Real Estate Without Borders: Panama Real Estate Investment

Episode Title: Panama Real Estate Investment
Host: Real Estate Without Borders
Guest: Sabrina, Panama Real Estate Expert
Release Date: April 4, 2025

1. Introduction and Guest Background

In this episode of Real Estate Without Borders, host Dave and co-host Fosh welcome Sabrina, an expert in Panamanian real estate, to discuss the burgeoning property market in Panama. Sabrina brings five years of real estate experience, initially in Ontario before relocating to Panama three years ago to assist international buyers with real estate transactions and offshore financial services.

[00:25] Sabrina: "I've been in real estate now for, like, five years. First I was in Ontario, and then I moved here about three years ago and started to just work with international buyers to help them explore Panama and move here."

2. Panama Real Estate Market Overview

Price Points and Prime Locations

Sabrina provides an insightful breakdown of current real estate prices in Panama, emphasizing the diversity in the market. Properties range significantly based on location and quality.

[02:54] Sabrina: "You'll have homes ranging from around $2,000 to $3,500 per square meter in prime areas like Punta Pacifica and Costa del Este within Panama City."

She translates these figures for Canadian listeners, noting that higher-end properties start at approximately $200 to $350 per square foot. Mid-range properties, such as those in San Francisco, are available around $1,500 per square meter, while more affordable options can be found widely.

[04:49] Sabrina: "You can find a condo here for $100k and up to $4 million, depending on what you're looking for."

Impact of the Pandemic on the Market

Discussing the pandemic's effect, Sabrina notes that Panama's real estate market has remained relatively stable, with only minor fluctuations during the height of the COVID-19 crisis. Post-pandemic, there is a resurgence in demand, particularly from foreign buyers, gently driving prices upward while maintaining overall affordability.

[05:12] Sabrina: "There really hasn't been honestly much of a difference. The market in Panama has been pretty flat historically, it's been pretty steady."

3. Buyer Profiles and Foreign Investments

Sabrina highlights the diverse pool of buyers investing in Panama, primarily from Canada and the United States, but also including Europeans and South Americans seeking stability and new opportunities.

[05:56] Sabrina: "There's a big mix. You have investors purchasing pre-construction for higher Airbnb returns, retirees seeking ready-to-move-in properties, and digital nomads wanting residency."

This diversity underscores Panama's appeal as a dynamic and inclusive real estate market catering to various investment strategies and personal lifestyles.

4. Airbnb and Short-term Rentals in Panama

A significant topic is the regulation of short-term rentals. Sabrina explains that while Panama City generally restricts rentals shorter than 45 days, the historic district of Casco Viejo is an exception, allowing for Airbnb operations without stringent limitations.

[06:55] Sabrina: "Regulations for Airbnb are primarily in Panama City, except in Casco Viejo where short-term rentals are permitted without restrictions."

Newer developments often include provisions for Airbnb use, having secured the necessary licenses, making them attractive for investors aiming for higher returns through short-term rentals.

[08:10] Sabrina: "The newer developments are designed specifically for expats and tourists, often yielding 8 to 12% returns."

5. Pre-sale vs. Resale Properties

Transaction Processes and Payment Structures

Sabrina differentiates between pre-sale and resale transactions, emphasizing that pre-sale offers more flexibility and attractive financing options for investors. Typically, foreigners are required to make a 30% down payment, which can be structured over time with developer cooperation.

[08:50] Sabrina: "The newer constructions bring in like 8 to 12% returns. The process is straightforward: reserve the unit with a $2,000 deposit, sign the contract within 30 days, and arrange the remaining payments."

In contrast, resale transactions are more complex due to the lack of a centralized MLS system in Panama, making it imperative to engage reliable lawyers and real estate agents to navigate legalities and ensure clear titles.

[13:06] Sabrina: "The process itself is a lot different. The lawyer handles everything, so you have to hire a good lawyer and a good real estate agent as your safeguards."

Contract Differences

Unlike the standardized purchase agreements in the US and Canada, Panamanian contracts are individually drafted by lawyers, resulting in variations across transactions. This necessitates careful review and professional assistance to ensure favorable terms.

[24:16] Sabrina: "In Panama, lawyers draft the contracts, meaning the terms can be different depending on who writes it. It's not very structured."

6. Rental Market and Investment Returns

The rental market in Panama presents varying opportunities. Sabrina notes that long-term rentals offer modest returns, especially for mid-range properties, while higher-end condos can command significantly higher monthly rents.

[26:29] Sabrina: "A mid-range condo might rent for $1,000 to $1,300 a month, whereas higher-end condos can fetch $2,000 to $3,000 monthly."

However, she cautions that landlords need to invest in quality furnishings to maximize rental income, as subpar properties do not perform well in the competitive rental market.

[27:27] Sabrina: "Some landlords furnish with subpar furniture, not realizing that investing a little more upfront can increase rental income by $500 more per month."

7. Real Estate Practices Differences

Comparing Panama to other markets like Canada and Mexico, Sabrina highlights significant differences in real estate practices, particularly in how transactions are handled and the role of legal professionals.

[23:30] Sabrina: "The actual documents and process aren't that much different, but the contracts are not standardized and depend on the lawyer drafting them."

This lack of standardization necessitates a strong reliance on professional legal assistance to ensure secure and transparent transactions.

8. Economy and Market Stability

Panama's economy remains robust and relatively unaffected by global inflation trends. Sabrina attributes this stability to the Panama Canal's significant revenue, which has historically insulated the country from economic volatility.

[33:26] Sabrina: "The economy is pretty stable. Inflation isn't out of control compared to much of the Western world."

9. Cost of Living in Panama

The cost of living in Panama is highly affordable, especially when local shopping practices are adopted. Sabrina advises shopping at local markets to maximize savings, highlighting that expenses like groceries can be remarkably low.

[33:59] Sabrina: "Groceries are very affordable. For example, 10 pieces of tuna steak caught that morning cost around $20, and you can buy three weeks' worth of fruit for about $14."

This affordability extends to everyday living, making Panama an attractive destination for both residents and investors seeking lower living costs.

10. Community and Cultural Insights

Sabrina emphasizes the pride Panamanians take in their country and their resilience against external narratives that might affect economic policies or real estate perceptions. This strong national identity contributes to a welcoming environment for foreign investors.

[16:08] Sabrina: "Panamanians are very prideful and value their country, not being swayed by external statements like those from Donald Trump."

11. Conclusion and Contact Information

As the episode wraps up, Sabrina shares her contact information and social media handles, encouraging listeners interested in Panama real estate to reach out for personalized assistance.

[35:39] Sabrina: "You can follow me on social media as the Panama Girl, and feel free to email me for any real estate inquiries in Panama."

Host Dave assures that Sabrina’s contact details will be available in the show notes for listeners seeking to explore Panama’s real estate opportunities further.

[36:13] Dave: "We'll put all your contact info and links to your socials in the show notes if anybody wants to reach you."

Key Takeaways:

• Diverse Market: Panama offers a wide range of property options catering to luxury buyers, retirees, investors, and digital nomads.
• Stable Pricing: The real estate market remains steady with modest post-pandemic growth, making it an attractive option for long-term investment.
• Investment Opportunities: High returns through pre-sale properties and strategic locations like Casco Viejo for Airbnb rentals.
• Legal Considerations: Importance of hiring reputable lawyers and real estate agents due to the non-standardized contract processes.
• Affordable Living: Significant cost savings available through local shopping and moderate rental prices, enhancing the overall investment appeal.

For listeners interested in expanding their real estate portfolios internationally, this episode provides a comprehensive overview of Panama’s promising market landscape, backed by expert insights and practical advice.