Is Property in Panama an Excellent Long Term Investment?

Among international real estate investors Panama is currently one of the most considered and researched locations with many investors considering when exactly to time their real estate market entry; this is because apparently property in Panama has suddenly become an excellent long term investment opportunity particularly for British buyers.  British buyers have the advantage of buying in Panama with a relatively strong pound in the face of a weak dollar in which properties in Panama are priced…this means British investors in particular can get even more for their money if they buy into investment property in Panama today. 

When you add to this the fact that in October 2006 78% of the people of Panama voted yes to President Martin Torrijos’ plans to expand the Panama Canal, and that the circa 5.3 billion dollar project is set to get underway this year and allegedly create substantial positive economic development in Panama over the next ten years, you can see that all the ingredients seem to be stacking up in favour of property in Panama becoming a long tem capital appreciating asset.

And these are not the only positive factors attracting property investors’ attentions either.  Basically Panama appears to be a nation in a state of positive transition; for example it has recently finalized an attractive free trade agreement with America which analysts believe will result in a boom in terms of trade and investment flow between the two countries when it is implemented, and speculation in the Panamanian property market - particularly in Panama City - is at an all time high.

However, there are a number of slightly concerning facts that investors need to be well aware of before they commit to any given project in Panama. 

The first issue of concern locally is that for every current unit of demand there are almost one hundred units of speculator interest – i.e., for every one hundred investors with an investment property that they want to rent out or resell in Panama City it is alleged that there is only one consumer seeking their property assets.  While we believe these figures to be exaggerated we do believe that speculator activity has reached an unsustainable level if any investor is looking to raise a short or even medium term ROI.

It seems there’s a property market frenzy already underway in Panama with the majority of interest focused on Panama City; investors are being lured with the promise of low entry costs, affordable, few questions asked local financing and a number of governmental incentives.  To meet this hungry demand there’s estimated to be over one hundred high rise residential towers in the planning and construction stages and eleven thousand new apartments are due to come to the market within four years.  But who wants all this property stock apart from investors?  I.e., how will an investor buying into such a speculator rich marketplace profit from his investments?  This is apparently a question going unanswered let alone even unasked which does not say much about the levels of due diligence the average investor is undertaking.

So, let’s assume that an investor ignores all these concerns and buys into a market saturated with supply and severely lacking in demand – well, who is giving any consideration to the infrastructure in Panama City and whether it can sustain all this building work? 

Very few people it seems. 

And if you think Dubai is suffering under the weight of construction progress you very likely ‘ain’t seen nothing yet’ – after all Panama City already smells bad with the levels of untreated human waste flowing freely into Panama Bay at an all time high, there are lengthy traffic jams daily and the much lauded Palacio de la Bahia project to build the tallest skyscraper in Latin America fell foul of many things including this creaking infrastructure which, let’s be honest, is only going to get worse.  Could it be that this issue will be the undoing of the investment property market in Panama?  Well, it’s certainly a possibility but fortunately the government say they are committed to constructing new roads and bridges and sorting out sewerage and cleaning up the bay so it could just be that it will prevent short term gains and mean that anyone committing to Panama today needs to be prepared to hold their assets for the long term.

Finally, it’s not all doom and gloom…Donald Trump has a Panama real estate development project underway giving a lot of confidence to the marketplace, the expansion of the Panama Canal is predicted to double the amount of toll revenue Panama enjoys within twenty years providing a substantial boost to the entire nation, already Panama’s annual GDP growth levels are impressive and an increasing number of international baby boomers are considering the country as a good place to retire to for a lower cost, high standard of living suggesting that demand levels could increase over the medium term.  So, to answer the question that this article posed namely ‘is property in Panama an excellent long term investment?’ the answer would have to be a positive and resounding – maybe.

We always impress upon investors that they have to do extensive due diligence relating to the potential profitability of any investment made into real estate….they need to look at whether the market can sustain their plans for it and whether there will likely be demand for their property stock when it comes time to rent or resell it…and nowhere is this advice more relevant today than when it comes to property in Panama and whether it can return an investor a decent return on investment and allow him to exit the market within his preferred time frame.

Special Reports: Property News for Panama

Panama for Real Estate Investors
Investment into real estate in Panama is booming because Panama is growing in popularity as a tourist and retirement hotspot.

Panama Real Estate Investment Potential
The range of opportunity for real estate investors in Panama is broad with potential in the residential and commercial sectors

Panama Real Estate Purchase Process
Purchasing titled real estate in Panama is simple but an investor will require the assistance of a reputable property lawyer