MARKET STUDY Global Property Investment Index 2021

PANAMA CITY
Panama

Panama City offers a different caliber of lifestyle

experience—a more comfortable, well-appointed
standard of living than anywhere else in Central
America. It’s changed drastically over the past 15 years
as it pushes always for growth. This city is constantly
under construction as it builds and rebuilds, expands,

E
AC
and develops… It’s well on its way to becoming the

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brand-name city it has long aspired to be.
1 ST

By settling or making an investment in Panama, you the best health facilities in the country—the reasons
can avail of the many benefits that this country has why Panama has a widespread reputation as a
to offer: quick and easy routes to residency, special medical tourism destination. Nicknamed the Hub of
benefits and discounts for retirement-age expats, life
the Americas, you could also take advantage of the
in a U.S.-dollar, low-tax environment…
capital’s well-connected Tocumen Airport, which
A major benefit to basing yourself in Panama City serves the United States and Canada (as well as a host
specifically is that you’d live within arm’s reach of of other countries) with direct flights daily.
PANAMA CITY, Panama 1st Place Global Property Investment Index 2021

Panama City has U.S.-style malls and traditional

open-air markets, skyscrapers and crumbling
Spanish-colonial architecture, five-star restaurants
and hole-in-the-wall eateries… a mix of old and new,
ultra-modern and run-down, laid-back and chaotic…
It’s a heady combo and certainly not for everyone…
Ultimately, what it offers is the chance to live in a
tropical urban setting, a hub of trade and industry,
and the only true cosmopolitan environment in
Central America.

Modern cityscape of Panama City

The Market’s
Risk Factors
Oversaturation Of up with the market constantly, to determine when
demand is changing, so you can make shifts in your
Long-Term Rentals
rates accordingly.

In Panama City, you cannot rent out your property On the other hand, there are a few developments
for less than 45 days, which creates too much available with permits to lease units as short-term
inventory for long-term rentals. Because of the rentals. This creates a unique opportunity for the
number of options available, this might lead you to investor, placing you in a smaller market where you
decrease your rental rates to be able to compete with can profit generously compared to the country’s
the long-term rentals in your area. You’ll need to keep long-term rental market.

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PANAMA CITY, Panama 1st Place Global Property Investment Index 2021

Ease Of Buying
Foreigners have the same legal rights as Panamanians
in property ownership, and the purchase process
is straightforward if you are purchasing titled land.
Foreigners can easily use a self-directed IRA or an LLC
as a local company or in their name to buy properties.

In Panama, untitled land must be owned by a

Panamanian citizen for at least two years before it can
be owned by a foreigner. After this period, it can be Sidewalk in public park at ocean promenade in Avenida Balboa
titled and resold.

Additionally, rights-of-possession titles are common

Foreigners cannot own within 10 kms (6 miles)
in some parts of Panama, especially the Bocas del
of international borders. Both foreigners and Toro region, for example, and this is something all
Panamanians can’t own within 22 meters (72 feet) buyers should be wary of. Rights of possession is not
of the Pacific or Atlantic Ocean (from the high-tide the same as a full title, but it can be converted to full
line). Special permits are needed with some types of title in some cases. To do this, you need the help of a
waterfront construction. trustworthy attorney who is familiar with the process.

The Cinta Costera III (Coastal Beltway) that runs around Casco Viejo on the waterfront of Panama City

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PANAMA CITY, Panama 1st Place Global Property Investment Index 2021

The Purchasing Process should engage a lawyer to assist you with the
purchase process. To find a trustworthy attorney,
Buying property in Panama is a straightforward, ask for word-of-mouth recommendations from
transparent process. You don’t need to be in the other expats, or get in contact with Live and Invest
country to do it; you can appoint your lawyer or Overseas’ recommended attorney here. Never hire
another trusted contact as your Power of Attorney to an attorney associated with the seller.
sign documents on your behalf.
2. Verify The Property’s Title
1. Find A Property That You Want To Buy
You need to verify the property’s title (escritura)
The first step in any property purchase, of course, and get a signed and stamped copy of the
is finding the property that you want to buy. Ownership and Encumbrances Certificate
Panama has a wide selection of property types (Certificado de Registro) from the Public Registry
available, from luxury apartments in Panama (Registro Público) before buying any property.
City to stand-alone houses and villas, condos This ensures that the property is titled and that
in high-end gated communities to diverse pre- there are no complications associated with it or
construction opportunities. liens placed against it. Most likely, you lawyer will
carry out the verification process.
There’s no multiple listing service in Panama,
and real estate agents don’t typically share listings
(although in the city you’ll find that brokers 3. Entering Into Agreements
cooperate more than the countryside). The best
way to find a property is to work with a reputable Most property purchases in Panama involve two
local agent who is well-versed in the purchase types of binding contracts: the promise to buy
process, though you can also buy property without contract and the purchase and sale contract.
a real estate agent. While the broker that owns an In some cases, you can proceed directly to the
agency must be licensed in Panama, individual purchase and sale contract; it depends on how the
real estate agents aren’t and regulations governing sale is negotiated between the buyer and seller.
their practices are limited.
The promise to buy contract outlines the price
Unless you’re fluent in Spanish and have extensive of the property as agreed upon by the buyer and
experience in Panama’s property market, you seller. As a rule, you should negotiate the price

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PANAMA CITY, Panama 1st Place Global Property Investment Index 2021

of the property with the buyer and reject the list use a bank or escrow company in Panama to make
price. The promise to buy contract also lays out your payment. When making your deposit, the
other contingencies, such as the deadline for company will issue an irrevocable letter of payment
the transfer of title, the legal description of the that states that they will transfer the amount owed
property, and whether a deposit is to be paid. to the seller once the title is transferred.

There is a penalty for backing out of the If you have a bank account in Panama, you can
promise to buy contract. Though it’s not a legal wire transfer funds from a U.S. bank to a Panama
requirement, contracts will be in Spanish. We bank and then pay the seller with a certified check
recommend getting full translations before once all the conditions of the purchase contract
signing any contracts or agreements to ensure you have been met.
understand all contingencies.
You can also transfer funds to your lawyer though
Your lawyer or a public notary will draft the you should do this in the presence of the notary so
purchase and sale contract, locking in the sale of that there is an official witness of your payment.
the property at the agreed upon price and terms. Avoid transferring funds directly to the seller as a
It’s common for a deposit of 10% of the purchase payment method.
price to be paid at this stage.

The notary will draft a new title in the buyer’s name 5. Recording The Purchase At The Public Registry
(including a description of the property and any
special terms that apply) for a minimal fee. Both the This is the final stage of the purchase process,
buyer and seller need to sign the new title. which your lawyer will carry out for you. It can
take anywhere from 2 to 30 days to complete
for previously titled properties. The purchase is
4. Making Payments not final until registered at the Public Registry.
You must also file the deed with the tax
There are a few ways to make a property payment records department.
in Panama…
The average timeline of a property purchase
If you made a deposit on the property and/or if in Panama is six weeks, though this can vary
you don’t have a bank in Panama, you will likely transaction to transaction.

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PANAMA CITY, Panama 1st Place Global Property Investment Index 2021

Property Costs
Real estate here costs US$2,526.77 per square meter
on average. You can find units in older buildings from
around US$2,000, while furnished new builds can go
up to US$3,800 per square meter.

Located in posh Calle Uruguay, close to many hotels,

grocery stores, restaurants, cafés, and the Cinta
Costera, is a new pre-construction building starting
at US$250,000 for a 71-square-meter unit. There are
bigger units available up to 135 square meters. This
project has developer financing at 4.5% interest, with Residential buildings in Panama City
a 15% down payment. It comes fully furnished and
has on-site rental and property management.
low-density building with just one tower and less than
Another new project located in central Panama City, 20 stories. These are one-bed, one-bath, 41-square-
in the middle of Via Porras and Via España (two meter units that include their own small balcony.
major roads), is on the market for US$90,700. This is a Price per square meter is around US$2,212.

Modern cityscape of Panama City

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PANAMA CITY, Panama 1st Place Global Property Investment Index 2021

Market Momentum
This resilient nation pulled through the last 2008
crisis more or less unscathed. And with both the
canal and the copper mine adding to its coffers over
coming years, we expect the country to continue her
upward climb...

Like almost every other country in the world, Panama

has struggled with COVID-19, but the vaccine is
being administered throughout the country and the
economy has started to recover. The government is Beautiful old building renewed in Casco Viejo, Panama City
open to providing incentives to restart the economy
and the time to capitalize on outstanding real
individual purchasers. Plus, developers are offering
estate deals has never been better. Seeking foreign
incredible deals on real estate including financing,
investment to work with the U.S.-dollar-pegged
economy, Panama is offering several quality programs inventory close-out deals, and cash prices.
to attract foreign nationals including tax abatements.
It doesn’t matter if you are considering a
Pre-construction properties are coming online in condominium for your own to capitalize on the
time to capitalize on the 100% tourist tax abatement residency incentive or an investment to build a
incentive and the ability to gain residency in 30 days revenue stream and equity by renting to tourists,
with an investment of US$300,000 in real estate. buying in Panama offers great returns and value for
Property tax relief is also in effect and available to your initial investment.

Liquidity
The Panama real estate market—especially the high- Europeans are buying for second homes like the
end Panama City and City Beach markets—relies on North Americans… or buying to move to Panama to
foreign buyers. For years, people have claimed that live. South Americans have come to buy because they
Panama City is overbuilt, but somehow the inventory see Panama as the most stable market in the region—
gets absorbed and the market continues to grow… especially true considering the political context of
Colombia and Peru.
But Panama’s real estate market doesn’t rely on
The moratorium on bank lending that was put
just one foreign market. North Americans come in place during the pandemic was recently lifted,
to Panama and buy for vacation or retirement so locals are being financed once again and re-
homes. Political events of the past few years plus stimulating the market. Panama has a big and growing
the pandemic have Americans looking outside middle class—a group not often catered to, as most
the borders of their home country, and the North Panama City developers build for the foreign market
American market is strong. or the high-end local market.
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PANAMA CITY, Panama 1st Place Global Property Investment Index 2021

Foreign Exchange
Controls
There are no currency or foreign exchange controls
in Panama.

Average Closing
Costs
Transaction costs range between 7.30% and 9.30%
of the value of the property. As the buyer, you are
responsible for the legal fees (1% to 1.5% of the
property value) and the registration fee (0.30% of
the property value) for registering the public deed
containing the change of ownership annotation at the
Public Registry.

Legal fees for registering a deed can vary: some

lawyers charge a percentage of the purchase price;
others charge a flat fee. For a property purchase of
Skyscrapers on seafront of Panama city, Panama
US$250,000, the legal fee for registering the deed will
be about US$2,000. Some developers don’t charge to
The seller calculates a 10% tax on the profit: if this
register deeds.
is lower than the 3% withheld by the buyer, the
seller can request reimbursement for the difference;
The seller is responsible for the real estate agent’s fee
if it is higher, the seller can consider the 3% as the
(3% to 5% of the property value) and the transfer definite tax.
tax (2% of either the updated registered value of the
property or the sale price—whichever is higher. The If buying and selling property is part of your normal
updated value is the registered value, plus 5% per business activities, you will be taxed at the standard
annum of ownership). income tax rates on your capital gains.

Other transaction and closing costs can include a

Capital Gains Tax percentage of the transaction fee set aside in escrow.

Capital gains from real estate sales are taxed at a flat

rate of 10% if you are not in the business of buying Property Tax
and selling property. The buyer must withhold 3% of
the purchase price or the ratable value of the property Property tax applies to all real estate in Panama and is
(whichever is higher) as an advance payment of tax. imposed at progressive rates. Under a new tax scheme,
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PANAMA CITY, Panama 1st Place Global Property Investment Index 2021

which went into effect on Jan. 1, 2019, property with (Patrimonio Familiar) has the right to receive the new
a registered value of US$120,000 or less is exempt tax schedule.
from property tax. For property valued between
US$120,000 and US$700,000, property tax is 0.5% on All additional residencies, land, commercial, and/
the difference over the US$120,000 exemption. or industrial properties will be taxed according to
this schedule:
All properties over US$700,000 pay US$2,900 (the tax
on the first US$700,000) plus 0.7% tax on the amount • Valued up to US$30,000: exempt.
over US$700,000.
• US$30,000 to US$250,000: 0.6% tax on the amount
To qualify for this scheme, the property must be over US$30,000.
registered as “Patrimonio Familiar,” property destined • US$250,000 to US$500,000: 0.8% tax on the amount
for permanent family habitation by its owner, or as over US$250,000.
“Vivienda Principal,” property destined for permanent
residential habitation by its owner. If you own more • Values over US$500,000: 1% tax on tax on the
than one property, only your primary residence amount over US$500,000.

Panama city coastline landscape

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PANAMA CITY, Panama 1st Place Global Property Investment Index 2021

Available Financing
In the current climate, even as a resident, you’ll have restriction for applicants at the age of 75. In other
trouble getting a loan at all in Panama unless your words, in order to qualify for the full 25-year loan
income is generated in Panama and maybe not even term, the applicant would need to be 50 or younger.
then. The pandemic economy has made banks in this The interest rates range from 5% to 7.75%. Banks here
country nervous. also require applicants to purchase a life insurance
policy for the amount of the mortgage naming the
That said, non-resident property investors in Panama bank as the beneficiary.
have been able to get financing of up to 80% LTV.
However, historically you’ve needed to put down at Most real estate transactions involving foreigners are
least 30% to 40%. in cash. With certain developers, it can be possible
to get a loan. At Live and Invest Overseas, we have
The term of the loan could be up to 25 years, worked with developers that offer interest rates as low
depending on the age of the applicant—there’s an age as 4.5%, with deposits from 15%.

Rental Returns Price per square meter US$3,800

Administration fee per square meter US$4
Management fee 12%
Unit size 90 square meters
Approx. % yearly occupancy 80%
Nightly rate US$140

Unit’s sale price US$342,000

Approx. monthly rent US$3,406.67
Management fee US$408.80
Monthly program fees US$250
HOA fees US$360
Aprox. electricity costs US$100
Residential district of Panama City
Cable and internet US$50

Here is an example of a pre-construction building

with a permit for short-term rentals of less than 45 Monthly income US$2,237.87
days located in one of the most sought-after areas Annual income US$26,854.40
of the city—Calle Uruguay. It includes a furniture
ROI 7.85%
package and on-site rental and property management.
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PANAMA CITY, Panama 1st Place Global Property Investment Index 2021

Residency Benefits
To get residency in Panama, you have four main During this six-month period, you need to stay in the
options: Panama’s Friendly Nations Visa, the country while your application is being processed.
Retirement Visa, the Self Economic Solvency Visa, If for some reason you need to leave the country,
and the Qualified Investor Visa. applying for a special permit can be granted. It is
recommended that you apply immediately for the
The procedure to get any residency visa is carried authorization to leave the country as you are applying
out at the central offices of the National Immigration for your visa to save you the trouble in case of an
Service of the Republic of Panama, located at the emergency. Traveling out of the country during the
Ricardo J. Alfaro Avenue. You need to be present in processing period without the special authorization
the country at the moment you apply. will be penalized with a US$2,000 fine.

First, you’ll need to register your passport in the These are the usual documents you will need for the
Affiliation Department of the National Immigration application of any of the visas:
Service. Your passport will get a seal with a sequential
registration number. After this is taken care of, you 1. A clean criminal record.
will file for the residency application. All this will be
carried out by your lawyer, even if you do need to be 2. Marriage certificate (if your spouse is being added
here for the application. Your lawyer will make sure as a dependent).
you have met all the requirements for the specific visa
you are applying for. 3. Birth certificate (and your dependent’s if they are
children under 25 years of age).
You will then go with your lawyer to the Migration
Department, where you will get an ID card, valid for All of these can be sourced in your home country
six months. In this moment your status as a foreigner and must be authenticated in your country’s Panama
will change from tourist to resident in process. consulate or apostilled.

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PANAMA CITY, Panama 1st Place Global Property Investment Index 2021

Documents that you will need to source in Panama: Friendly Nations Visa
1. Copy of your passport authenticated in a Citizens of any of the following countries can apply
Panamanian public notary. for a Friendly Nations Visa: Andorra, Argentina,
2. Health certificate issued by a qualified physician Australia, Austria, Belgium, Brazil, Canada, Chile,
in Panama. Croatia, Cyprus, Czech Republic, Denmark, Estonia,
Finland, France, Germany, Greece, Hungary, Hong
3. Receipt of payment of US$250 to the
Kong Administrative Region, Ireland, Israel, Japan,
National Treasury for your application in a
migration category. Latvia, Liechtenstein, Lithuania, Luxemburg, Malta,
Monaco, Marino, Montenegro, Netherlands, New
4. Receipt of payment of US$800 to the National Zealand, Norway, Poland, Portugal, Serbia, Singapore,
Immigration Service as a repatriation deposit. Slovakia, Spain, South Africa, Korea, Sweden,
5. Six ID-sized photos. Switzerland, United States of America, Uruguay, and
United Kingdom.
Your lawyer can take care of authenticating
your documents at the notary, as well as making Requirements for the Friendly Nations Visa until
your payments. Aug. 7, 2021:

Casco Viejo, Panama City, Panama

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PANAMA CITY, Panama 1st Place Global Property Investment Index 2021

1. Creation of a Panamanian company or hold

property title in your name for a Panama property
of any value.
2. Open a bank account for no less than US$5,000.

Changes are coming August 2021 to the Friendly

Nations Visa. The usual procedure was to immediately
receive a permanent residency card after the six-
month processing period. Coming this August, you
will first get a provisional residency card that is valid
for two years. After the two years are up, you will need
to apply for a permanent residency card.

The biggest change for the new Friendly Nations

Visa is that it will require a real estate investment in
Panama property of at least US$200,000 either in cash
or through a mortgage from a local bank.

This visa was redesigned as a way to keep the

Panamanian economy active and promote foreign
investment and job creation.

Pensionado Or Retirement Visa

With this visa, after the six-month processing period
is over, you will be granted a permanent residency The iconic F&F Tower in Calle 50, Panama City
card without an expiration date.

Requirements for the Pensionado Visa: For this visa, the real estate purchase will need to be
made in cash.
1. Receive a pension of more than US$1,000 a month.
2. Proof of your pension. For the long-term bank deposit, a foreigner needs to
invest a minimum of US$300,000 in a long-term bank
As a qualified Pensionado Visa holder, you will be deposit for a minimum of five years, an additional
entitled to a one-time exemption of taxes on the US$2,000 for each dependent, and the deposit needs
importation of household goods up to US$10,000
to be in the applicant’s personal name. The monthly
and a 100% duty exemption on the importation or
interest earned from the deposit can be deposited into
purchase of an automobile every two years.
any Panama bank savings account, and the earned
interest is not subject to income taxes in Panama.
Self-Economic Solvency Visa
For the real estate investment, an additional US$2,000
This visa requires a US$300,000 investment as a is also needed for each dependent (if applicable). The
long-term bank deposit or in a real estate purchase. title of the property can be in either the individual’s
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PANAMA CITY, Panama 1st Place Global Property Investment Index 2021

name or in a Panama foundation’s name as long as a property purchase. In October 2022, this amount
the applicant is a beneficiary or the founder. Title will increase to US$500,000. You can also invest
in a Panama trust or corporation will not qualify US$500,000 in securities as an individual or a legal
you for this visa. The primary applicant must also
entity. Or you can invest in a time deposit with
provide proof of income and that they will be able to
economically support themselves and their family. US$750,000 for a five-year period.

For this visa, you can start the process outside

As with the new Friendly Nations Visa, you will be
granted a two-year residency permit, and then upon of the country. The approval of the visa will take
expiration you will be able to apply for the permanent approximately one month, and it does not require
residency card. a processing card. Aside from the investment
amount, you will need to pay a fee for US$5,000 to
the National Treasury, US$5,000 to the National
The Qualified Investor Visa
Immigration Service, and US$1,000 to each of the
For this visa, you will need to make and investment mentioned institutions for each of your dependents
of US$300,000 as an individual or a legal entity in (if applicable).

Market Opportunity

Panama City’s Avenida Balboa is one of the most

prestigious addresses in Central America. This is
a luxury location with, typically, the price tag to
match. However, we have negotiated a deal on a
limited number of units, the likes of which you
won’t see again. What if you could take your place
along this luxury row for not a million dollars…
but US$122,500? Rental income is projected at
6% ROI. However, when tourism returns, there
is strong upside potential. This building offers
everything the high-end rental market is looking
for... but, remember, you are paying below cost for
your apartment.

For more details on this exclusive

offer, go here.

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PANAMA CITY, Panama 1st Place Global Property Investment Index 2021

Criteria
For Panama City, Panama

Our grading scale goes from 1 to 10, with 1 being the

lowest grade and 10 being the highest grade.

Market Risk Factors 7

Ease of Buying 9
Property Costs 8
Market Momentum 9
Liquidity 7 Total

7.73
Real Estate Trading Currency 10
FX Controls 10
Average Closing Costs 5
Available Financing 6
Rental Returns 7
Residency Benefits 7

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