 104-story Ice Tower, slated to be completed in 2010, is being developed by Panama’s F&F Properties LTDA., Inc, while Spain-based Olloqui Group is constructing a 93-floor building, Palacio de la Bahía, located on the Bay of Panama.
Panama offers first rate infrastructure but the cost of living is 1/5 to 1/10th of the US.
First row sea-front ocean-view new apartments cost around US$2,000 to US$3,000 per sq. m., coming down to US$1,500 per sq. m. for larger apartments of 300-400 sq. m. When you move back from the ocean front, new condo prices come down to US$750-1300 per sq. m. It is advantageous to buy new condos because of the 20-year real estate tax holiday.
Charming old quarters
Yet Panama City also has charming old quarters such as Casco Viejo, a walled area of colonial buildings and lovely plazas, where artists, journalists and the well-bred live – like Ruben Blades. He is a movie star who President Martin Torrijos has drafted in to head the country’s highly successful public relations campaign.
The key to the PR campaign is to shake the memory of the former drug-lord dictator Noriega, and to forefront the establishment of stable democracy since the early 1990s, and the appeal of Panama’s natural resource wealth. Partly as a result of such positive media coverage, e.g., in the Conde Nast Traveler and magazines published by the American Association Retired Persons (AARP), Panama is seeing unprecedented interest from U.S. retirees.
Mountains and beaches
One area which has seen high price rises (25% per annum) and a lot of foreign interest are the hillsides in Chiriqui province and particularly Boquete, which is around 7 hours drive from Panama City. This has very beautiful mountains, rivers, many flowers, and a gentle climate, and is very attractive to US retirees.
The project which brought it fame and generated a lot of publicity was the Valle Escondido development, but there are other mountain areas like Volcano or, much nearer to Panama City, El Valle, which arguably have even more potential.
Another ‘hot spot’ in terms of price appreciation is the coastal road and the beaches running 50 kilometres West out from Panama City. The first development, Coronado, is around 60 years old. Then follows Vista del Mar, Costa Blanca, Buenaventura and Playa Blanca resort, mostly 5-8 years old.
These developments were planned for weekend retreats from Panama City, so they have few restaurants and things close during the week.
Bocas del Toro
Finally, the third area which is attracting interest is the province of Bocas del Toro, which contains a large Archipelago consisting of 68 islands and numerous mangrove keys. Around them are fields of coral, a great variety of marine life and water so emerald in color that Christopher Columbus named the region Veraguas a contraction of verdes aguas (green waters).
Even today most of the archipelago is flush with virgin rainforest, and four species of sea turtle continue to lay their eggs on this beaches, just as they have for thousands of years.
Tourists come to enjoy the islands, to snorkel, scuba dive, and hike in the rainforest. The largest and most developed island is Colón Island, where the capital of the province, Bocas del Toro, is located, which has a large number of hotels, restaurants, entertainment centers and facilities for ecotourism and other adventures.
The US dollar is Panama’s official currency. Coins are a mix of US coins and the Panamanian balboa (converted at US$1 = 1 Panama Balboa).
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