Panama Real Estate Property Market Update July 2023

The Panama City, Panama real estate market continues to show an increase in property values compared to this time last year due mostly to decreasing inventory. In fact, the average number of transactions per building is up by more than 30% (source: Public Registry of Panama).

Condos for sale in AAA buildings such as Allure at the Park have seen the price per meter closed-sale prices go from an average of $1,890/m2 in 2021 to an average of $2,139/m2 or a 13% increase over the last 24 months.

New inventory aka recent project completions of homes and condos for sale in Panama City also shows a reduction of 20%, according to Galeria Inmobiliaria International’s April report. This, combined with fewer new construction project starts could make for a very interesting next 12-24 months in the Panama City, Panama real estate market.

Demand from foreign buyers also continues to trend upwards, fueled by political angst in places like the United States and Canada as well as continued concern about regional security from European buyers. Stability and safety continue to be a top concern. A weakening Dollar is also bringing in foreign buyers.

Storm Clouds On The Horizon?

There are, however, a few storm clouds we are tracking. Namely the increase in newly finished, unsold inventory which is currently hovering around 4,200 units. This number is up by over 10% from the same period as last year and currently represents 28% of the total inventory both planned, in construction and completed.?

Some of this increase can be attributed to a tightening credit market for new home purchases, mostly from local buyers. Interest rates have also gone up by 50 basis points over the last 12 months.

Foreign buyers for real estate in Panama generally tend to favor an all-cash purchase.

The Local Economy and Political Climate

Panama’s political scene generally starts to get interesting around this time, as the presidential candidates start posturing for next year’s presidential elections.

While it is way too early to start trying to call the election, current front runners include two former presidents: Martin Torjios and Ricardo Martinelli.

Torrijos, who was president from 2004-2009 has become an early favorite for the Panamenista party, which usually forms a coalition with several other parties such as the Partido Popular.

And Martinelli, somewhat of a political outcast but a populist hero, continues to position himself as a viable candidate for a party he created: RM, aka Realizando Metas (achieving goals). And as luck would have it, also his initials.?

Panama’s current mayor is commonly seen, almost unanimously, as one of the most ineffective mayors in the last 30 years.

Despite the disappointment in the effectiveness of City Hall and the occasional, mostly non-violent protests, Panama’s political environment has, since Noriega’s ouster in 1990, been stable, predictable, and for the most part uneventful.?

Unemployment is manageable and currently hovering around 10%. GDP is still being led by services industries such as shipping, insurance, and banking however mining (copper and gold) continues to play an important role in driving Panama’s economy.

Debt to GDP, while on the rise, is currently at just over 50% meaning the generally conservative government still has plenty of borrowing capacity if needed.

Panama Real Estate Market Predictions

Regional unrest and upcoming elections will continue to have an impact on Panama’s real estate market. Assuming banks maintain their conservative position on lending, construction projects, and the subsequent new inventory is likely to be kept in check. And even given unchanging demand, less supply may have a positive impact on prices.

A weakening Dollar should also encourage foreign investment in Panama.

On the other hand, yields in residential properties are generally trending below traditionally safer instruments such as US Treasury bonds and local certificates of deposit, giving investors pause until rents correct.

*Sources: Galeria Inmobiliario, Registro Publico de Panama, MLS Panama