|M & E Abogados|
Panama: Report: The Real Estate Market In Panama
13 August 2007
Article by Emilio José Cornejo Vernaza
Most likely, you have heard of the recent real estate BOOM currently occurring in the Republic of Panama. Perhaps, there are several internet sites you have read or visited searching for further information on this topic. Or maybe you are one of those persons that have taken already the decision of buying an apartment or a beach house, but you don’t know where to start or wish to start your own real estate project in Panama, yet still need more information.
Well, I have prepared this article in a practical and simple way in order to guide you in our real estate market. You will find this paper helpful, whether it’ll be for the direct buying of a property or to start your own real estate project in Panama or simply to have a more complete notion of this rising real estate BOOM.
What is happening on in the Panamanian Real Estate market? What is going on in Panama is without any sort of precedent. The market is growing rapidly and such real estate development has never been experienced before in our country. Monthly, we are visited by hundreds of foreigners interested in buying real estates in Panama, in the City, the coasts and the mountains.
The constant rising of the value per square meter is almost in a monthly rate. For example: in January, 2006 it was possible to find apartments in Panama City for around US$ 1,000 per square meter, which is nearly impossible nowadays (US$ 2,000 – US$2,400 and rising). This has generated the value per square meter to triplicate in the city and even to quadruplicate in the rest of the country. The main real estate broker associations have foreseen that the general value of the land in Panama could rise up to 30% to 40% in the next three years, due to this price increasing flow.
Extreme luxury towers of over 100 stories, residential houses of over a million dollars, yachts and marine clubs, huge luxury hotels, golf camps designed by well-known international specialists, as well as top of the line malls, are currently under construction or in process of delivering in the next couple of years; renovating the face of the city into an international and cosmopolitan metropolis.
Promoters, private investors and international real estate companies, from United States, South America and even Europe, have started the construction of real estate projects of great impact. Also, a great number of international real estate broker companies are currently setting up businesses in our country per month.
Specifically we could say that six of the highest towers under construction in Latin America are being built in Panama City, within the areas known as "Avenida Balboa" (this area is projected as the skyscraper in front of the sea in the city). We could mention, among others: Aqualina, Aquamare, Vitri, Ocean Two and One and Los Faros de Panama, ready to be delivered for the year 2009; besides the hundreds of apartment towers bring developed around the city.
Great beach lot projects, island resorts, as much as in the Caribbean Sea (Bocas del Toro) as in the Pacific Ocean (Pearl Islands); as well as delightful retirement mountains (Boquete, Altos del Maria) are part of the avalanche of real estate projects that seems just to be starting.
Which are the real factors that caused this real estate boost? We all know that after the hostilities occurred in Panama in 1989, the Panamanian real estate market remained hesitant and the small amount of inversions in this sector were led in its majority into commercial projects. Fifteen years had to run by after this event (year 2004) for the leaders in the tourist sector of the Panamanian government (led by the well-known Panamanian singer Ruben Blades) to take action initiating a serious campaign for the enhancement of the country’s image. Panama was shown as "the path less travelled", stressing not only in the advantages of being and international banking services and offshore centre, but also in the social, tourist, ecological and geographic elements that until then were unknown to the rest of the world. This successful campaign was promoted worldwide in the main international television chains, in Europe as well as in the United States.
Added to this, something that has to be acknowledged, for the year 2003 Panama comes back to the international field with the announcement that a young Panamanian lady (Justin Pasek) won the Miss Universe contest, situation that allowed by extension the range of advantages of our country as a tourist and commercial destiny.
Between the years 2003 and 2005, little by little the number of visitors increased as a consequence of these two important catalysts.
Meanwhile, small groups of professionals (lawyers, brokers, and independent professionals) were offering seminars about the Panama’s advantages or organized small real estate tours to foreigners. Several articles published in international retirement magazines (generation known as "Baby Boomers") and second residence abroad, started to acknowledged Panama as one of the best countries in the world to live at high standard levels, but with low costs; all of this caused due to excellent projects addressed to this market, as "El Valle Escondido" in Boquete – Chiriqui or "Altos del Maria" in Panama.
One of the main triggering factors of this real estate boost in Panama occurred last April 24th, 2006, when Donald Trump announced in New York City the construction in "Punta Pacifica" area in Panama City of a 65-story tower branded as "Trump Ocean Club International Hotel", with a cost of 220 million dollars. Further more, on October of the same year, the national acceptance for the enlargement of the Panama Canal was given, initiating construction works in the year 2009.
Starting from this point, there is no doubt that Panama would become the centre and role model of real estate investments in the area, situation that has been increasing exponentially.
Which are then Panama’s advantages as a real estate destiny? Well, let’s get into the subject. Let’s study those advantages that Panama offers and that will allow you, effectively, to take the decision to buy a property in our country, as many foreigners have done. From the real estate point of view, we could mention:
- Panama offers the best banking centre in the region, with the use of the American dollar as legal currency and with top of the line banks (HSBC, CITIBANK, BBVA, etc.) which will facilitate the process of obtaining mortgages for foreigners, offering a fast international bank transaction process for deposits and reservation of properties.
- Panamanian immigration law has one of the best retirement programs in the world, which will allow you to become a "resident" in less than two months. This program offers several incentives as the possibility to import goods and personal values into your new properties free of import duties, as well as motor vehicles also free of import duties.
- An outstanding service, utilities and infrastructure system for properties, such as: high speed Internet (there are five of the main Internet interconnection Networks crossing through Panama), Cable and Satellite TV, public potable water, wide range of telephony offer, fixed and cellular.
- The opportunity to buy extreme luxury apartments with ample spaces to a price amazingly low compare with apartments of the same quality in USA and Europe.
- The opportunity to acquire properties exempt to the 0% of property taxes for a period of 5, 10, 15 and even 20 years (depending on the date of construction’s commencement).
- A vast variety of companies and bilingual professionals involved in the real estate market.
Additionally, there are other advantages to take into consideration that even when you are not directly involved in the real estate business, they can become helpful at the moment of taking the decision of buying a property:
- If you are a businessman, Panamanian law has fiscal benefits to constructors and promoters that start real estate projects in the country.
- Panama has been acknowledge for companies as Pinkerton Intelligence Agency as a high standard security country in contrast with the current situation in neighbouring countries.
- You can hire house keeping services for a low cost (around US$ 150.00 per month)
- Up-to-date high standard technology available.
- The opportunity to acquire products from all over the world in the Colon Free Zone, due to the noticeable position of the Panama Canal and the transit of over 14,000 ships per year.
- The conditions of Panamanian taxation law allow the tax payer not to pay taxes on bank interests or even income taxes when the service and/or business are performed abroad.
- An exceptional geographic position to perform international commercial transactions, with fast access to the Pacific Ocean as well as to the Atlantic.
These are some of the many advantages that Panama can offer if you decide to acquire a property in our country, whether it is to invest or simply to relocate and enjoy life.
- Panama has a low-risk profile in regards to natural disasters, such as earthquakes and hurricanes.
Which are the most attractive places to buy properties? To better answer this question, we have to divide our answer in four groups: Panama City, the mountains, the Pacific shore and the Atlantic shore.
The main seaside view luxury condos are found in Panama City, distributed as follows: Balboa Avenue, Punta Pacifica and Costa del Este. The region known as "Avenida Balboa" has become the icon of real estate development in Panama. The reason for this is due to the current construction of luxury residential apartment towers with an outstanding architecture with a height of over 75 stories, to be concluded in the year 2009. Balboa Avenue offers quick access to the whole city, the banking area, as well as to the main avenues, given that it is the coast boulevard. One hundred meters away from this area you will find restaurants, bars, hotels and several facilities. European promoters, American and South Americans have foreseen the real estate potential in this area, equivalent to condos phenomenon occurred in Miami during the eighties.
"Punta Pacifica" area was developed over the old City airport (for the reason that it was next to the pacific coast and inside the city). This region was designed specially to provide an answer to the upcoming real estate demand. The area offers beautiful projects and high standard apartment towers. You will also find in "Punta Pacifica" malls (Multiplaza Pacific), Hospitals (John Hopkins Hospital), corporate buildings and access to highways (Corredor Sur) which will grant you fast access to the international airport in 15 minutes. Is also in this sector where the Trump Organization and K Group will raise their promoted real estate project.
Another of the desired areas for foreigners is Costa del Este. The "other city" as is referred to was also conceived and designed for the development of apartment buildings and closed residential communities. It is the perfect place for a foreigner to completely relocate in Panama. This region has it all schools, malls, wide avenues; this sector offers several real estates with a gorgeous view to the sea or to the city, located five minutes away from the city and only ten from the international airport.
It also important to stress out that this luxury tower’s development is not circumscribed to these few areas. There are also urban projects in the region of Punta Paitilla, Coco del Mar and San Francisco (all of them in front of the sea), as well as beautiful developed residential areas in the surroundings of the Panama Canal, such as Albrook, Clayton and Quarry Heights.
Gorgeous mountain projects with cool, fresh weather from 18Cº to 20Cº (64ºF to 68ºF) have been developed in the provinces of Panama, Cocle and Chiriqui. In the province of Panama, the most representative mountain project is found in the region of Sora, 75 minutes away from the City and known as "Altos del Maria". This project consists of a well-organized foreigner’s community with utilities and spectacular landscapes.
Another region of urban development can be found in what is known as "Tierras Altas" (High Lands) located in the province of Chiriqui (Volcan, Boquete and Cerro Punta). Among these places, Boquete has become one of the most relevant real estate centres in the whole country, given that it counts with a wide supply of real estate projects, residential houses in the mountains with amazing landscapes. Boquete has been recognized by specialist in the subject as one of the best places for retirement in the world, fact that has generated in this region the highest concentration of retired foreigners in the country.
Finally, in the province of Cocle, you will find the region known as "El Valle". Located in an extinguished volcano, El Valle offers the perfect weather, rivers, waterfalls and tourist attractions. El Valle is at present taking measures to become one of the most wanted regions in the field of mountain real estate properties, owing to its facilities and infrastructure, as well as to its proximity to Panama City (1hr. 45 mins.)
The Pacific Shore
The supply of lots in front of the sea starts in the pacific coast line of the Province of Panama, and it goes all the way until the mid-country provinces. Most Panamanian high-class families have their beach houses on this sector; due to its proximity to the City (45 minutes). This coast line offers residential areas such as Chame, Coronado, Punta Barco, San Carlos, Gorgona, among others. Within these beach residential areas we have to remark the region known as "Coronado", region which counts with one of the best professional Golf camps in Latin America, pools, beach clubs, equestrian clubs, several restaurants and great supply of houses and apartment buildings in front of the sea.
Additionally, further on in the pacific coast line, we can find the region of Playa Blanca. Since the development of the macro hotel project known as "Royal Decameron" in the area, the infrastructure and general surroundings have grow significantly. In Playa Blanca, you will be able to find casinos, swimming pools, restaurants, bars and discotheques, beach clubs and a great variety of real estate projects just right next to the beach.
Finally, we should also mention the recent development experienced in the seaside areas the provinces of Los Santos (Pedasi) and Veraguas, such as Playa Arenal, Punta Mala and Playa Venao, among others; which have become the new destiny for many foreigners (mostly Europeans) that are searching for great extensions of lands in front of the sea.
The Caribbean Shore
In this area, we can find a similar supply of real estate properties to the one found in the pacific coastline of the mid-country provinces. There are several properties in front of the sea, as well as vast extensions of hectares next to the beach. This region is located two hours away from Panama City and it offers the option to buy in the well-known Colon Free Zone.
On the west side of the country, you will find in the Caribbean coastline, the spectacular region of Bocas del Toro, where properties next of the sea or in the middle of an island are simply astounding. A great variety of international real estate companies have started projects in the crystal clear waters of Bocas del Toro. Bocas is one of the most known tourist destinies in Panama, located only 1hr and 45 minutes away by plane. It offers an amazing night life, restaurant, hotels and tours around the different islands of the area. Bocas del Toro coastline has become the most wanted real estate choice for retired or pensioned foreigners in the Caribbean.
Among the best areas of Bocas del Toro you can find Isla Colon, Boca del Drago, Red Frog Beach and Playa Larga. The residential project known as Red Frog is of renowned reputation in the international spheres, given that it offers an incredible exclusively designed development for foreigners in one of the most beautiful islands in Bocas del Toro, Bastimento’s Island. The project has marine clubs, restaurants, houses and a dazzling infrastructure.
The most notorious group of islands is found in Bocas del Toro, given that, as we already mentioned it offers a wide variety of real estate projects in the Caribbean, scenario of several TV series broadcasted around the world. The most important islands of the archipelago are: Isla Colon, Isla Bastimentos, Isla Solarte, Isla Cristobal, Isla Popa and Isla Zapatilla. Likewise, we can found several small independent islands for private projects. Bocas’ islands counts with an astonishing ecosystem for scuba diving, marine activities, and bird watching.
Another group of islands that is raising popularity is the real estate market found in the archipelago of Mosquito’s Gulf, in front of the pacific coastline of the province of Chiriqui. This Gulf has been granted by the Panamanian government the title of Ecological Reserve, as a consequence of the great diversity of marine fauna found in the area. Most of the islands have registered real estate titles, which allow its prompt buying. The surroundings of these islands are famous for being one of the best places in the world for Black Marlin fishing.
The Pearl Islands are located within the Gulf of Panama, three hours away from the city in the open sea, offering a group of more than 35 beautiful islands with spectacular landscapes, surrounded by coral reefs and vast vegetation. The beauty of this area attracted the production team of the popular reality show "Survivor", who has filmed several times in this region.
Finally, you will find the island of "Coiba" in the Pacific Ocean, formerly a prison already abolished and currently a National Park. The main island and its small islands such as Isla Iguana have become in top destinies for scuba diving and water sports.
What should I and shouldn’t do when buying a property in Panama? As a final tip, we will recommend you some practical advises in case you decide to buy a property in Panama:
- Recommendation # 1: You can visit the projects on your own, but it is advisable to be assisted by a professional who could properly introduce you to the promoters, avoiding the pointless increase on the price.
- Recommendation # 2: If you are not fluent in Spanish, you should ask the promoter to get you the contract both, in Spanish and in your native language, for all legal transactions to be performed.
- Recommendation # 3: Once you reserve your property, immediately ask for a receipt and the signature of the Promissory Purchase-Sale agreement.
- Recommendation # 4: Once you have signed this agreement, double-check the deadlines for the subsequent down payments of your property. If you miss one of these, you are exposed to lose the money already paid to the promoter.
- Recommendation # 5: Try to take a quick decision on acquiring the property; given that once you reserve it, the price is then frozen. Due to the current demand in the market, prices on apartments rise at a monthly rate.
- Recommendation # 6: Once you reserve your property, look for the professional advice of lawyers or real estate brokers, in order to verify all documentation and contracts are due to the procedure of registration.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
- Recommendation # 7: Think about the possibility of acquiring your property through a Panamanian corporation. They are of fast incorporation, considerably cheap and easy to manage. Using a corporation to acquire a property in Panama will ease a future transfer of it, if that’s the case.