Private Office

Index:

1. Executive Summary
2. Market Overview
   • Economic Indicators
   • Current Trends
3. Comparative Analysis
4. Expert Perspectives
5. ACOBIR Data
6. Additional Insights
   

Executive Summary:

The Panama real estate market is poised for significant growth, with projections indicating a market value of US$232.90 billion by 2024. This comprehensive analysis explores the factors driving this growth, focusing on the dominance of the residential sector, anticipated growth rates, and emerging opportunities within the Airbnb sector.

Market Overview:

2.1 Economic Indicators:

Panama’s real estate sector has exhibited signs of recovery and growth, particularly since mid-2023. Despite global economic challenges, the country’s GDP growth rates for 2024 and 2025 are expected to remain robust. This subsection provides an in-depth exploration of key economic indicators shaping the real estate market.

Panama’s Economic Resilience

Panama’s economic resilience has been noteworthy, especially in the face of global uncertainties. The closure of the Minera copper mine may slow GDP growth to 2.5% in 2024, but the overall impact on the economy is expected to be mitigated.

Projections for Economic Growth

According to the International Monetary Fund (IMF), Panama’s GDP growth rates for 2024 and 2025 are forecasted at 4.6% and 5.3%, respectively. These projections underscore the country’s economic stability and growth potential, which bode well for the real estate market.

Stable Investment Environment

Panama’s strategic location and robust US dollar-based economy provide a stable investment environment for both domestic and international investors. This stability, coupled with favorable government policies, has positioned Panama as an attractive destination for real estate investment.

2.2 Current Trends:

This subsection delves into the prevailing trends shaping the Panama real estate market, highlighting key developments such as the reactivation of stalled projects and significant infrastructure investments. It also underscores the growing demand for luxury real estate in prime locations.

Reactivation of Projects

The resurgence of previously stalled projects indicates a revitalization of the market. Many projects that were once on hold have resumed construction, signaling renewed confidence and investment in the real estate sector.

Demand for Luxury Real Estate

There is a noticeable uptick in demand for luxury real estate, particularly in sought-after locations like Punta Pacifica, Costa del Este, and Avenida Balboa. These prime areas continue to attract affluent buyers seeking upscale residential properties.

Infrastructure Investment

Government investments in key infrastructure projects, such as the expansion of Tocumen International Airport and new road developments, are enhancing connectivity and creating opportunities for real estate development. These infrastructure upgrades are instrumental in driving economic growth and attracting investment.

Comparative Analysis:

In addition to analyzing Panama’s real estate market, it is beneficial to compare it with other key markets around the world. The following table provides a snapshot of the rental return expectations and expected property value gains for 2024 in various countries:

This comparative analysis highlights the diverse nature of the global real estate market and the varying factors that influence rental yields and property values. It is evident that each market has its unique trends and potential for investment.

Expert Perspectives:

Industry experts anticipate sustained growth in the Panama real estate market, driven by economic and political stability. This section also examines the appeal of Panama to foreign investors and the favorable policies encouraging investment.

Sustained Growth Prospects

Industry experts project continued growth in the Panama real estate market, supported by the country’s economic and political stability. This favorable outlook underscores the resilience of the market and its attractiveness to investors seeking long-term returns.

Appeal to Foreign Investors

Panama remains an attractive destination for foreign investors, thanks to its stable investment climate and favorable government policies. Laws such as Law 54 of 1998, which allows foreigners to own property without restrictions, contribute to Panama’s appeal as a real estate investment destination.

ACOBIR Data:

The Panamanian Chamber of Real Estate (ACOBIR) provides valuable insights into inventory absorption and market trends. This subsection highlights the significance of ACOBIR reports in informing investment decisions.

Biannual Reports from ACOBIR

ACOBIR’s biannual reports offer comprehensive data on inventory absorption and market trends across various sectors of the Panama real estate market. These reports serve as valuable resources for investors, enabling them to make informed decisions based on data-driven analysis.

Insights from ACOBIR Reports

ACOBIR reports provide insights into key market indicators such as supply and demand dynamics, pricing trends, and inventory absorption rates. By leveraging this data, investors can gain a deeper understanding of market conditions and identify lucrative investment opportunities.

Actual Rental Returns / Projections:

Actual Rental Returns in Panama

The gross rental yields in Panama range from 4.59% to 11.00%, with an average of 6.52%. This indicates a good return on investment by international standards. The rental market is particularly attractive in areas like Santa Maria and El Cangrejo, where yields can be on the higher end.

Average Property Gains in Panama

The real estate market in Panama has experienced some fluctuations. As of March 2024, the average closing price for a property was reported to be 11.2% below the asking price. This suggests that while there may be opportunities for buyers to negotiate prices, sellers are also willing to accept lower offers.

The long-term outlook for property gains in Panama remains positive, with expectations of slight increases in property values. The market’s potential for growth and stability makes it an attractive place for real estate investment.

It’s important to note that these figures represent gross yields, which are before taxes, repair costs, ground rents, estate agents fees, and any other costs. Net yields, which are what you’ll actually earn, are typically around 1.5% to 2% lower. Additionally, the property market can be influenced by various factors, including economic conditions, government policies, and international events, so these figures may vary. Investors should conduct thorough research and consider consulting with a real estate expert before making any investment decisions.

Insights and Projections

This section offers additional insights into the Panama real estate market, including ROI projections, management strategies for maximizing returns, opportunities within the Airbnb sector, and the demand from foreign retirees for rental flats. It provides detailed information on rental yields, property maintenance, market awareness, legal requirements for Airbnb hosts, cost per square meter, and gross rental yields.

ROI in Panama Real Estate Market The market is expected to reach US$232.90 billion in 2024, with residential real estate leading at US$182.30 billion. The gross rental yields in urban and tourist centers range from 6.2% to 9.3%.

Cost per Square Meter The cost per square meter for apartments in Panama City is approximately USD 2,431 and USD 2,000 in Rio Hato. For houses, the cost per square meter is around USD 1,666 in Panama City and USD 1,979 in Rio Hato.

Opportunities

Rental Demand from Foreign Retirees The demand for rental flats from foreign retirees in Panama has been strong, particularly as we move into 2024. Several factors contribute to this trend, including the country’s economic attractiveness, the Pensionado Visa program, and increasing interest from expatriates.

Airbnb Possibilities in Panama Panama presents attractive opportunities for Airbnb investments, driven by its famous beaches, vibrant culture, and growing tourism industry. The average daily rate for Airbnb rentals is around $201, with an occupancy rate of 59%, making it a lucrative option for investors seeking short-term rental income.

Panama Real Estate Market 2024: Conclusion:

Investing in Panama’s real estate market presents promising ROI opportunities, particularly in Airbnb properties. By leveraging market insights, strategic management practices, and local expertise, investors can navigate the dynamic landscape of Panama’s real estate market effectively. The robust demand from foreign retirees for rental flats further enhances the investment potential, fueled by favorable economic conditions, attractive residency programs, and a growing expatriate community. As more retirees seek out Panama as a retirement destination, the demand for rental properties is expected to sustain and possibly increase, promising long-term growth and profitability for investors.

This complete content maintains the structure and length of the original document while integrating the comparative analysis table to provide a global perspective on the real estate market. It offers a comprehensive outlook for 2024, with insights into Panama’s market and its potential in comparison to other key markets. Investors are advised to consult with a financial advisor or real estate expert before making investment decisions.

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