Panama City’s soaring skyline of glass and steel rarely fails to impress first-time visitors driving into town from the international airport.  This is a metropolitan city and a world-class banking center.  There’s little to challenge Panama City’s position as the region’s most important financial, logistics and business hub.  

The list of factors that bolster the confidence of real estate investors looking to invest in Panama, is a long one.  You’ll hear Panama real estate promoters raving about the dollarized economy, one of the most dynamic in the region; the US$5.25 billion project to expand the Panama Canal; the attractive and far-reaching tourism and investment laws; the presence of heavyweight real estate brands such as Donald Trump and Nikki Beach and a fantastic retirement program with discounts of up to 50% on items such as movies, restaurants, airline tickets and prescription medication.  

Panama’s GDP rose rapidly during the boom years reaching a staggering 11.7% (annualized) in 2007.  This fell to 9.2% in 2008 (see chart) and is predicted to be around 3% in 2009.  Even with these falls Panama beats regional averages across a range of economic indicators and many remain optimistic about the country's future, particularly with business friendly President Martinelli at the helm.  The Heritage Foundation and Wall Street Journal rank Panama on an equal footing with Costa Rica in their Index of Economic Freedom, with both countries scoring well above Belize and Nicaragua.  See more Panama real estate indicators.

The attractiveness of Panama as an investment destination in the run up to 2008 led to a construction frenzy with hundreds of new high-rise condo towers in Panama City and real estate developments across the country.  Celebrity purchases by Mel Gilson, Angelina Jolie and Brad Pitt in Panama received much press attention.  But it wasn't just North Americans driving the real estate market, a large number of Venezuelans, Columbians and Europeans also purchased.

Impact of the economic downturn on international real estate in Panama

You just have to look at the fall in GDP growth since 2007 to see that things have slowed.  Our data shows that list prices for real estate in resort communities, condo towers and gated developments in Panama fell year-on-year to September 2009, for the first time since the boom.   But the falls were not across-the-board and were smaller than the double didgit declines we're getting used to seeing elsewhere in global property markets. 

Still, things may get worse before they get better.  Local property developers and realtors are warning about project delays and closures.  In areas where a high level of real estate sales have been made pre-construction (such as Panama City) more price falls are expected as buyers default on their payments.  

Sellers, used to riding the long boom years, are slowly coming round to the fact that it’s a new market in Panama real estate with buyers firmly in the driving seat.

Where are the Panama real estate hotspots?

In our sample, Panama City far out-ranks other regions for the number of real estate projects underway with over 50% of the total.  The beach area within 90 minutes drive of the capital, encompassing Coronado and San Carlos accounts for 15% of Panama real estate projects in our database, followed by the highland areas of Boquete & Volcan with 11% and then Bocas del Toro, a cluster of islands on the Caribbean coast with 6%.

There’s information on price points for Panama real estate across different categories on our Panama property page.

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