While Asian and European companies and investors protect their assets (among other options) in real estate in UAE, their counterparts in North and South Americas rather prefer investments into real estate in Panama. Even though nowadays more and more investors come to Panama from Europe as well.
This fact merits some more insights and explanations.
Actually, Panama can be seen as a direct competitor to UAE in regards of real estate, just that it is located in Central America.
You can reach UAE on a flight from Europe within 4,5h (Athen) to 7h (London), Panama is as close as 3h flight from Miami, 5,5h from Toronto or 7h from Santiago de Chile. UAE has a time difference of just 2-3 hours compared to Central European time zone, while Panama is within the EST time zone (UTC-5) used among others on the US East Coast. In both cases jetlag is rather moderate, if at all existing.
UAE experience currently a boom of real estate (we wrote about it in another article), caused by the governmental demographic development plans, convenient location between Europe and Asia, strong security, reliable and worldwide renowned construction companies, and favorable tax regimes.
Panama is conveniently located between North and South Americas, it is a financial center for Latin-American countries, one of the most stable economies in the region and one of the most secure countries in Central America, in Panama City you can find regional headquarters of many multinational companies and governmental organizations as well as the Latin-American Parliament.
This explains the fact that many international expats working for international corporations or governmental organizations come to work and to live in Panama City. Also for the local population Panama City is a strong magnet due to the concentration of many companies and jobs availability.
The growing population of Panama City causes the increase of the prices for real estate (equally for purchase and rental). In the last years, the population growth was very stable at ~2% year over year.
As Panama plans to join Mercosur by the end of 2024 as associated member, this will promote a further move of Latin-American population towards Panama and a further growth of real estate prices.
West- or northwest bound, the development of Panama City is limited by the Panama Canal and natural protected areas (of which you can find over a hundred across the country), so that the city develops rather to the east or north-east. In the eastern part of Panama City, you also find the international airport Tocumen connecting Panama City to around 100 destinations worldwide on direct flights making it to one of the biggest hubs in Central America.
Interestingly, the most modern and best-developed district of Panama City is located not far from the airport at the East Cost (Costa del Este). International expats and well-heeled Panamanians try to find an apartment in Costa del Este making it to the most attractive district (and one of the most rewarding for investors). Within Costa del Este you can find everything from the most modern studios and apartments to parks, golf courses, restaurants, supermarkets, and other conveniences. Despite the short distance to the airport (driving time about 10-15 minutes only), you do not have any flight noise as the district is completely aside of the approach path.
In the currently developed projects constructed by a Swiss company with very high-quality standards, the investment opportunities at Costa del Este start from about 79.000 USD for a key-ready studio.
On the opposite side of Panama City, close to the Panama Canal there is another interesting investment area – the heritage side of the old city, Casco Viejo. Historical, colonial buildings are freshly renovated (or being renovated) and represent a good investment opportunity, offering place for luxury apartments and 5* hotels.
If you prefer to purchase a bigger property outside of the hustle and bustle of the city, the area of Coronado offers perfect apartments, houses and villas. Actually, I’m talking about the province named Panama Oeste, but within the local community the name of town of Coronado expanded to the entire area all around. Located just about 1-1,5 hours’ drive from Panama City, this area is well developed, mainly because of the expat community coming from the USA and Canada. Despite the smaller population compared to Panama City, you can find several supermarkets, clinics, shops and other conveniences needed for a relaxed lifestyle. This coastal area is also a real hotspot within the locals, who like to spend weekends and vacations at the Pacific beaches of Panama.
While investors from many American countries pull out their capital, bring it to Panama and purchase whatever is available there, many Europeans hesitate to invest in Panama. Some do not like the distance and the jetlag, others have concerns about the legal basis of the real estate purchase associating Panama with Panama papers, blacklists and overall crime in Latin America.
The property rights in Panama are better protected than the property rights in many European countries. The government in Panama has never permitted any offense against the property like additional property levy, while European countries imposed it in the past (like in Germany) and this levy is currently being seriously discussed again in certain countries nowadays. The legal basis in Panama strongly protects the property rights of the owner. The purchase goes via a notary, is legally secured and properly registered.
Other positive points of the real estate in Panama are
- Max. 1% property tax (for property with value above 500.000 USD, else lower) if you purchase the property as an investment, for rental or as a second domicile
- Possibility of the property tax exemption for up to 10 years if you register the property as your primary residence for Panamanian authorities
- Lower property tax if you continue using the property as your primary one after the exemption period
- Possibility to get a permanent residency if the property value exceeds 300.000 USD for friendly nations or 500.000 USD for all other applicants
If you wish to better regulate the heritage within your family and relatives or protect your wealth, you can easily incorporate a Panamanian foundation, and your foundation would be the buyer and owner of your real estate. The acceptance of the Panamanian foundation abroad can differ from country to country. While, for example, Germany and Austria do not accept foundations incorporated outside of Europe (that’s why many Germans and Austrians are working with foundations in Liechtenstein), it is possible to have a Panamanian foundation for Swiss nationals. Many other countries do not have any regulations about foundations in their law at all.
The foundation in Panama, as well as incorporation of companies and permanent residency in this wonderful country would be a topic of other articles, here just to mention that the costs of the Panamanian foundation are much lower than those in Liechtenstein, while the flexibility of the use is much broader.
Singabiz is working with one of the most serious, well-established and experienced real estate agents in Panama as well as with a world-renowned English-speaking lawyer cabinet for legal topics be it residency, incorporation of companies, foundation or real estate purchase. Should you have investment plans and look towards Panama, do not hesitate to book your first consultation. In case you do not want to wait for articles about companies, foundations or permanent residency in Panama, we are ready to consult you on these topics any time as well.
