Panama: Still A Buy And At The Top Of Our 2016 List
Panama City’s real estate markets continue up. The Panamanian capital’s highest-end neighborhoods have seen double-digit appreciation this past year, and other residential areas have enjoyed growth of no less than 4% to 5% in 2015.
Looking to 2016 and beyond, I see nothing but further expansion. The local economy continues to grow, international companies continue to invest and to add international staff, and Panama is an ever-more-popular destination among both tourists and foreign retirees.
Hotel room rates in Panama City are down, thanks to an oversupply. This is a symptom of the extremely high occupancy rates that Panama City hotels experienced for years. Unmet and growing demand led investors to launch new hotel projects; now these new properties are coming online. This is how the hotel industry cycles in an active and expanding market. Undersupply leads to construction leads to oversupply. Occupancy rates in Panama City are down right now… as is new hotel construction. Rates will recover as both tourist and business travel continue to expand. Meantime, you can get a great deal on a high-end hotel stay in this town. A friend stayed at the new five-star, center-city, waterfront Hilton recently for US$70 per night.
Rental yields on city apartments remain decent, in the 5% to 8% range. My loft rental in the city is netting about 8% on my estimated current value for the property. Add even 4% for annual appreciation this year, and that’s a 12% total return. Few stable markets return as well.
The City Beaches areas, starting about an hour outside Panama City, offer the potential for similar yields from short-term rental properties if you buy right.
If you’re looking to make a move rather than an investment, you should understand that real estate in Panama City and the nearest beaches isn’t the bargain it once was. You could buy a house or an apartment cheaper some places in Florida. However, you have to keep things in perspective. Panama offers the potential to live tax free (depending on your income circumstances) and no hurricanes.
Get out of the city, and your cost of living can be a bargain compared with, again, Florida. Living in a high-end Panama City neighborhood, your budget could be thousands per month. Elsewhere, it could be US$1,500 per month or less. Remember to compare apples to apples when looking at costs, both for the purchase of real estate and living overall.
No hurricanes or any natural disasters (other than the occasional minor earthquake tremor) can be a big advantage when you compare Panama with other options in the Caribbean. Another is the country’s political and economic stability. This continues to translate into ever-more and ever-more-diverse immigration from around the world. Panama City is a more eclectic melting pot every month, a land of opportunity attracting investors, entrepreneurs, retirees, and expats of all ages from across the globe in growing numbers.
At our office Christmas party last night, I was struck, as I am every time our Panama City team gathers in one place at one time, by how unlikely a community we’ve been fortunate enough to assemble. Standing around our Christmas tree drinking eggnog and exchanging gifts was an impressively enthusiastic, eager, and engaged group of young people. This educated, English-speaking bunch has sought out Panama City from Germany, France, the UK, Ireland, Belgium, Canada, the United States, Honduras, Jamaica, and Russia. They all mix happily, convivially, and productively with our Panamanian staff.
Where else in the world would this be possible? Not many places I can think of.
Bottom line, taking year-end stock of the country where we’re living and building our business, I’d say that Panama still checks all the boxes. If growth continues at rates comparable to those of the last 10 years, you can expect prices for high-quality, good-location real estate in Panama, especially in the capital city, to outstrip regional values and to begin to be considered and compared with property markets in other international hubs such as Singapore, Hong Kong, and Dubai.
Don’t get me wrong, Panama City hasn’t reached the level of those cities yet… and may never. However, this city is a regional hub and will continue to enjoy the attention that brings. The location alone will continue to fuel this market.
One particular opportunity in Panama City right now is commercial space. Values are moving up, and I see demand only increasing. New office and industrial space is being built and bought up in key areas around the city, from the Tocumen International Airport to Panama Pacifico and other areas of the former Canal Zone, and demand is building in certain parts of this country’s interior, as well, including and especially in and around Santiago, in the Veraguas Province.
The bottom line is that Panama should be on your radar for 2016.
To help make it as easy as possible for you to consider and act on the best opportunities that Panama has to offer, we’ve launched, just in time for the New Year, a new division called Access Panama. Access Panama will be focused on developing and presenting the best ideas and options for living, retiring, investing, owning property, and starting a business in this country that continues to offer such enormous upside.
One specific thing Access Panama will be doing out of the gate is offering property tours for those who want to fast track their learning curve for Panama real estate markets.
First up, Jan. 29–Feb. 1, 2016, is a tour of Panama City and the City Beaches. This program includes a half-day seminar with a Panama real estate attorney and other local experts, followed by two-and-a-half days of property visits. More information here.
If you’re interested in getting to know Panama better, as I recommend you should be, this is the most efficient opportunity to that end I can imagine.
Lief Simon
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