The process of investing in Panama is simple and straightforward, but we recommend that you always work with a good attorney. In short, this is smart business practice, but it’s particularly important in Panama where a large part of realizing success has to do with making contacts and building relationships. So, a reputable lawyer is a good place to start.
The economy of Panama has been on the rise for some time. Low unemployment, low debt, and the recent expansion of the Panama Canal have been solid economic indicators and investors are recognizing opportunities and cashing in.
Many economists are making claim that the expansion will have Panama’s GDP doubling within 10 years.
Although there are a plethora of investment opportunities in Panama today—namely those in the tourism sector, banking, reforestry, and mining—real estate is the most lucrative place to put your money immediately.
From developments like guest houses and resorts to projects like charter dive operations or guiding trips, you’ll find unlimited options for an investment in Panama’s tourism sector.
You could build a bed and breakfast in the hills of El Valle, start a white-water rafting outfit in Chiriqui, or operate fishing expeditions or a scuba dive shop in Playa Santa Catalina. Recently there was a hotel and a marina for sale on Solarte Island in Bocas del Toro for US$1.2 million.
Best of all, the government is behind you all the way. The Panamanian Tourism Authority (ATP) plans to invest in a tourism campaign in the coming years.
Money will go toward such programs as overseas advertising, rural bed & breakfasts, installations of tourist information kiosks and craft centers. So, all the incentives currently in place in Panama are expected to remain.
No matter how big or small your investment portfolio, it should include agriculture.
We live in a world with an exploding population and dwindling arable land.
For example, we’re looking at more than 9 billion people on this planet by the middle of this century, a sobering reality that is translating to a global race for farmland and food security.
In other words, experts estimate the global demand for food will increase by 70%. And, productive land always retains its potential to make money.
In recent years, Panama has become a favorable spot for organic agriculture investing. Plantations for limes, mangoes, and avocados are producing annualized returns over 15%.
The amount of capital required to buy-in has been under US$40,000 and provides a stable long-term investment. But, the only downside is that the opportunities sell out fairly quickly.
With this impending tourism boom across Panama, a corresponding increase in the production of high-value food to supply resorts and restaurants needs to happen.
Given these major investments in the economy and infrastructure, it’s predicted that by 2030 Panama will have lost its designation as a developing country and will have joined the ranks of First World nations.
Panama is currently focusing a great deal of attention on the reforestation of its land. To attract foreign investors to this sector, the government grants financial and forestry incentives for investors who purchase land designated for reforestation or that has already been reforested.
So, if you invest at least US$80,000, for example, you can obtain a Complete Reforestation and Investor Visa Solution, which is a quick way to obtain Panama residency.
If you set up your investment as a corporation and not as a private investor, the corporation conducting reforestation activities must be approved by ANAM (Autoridad Nacional del Ambiente) to operate in Panama in order for you to get the visa. Above all, you need a forestry registry certificate from ANAM whether you invest as a person or corporation.
To apply for this visa, you’ll need the following:
Panama has two big advantages which give it an edge for investors and for expat living. Firstly, it’s Panama’s location. Secondly, is that Panama is an icon of stability in an unstable world.
Above all, Panama is one of the safest, most stable countries in the world and certainly in the region. The whole country is an investment and lifestyle destination.
With all the free zone opportunities in Panama, an export company could make sense for would-be investors. Of all Panamanian exports, 20.3% are directed to the U.S. market, its main commercial partner
The great thing about setting up an export company is that you can operate in an Export Processing Zone (EPZ), which is 100% tax-free.
Any activity, operation, transaction, license, procedure, transfer of movable goods and real estate, purchase and importation of all equipment, spare parts, raw materials, and all goods and services, are 100% exempt from national direct and indirect taxes, duties, levies, and charges for an indefinite period.
The main export industries allowed in the EPZ are manufacturing, processing, telecommunications, and high-technology parks. Similar incentives exist for oil and petrochemical companies located in the country’s Petroleum Free Zones.
Real estate investors from around the world are enjoying the benefits and incentives put in place by the Panamanian government.
Opportunities from high-rise condos in Panama City and residential communities in Boquete to Caribbean and Pacific beachfront properties exist for real estate investors, and construction is popping up all over the country.
Many foreign investors starting a business or purchasing real estate in Panama set up a corporate entity. Most importantly, Panamanian corporations and foundations offer flexibility in everything from estate planning and tax management to asset protection.
The short-term rental market has come back strong in Panama and contacts in the industry report a growing number of people looking tomove to Panama but not buy… meaning long-term rental demand, as well. So, you should expect net yields in the range of 5% to 8% in most areas.
Panama has 68 direct flights from 31 countries, offering easy access for tourists from almost anywhere on the globe.
While short-term tourism rentals aren’t allowed in most of Panama City to avoid tourism displacing local renters, certain developments are allowed to rent to tourists in the short term. (In Panama, a short-term rental means less than 45 days.)
By investing in a property with a short-term rental license, you can expect rental returns from the 6% to 10% mark after all expenses.
Meanwhile, if you want to discuss your short-term rental investment options around Panama City, contact our most-trusted Panamanian property agent here.
With their huge investment in advertising Panama as a premium tourism destination, tourism in all areas is expected to flourish. As a result, all short- and long-term rental opportunities will improve for all property owners.
A savvy investment now in a rental property in a popular or up-and-coming tourist area will increase cash flow and appreciation rates in-step with these major government investments.
Right now, deals can still be found on guesthouses, bed-and-breakfasts, small hotels, and tourism service businesses.
Panama is a very popular place for companies to establish as their home country, due to tax laws and financial privacy. Offshore companies and their owners are exempt from corporate, withholding, income, capital gains, and estate taxes.
Panama’s economy is based mainly on the services sector, which accounts for 80% of its GDP and accounts for most of its foreign income. Services include banking, commerce, insurance, container ports and flagship registry, medical, and tourism.
Yes, all foreign investments are protected by Panama’s Civil Code, Constitution, and its Foreign Investments Act. These provide foreigners equal rights as Panamanians when it comes to property ownership, investments, and commerce.
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