How to Navigate Panama’s Real Estate market as a foreigner

The real estate business in Panama, particularly as a foreigner, its very dynamic. There are a lot of options to choose from, both in Panama City and Interior cities that, if chosen well, it could give foreigners either a good rental opportunity or appreciation over the time.

But getting around Panama and understanding the real estate market from a foreigners perspective is different than from locals, since there are aspects from the process of purchasing and financing that are different, and there are a variety of residential projects that are tailored for the local segment and others for the foreign buyers.

Below there are some of the factors that you need to pay attention while exploring Panama real estate:

Financing, down payments and FECI fee

If you are looking to get a mortgage in Panama when purchasing a real estate property, the financing approval process is generally stricter for foreigners than for locals. But it also highly depends of if you are a foreign temporal resident or a permanent resident.

When discussing with the bank about the terms of the mortgage, it is very likely they will require a higher down payment for expats, such as 15% to 20%, sometimes more. While with locals they are likely to get special terms such as a 5% down payment.

Bear in mind that interest rate for the mortgage can vary as well, especially if you are not a foreign permanent resident, since there is an additional 1% FECI fee by law that applies for nonresidents, which his the Special Fund of Interest Compensation (Fondo Especial de Compensacion de Intereses, in Spanish).

Real Estate Prices

When sourcing for a well located apartment in Panama City or in the Beach, the real estate prices can be considered very competitive when compared to similar properties in North America or some countries in Europe.

While this may be true, as a foreigner, it is recommendable to consider multiple choices of the same type of apartments, in similar locations and with similar amenities, to get a good glimpse of the market prices before making a purchasing decision.

It is important to rely on a good real estate agent that can give you multiple choices, can explain you how the market works and give you all the information such as the common amenities, good locations and building information, so you can get the best deal out of a property in Panama.

Location, New and Second Hand Properties

There are numerous good locations in Panama City and in the beach communities, and definitely location is an important factor when choosing a property, particularly if you would like to have a good return in terms of appreciation or rental income.

While some locations are good, it is important to observe and explore different alternatives in each of these locations, both in new residential projects and also second hand projects. The new residential buildings in Panama City are likely to have a much higher price per square meter, and the rental income and appreciation in value of such properties will highly depend on the quality, amenities and type of apartment the developer is building in such project.

Most prime locations in Panama also have second hand buildings and properties, that if chosen well, they could possibly give higher returns in the future.

The benefit of a second hand building that is in the market already for few years is that probably is already popular and you can get more feedback on the quality of the property, building and amenities, as well as more competitive prices since these are units that are offered by the market, and not just one developer.

In summary, it is important to keep in mind these aspects when exploring the real estate business in Panama, a good real estate agent can give you the support you will need, and can help you find properties based on your requirements. At the end, the more research and information you can get from the market, the better purchase decision you can make.