Year in Review: Panama Real Estate Roars Back

The COVID pandemic continued to plague the global economy in early 2021 and presented challenges and opportunities for real estate in Panama. Once the markets reopened, Panama sales and rentals soared as buyers viewed the country’s established market as a safe haven during turbulent times.

At the end of the year, let’s take a step back and highlight the big news trends of 2021.

The US alternative. With home prices skyrocketing in the United States, investors looked for real estate investments that could offer real growth in the years to come. Panama was once again viewed as a great alternative, offering stability, a dollar-based economy, and quality real estate below market value and replacement cost.

The rise of crypto. Cryptocurrencies began to play a role in sales as more owners expressed their willingness to accept Bitcoin and other forms of crypto. No longer a theoretical concept, it is clear that crypto will play a more important role in the future. The government is also considering laws that would make crypto an accepted currency and create a regulatory framework for transactions.

Ocean Reef is thriving. This year the artificial islands in the Bay of Panama were among the most successful in the world. Sales burned with Beach Club Residences, Seascape, Almar, Waterfront 21 and Casa del Mar joining the list of sold out developments. Construction work on the main infrastructure also advanced, with the opening of the marina and the largest water sports club in Panama City.

Rental rebound. At the height of the pandemic, vacancy rates rose and rates fell. That changed in 2021. In PPR’s property management, the occupancy rate rose to over 95% and rental prices rose steadily. The flight to quality was clear, because apartments in top buildings attracted competition. During the year, PPR’s property management division added 75 managed units as more and more investors turned to our trusted professional team to take care of their investment properties.

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Falling supply. The pandemic has encouraged the cancellation or delay of an unprecedented number of developments. Almost no new projects were launched in 2021 and banks were reluctant to fund new home loans. As a result, there was an increased sales volume and the inclusion of unsold property developers as well as resale apartments that had long been on the market, which were finally sold. The decline in supply will have a profound effect on the market – and prices – in the future.

Bulk sales are increasing. Investors increasingly focused on already rented condominium portfolios in the buildings with the highest rental demand such as the Ocean Club in Punta Pacifica, Yoo Panama on Avenida Balboa and the Regent in Costa del Este. Investors typically bought packages of 5 to 15 rental apartments in these popular buildings, generating cash flow from day one. These bulk buyers focused on buildings with unique equipment packages and high demand from multinational executives.

Top developments nearing completion. Construction on some of the most anticipated developments in Panama City continued. The list contains the Wanders & Yoo in the city center, La Maison by Fendi Casa in Santa Maria and the Beach Club Residences on Ocean Reef. In many cases, buyers who purchased units at front-end prices will see significant increases as the buildings are completed and move-in begins.

New visa requirements. Panama has introduced a new “Golden Visa” rule that provides real estate buyers with a route to residence, a huge advantage in the international market. The visa was a big step forward and was one of the most talked about topics among PPR clients. The government has also introduced a new “digital nomad” visa that will make it easier for teleworkers to set up offices in Panama. Both guidelines strengthened Panama’s image as one of the most hospitable countries in the world for international property buyers.

All of these trends in 2021 should carry over into the new year. If anything, they are likely to increase as the pandemic continues to subside and markets return to normal. With all of these factors – and significant economic growth – next year will be one of the best in Panama’s property market history.

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