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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 expansion of the Panama Canal have been solid economic indicators and investors are recognizing opportunities and cashing in.
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.
Reviewed By Kathleen Peddicord
Kathleen is the Live and Invest Overseas Founding Publisher. She has more than 30 years of hands-on experience traveling, living, and buying property around the world.
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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.
In short, 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.
Most importantly, 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 to move 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’s property markets continue to hold opportunity for investors in the know. During 2023, the value of residential construction in Panama rose by over 18% to $747 million after rising by over 21% in 2022 and 83% in 2021.
Demand is strong and continues to rise. Last year, home sales were up by 21%, and transaction values rose by over 8% to $750 million. This year, transaction values are expected to rise to $964 million.
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.
Also, a savvy investment now is 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 has been on Live And Invest Overseas’ radar for more than 20 years, and its investment fundamentals continue to stack up:
The expanding influx of foreign labor and executives is providing double-digit monthly rental returns, while the ever-moving path of progress is creating the potential for dramatic appreciation in key areas.
Values have increased compared to this time last year, as has the average number of transactions per building, which is up by 30%. The opportunities on offer are extraordinary.
But if you know anything about Panama City, you know that it’s a niche market. It’s divided into administrative units called corregimientos, which are further broken down into boroughs.
Each area has unique characteristics and requires special consideration when it comes to investment strategies. You want to make sure that your portfolio objectives align with the characteristics of the area you choose to invest in because outcomes can vary.
Some areas offer more potential and upside than others…
Twenty years ago, you could have bought almost anything in Panama and felt confident that you’d earn a good return. That’s no longer the case. Today, you need to target your investment search.
Where, specifically, in Panama City should you be shopping?
Mónica Linares, Editor of Global Property Advisor and Panama City native, shares with us her opinion. She named San Francisco, Costa del Este, and Bella Vista as the top choices right now.
San Francisco is to Panama City what Manhattan is to New York. It’s the commercial, financial, and residential hub of the city. Some of the most exclusive and expensive neighborhoods in the city are found here, like Punta Pacífica and Punta Paitilla.
It’s home to the skylines that characterize Panama City as well as some of the city’s most famous buildings, like the JW Marriott Panama (previously Trump International), Atlapa Convention Center, Multiplaza mall, and Hotel Las Americas.
This is a trendy area with a wide assortment of shops, cafés, restaurants, and nightlife venues. It’s also home to Parque Omar, the Central Park of Panama City, as well as Calle 50, the city’s most important financial and commercial thoroughfare. Panama’s two best private hospitals—Hospital Punta Pacífica and Hospital Paitilla—are in San Francisco.
This is one of the city’s oldest corregimientos. It’s been developing and modernizing since the 70s, and it’s where Panama’s real estate boom is concentrated. It’s a rapidly developing area with a mix of homes and high-rise apartments.
San Francisco is a mostly upper-middle- to upper-class area. I see the best play here as an apartment that’s rented on a medium- or long-term basis to this market.
Costa del Este is unlike anything else in Panama City…
It’s a 740-acre master-planned suburb that stands out for being the city’s best planned community. In contrast to San Francisco, everything in Costa del Este is new and shiny.
It’s a neighborhood within the corregimiento of Juan Díaz, and it’s found just off the main highway that takes you into Panama City from the international airport.
It’s among Panama City’s most sought-after business and residential addresses, and it offers strong investment potential. A number of national and international companies are based here, which has attracted expats from all over the world—especially those with families.
Spacious, walkable, clean, safe, and turn-key, Costa del Este is both a classic suburb and a truly cosmopolitan neighborhood. It’s also home to Panama City’s newest John Hopkins-affiliated hospital, as well as being just minutes away from a Jack Nicklaus-designed golf course.
Prices in Costa del Este are some of the highest in the city, but demand remains strong.
What’s the best play here? Targeting the executives and employees of multinational corporations, again with medium- to long-term rentals. Buying pre-construction either to sell or to rent at completion can also be an effective and profitable strategy.
Bella Vista is a corregimiento made up of some of Panama City’s most important neighborhoods, including Obarrio, Marbella, El Cangrejo, Avenida Balboa, El Carmen, and La Cresta.
It’s been undergoing a major overhaul that involves widening sidewalks, putting power and communication cables underground, improving parks, and more, all designed to craft a young, metropolitan lifestyle.
Living here puts you in the heart of the city, with easy access to everything. Calle 50, a major Panama City thoroughfare, runs through it. Also close is Calle Uruguay and its vast selection of bars, restaurants, and clubs.
One of the city’s most popular expat neighborhoods, El Cangrejo, is here. It’s close to public transportation, schools, universities, clinics, pharmacies, grocery stores, restaurants and bars, and plenty of green areas.
It’s central, so you can easily reach other areas of the city, and best of all, it’s walkable—one of the few neighborhoods in Panama City that qualifies as such.
The best play in Bella Vista is as a medium- or long-term rental apartment in El Cangrejo that targets young professionals, millennials, and digital nomads who are attracted by its fun and funky atmosphere.
Panama remains one of the best places in the world to live or retire overseas. And, it’s also one of the world’s safest investment havens.
This despite the fact that a downturn in Panama’s property markets has been predicted for years.
Starting in 2003 and continuing through 2008, this country enjoyed a mega construction boom. Then came the crash of real estate markets around the globe.
Panama City, for example, like any city of a million-and-a-half people, is many different markets, some offering more potential and upside than others.
In 1998 and through 2008, you could have bought almost anything in Panama and felt confident that you’d make money. That’s no longer the case. Today you need to target your investment search.
Where, specifically, should you be shopping?
Avenida Balboa continues to offer opportunity. This frontline strip along the Bay of Panama has always been and will always be one of the city’s best addresses.
Pricing continues up even as new buildings and more inventory continue to appear along this oceanside boulevard. An apartment on Avenida Balboa will always find a buyer or a renter, as the case may be.
The other area in the city offering strong investment potential is Costa del Este. This master-planned suburb is the focus of many top Panama developers who are hard at work building both houses and apartment towers, as well as commercial space.
In addition, this is also the area where many (most) of the many thousands of expat workers moving to Panama City for jobs with the dozens of international companies that have set up and continue to be set up in and around Panama’s capital are looking to live… especially if they are coming with families.
Prices in Costa del Este are among the highest in the city, but demand remains strong. Buying pre-construction either to sell or to rent at completion can be an effective and profitable strategy.
Outside the city, other dynamics are playing out and creating opportunity.
Thanks to the anticipated new (fourth) bridge over the Panama Canal, the Veracruz neighborhood, which sits on the coast behind Panama Pacifico, is smack-dab in the path of progress. It’s an up-and-coming zone for a rental investment. It’s the nearest beach area to the city but has traditionally been overlooked by both tourists and investors.
Puerto Armuelles found its place on the map in 1927 when Chiquita Banana came calling. The company built the town as it exists today, complete with housing for workers, roads, sewers, and a railroad.
Puerto’s infrastructure is head and shoulders what you typically expect from a small Central American town. Chiquita is no longer headquartered here, but its legacy carries on.
When Chiquita pulled out of this coastal region in 2003, the local economy collapsed and the population decamped.
Most importantly, this is a depressed market that is attracting the eye of forward-looking developers who recognize potential when they see it.
Reviewed By Kathleen Peddicord
Kathleen is the Live and Invest Overseas Founding Publisher. She has more than 30 years of hands-on experience traveling, living, and buying property around the world.
Start Your New Overseas Life Today
A world full of fun, adventure, and profit awaits! Sign up for our free daily e-letter, Overseas Opportunity Letter, and we’ll send you a FREE report on the 10 Best Places To Retire In Style Overseas Today 2024
We Value Your Privacy! We will not share your email address with anyone else, period.
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.
Whether the U.S. dollar fails or the economy is burdened by government debt, avoiding dollar-based investments for retirement is not a solution.
Panama uses the U.S. dollar because the U.S. helped it gain independence from Colombia to oversee the Panama Canal.
Also, Panama has its own currency, the balboa, which is pegged to the U.S. dollar at a 1-to-1 rate. The country produces its own coins, which is often cheaper than importing them.
Plus, it could choose to rely solely on its currency or link it to another currency like the euro at any time.
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