Is it an Economical Time to Buy in Panama?
Many baby boomers are reaching the age where retirement is a looming prospect. For many, it is an opportunity to slow down and finally be able to enjoy the fruits of your labor.
You may have outgrown the home your family grew up in, your family may have scattered to new opportunities, never ending inflation is rapidly gnawing away at your savings or perhaps you simply crave something new, an adventure to spark this new phase of your life.
For those of us who chose the path of adventure, the expat life can be an attractive alternative. For the well traveled, perhaps that one special place has been lingering in the back of your mind. For the rest of us, a bit of wanderlust opens vast opportunities to research. The Internet is the most valuable tool and can provide reams of information as you search for your new destination.
Eventually you will end up here and you will see how many expats live in Panama. It may be a bold statement and I proclaim it with confidence. Your initial search results in any regard to topic will include Panama.
Consistently ranked at the top 10 places to visit in Panama and ten of the highest cumulative scores across all categories. Best retiree country (#1 in 2019 again per International Living’s Annual Global Retirement Index), lower cost of living, senior benefits of the Jubilado (Panama Pensionado program), relatively simple immigration process, Panama retirement visa, Panama reforestation visa program, tax exemptions, etc.
The most significant determinant for us was climate. The year we began our search in earnest, only Panama remained untouched after the devastation wrought by hurricane season. Historically, there has never been recorded landfall of a hurricane in Panama though in 1969 a category one tropical storm made landfall in Veragaus with minimal impact. In our changing times, this detail was particularly pertinent.
A few visits to Panama and it is decided this will be your new country. You sell off your worldly goods, pack up the remainder, gather the mountains of paperwork required for immigration and opening a bank account, and here you are!
Somewhere is this frenzy, you are formulating thoughts on your new life as an expat. Consideration of where you will live are high on your virtual priority list.
If you are interested in buying Panama real estate, you are correct to be thoughtful and hesitant with making a significant investment in any new country. Smart investors are risk averse when spending their hard earned life long savings. In this respect, Panama is no different than where you came from. You want your investment to grow, don’t want negative surprises or hassles with your future.
I consider Panama to have three distinct options for prospective homeowners, the city, the mountains or beaches. All have current listings of both condos and houses. Be sure to visit Try Panama’s website where you will be able to find an abundance of listings in all areas for all types of homes such as condos, houses and/or land if you are considering building. Click here trypanama.com
The city is vibrant and busy, suitable to those who are working or seeking an active urban lifestyle. Mountain and beach tend to be more rural and laid back and desirable for expats. Many thriving expat communities are active in all options.
Whichever real estate market works best for you, getting a general understanding of the state of the Panamanian real estate market will give you the information to make an intelligent and informed investment.
Economically, Panama has seen its ups and downs along with the rest of the world markets. The global financial crisis of 2008 significantly impacted real estate market prices and foreign investment waned until 2012.
Infrastructure is now booming again, the skyline littered with cranes and many new projects are nearing completion and occupancy. New property tax laws enacted in January 2019 reduced property tax rates. Tourist numbers are on the rise.
Statistically, year over year MLS transactions have grown with a minor downturn in the last half of 2018 before rebounding to existing levels in the first half of 2019. Residential sales are up, closures on condos and houses have increased in numbers. Selling prices average $240,000 USD to a high of $1.5 million USD across all residential markets.
Specifically in the beaches area which includes Anton, Chame, San Carlos and Penenome, purchases outranked rentals 2:1 in 2019, increasing from an almost 50/50 split in 2017.
If you are coming from a North American real estate market, particularly large urban markets with ever skyrocketing prices, sales over asking price and quick sales, you may be surprised at the non-volatility of Panama property prices and the Panamanian Real Estate market. Fluctuations are minor in comparison.
The upside is that the market is not considered to be in a “bubble” which in an economic downturn eventually will burst. It can be a tricky gamble to buy and sell at the most opportune moment to maximize your value or profits. Slow and steady growth is preferable when risk is considered.
Level setting your investment expectations is important. Coming from one of the most expensive cities in North America, we were able to turn our gains into our expat investment. We automatically factored in the funds invested in our home were sunk costs, with zero expectation for growth.
Instead, we used a simple calculation (not factoring in outside influences such as inflation) to determine our personal risk. We took a figure that represented anticipated monthly rent for a property that met our requirements and determined how many months/years it would take to recoup the purchase price.
A duration of ten years seemed reasonable. After all, if you were renting, once the ten years had passed, you would have nothing in hand but an endless future of rent payments. It was a no brainer decision for us.
No investment is 100% risk free. Panama’s economy is stable and shows steady growth, the country is welcoming to foreign investors, the people are warm and friendly and it is internationally recognized as a great place to retire.
Factoring in the latest statistical details can provide a level of comfort to a potential buyer. Add a reputable real estate agent and a trusted and knowledgeable lawyer and you can reduce your stress through one of the most confusing and yet rewarding experiences as you commence or continue your latest adventure in Panama.
Those of us happily settled into our new life can’t wait for you to join us!