The Impact of the New Government on Panama Real Estate

Panama’s presidential election was carried out in May 5^th, declaring the winner Jose Raúl Mulino as the new president of Panama, which was sworn in July 1^st.

With the recent election of a new government, questions have emerged regarding the potential impacts on the real estate sector. Policy changes, new government priorities, and adjustments in economic strategies all have the potential to reshape the environment of Panama’s real estate market.

The real estate sector in Panama has long been an important contributor to the country’s economic growth, attracting both domestic and international investors. Below we present some of the points that can influence the following years of the real estate sector in Panama.

Continuation of Pro-Investment Policies

Historically, Panama has been known for its pro-investment policies, which have helped create a growing real estate market.

Previous administrations have implemented tax incentives for foreign buyers, including exemption from property taxes for several years and special visas for investors.

The new government has expressed a desire to continue attracting foreign capital, which is a positive indicator for the real estate market. By maintaining or expanding these incentives, the new leadership can ensure that the sector continues to grow and appeal to international buyers.

President Mulino also has expressed on its proposals increase the tourism demands with special agreements with tour operators and airlines, as well as implementing strategies to become the country with the highest minimum wage in Latin-America, and support the Panama Canal Authority in the new developments which can increase capacity and competitiveness.

All these proposals increases the purchasing power and popularity of Panama as a global Hub, positively affecting all industries including real estate.

Infrastructure Development as a Focus

One of the most significant promises of the new administration revolves around continued infrastructure development. The new government has committed to expanding infrastructure even further, focusing on transportation networks, urban development, and modernizing key public services.

Key projects proposed by Mulino includes the plan to extend the north corridor to the cargo terminal of the airport, as well as constructions of new roads across the country and surrounding areas of the city, and improving basic services in Chiriquí, Pedasi, Colón and Panama City.

These infrastructural advancements are expected to impact the real estate market positively, particularly in regions that were previously less accessible or underdeveloped.

Property values tend to increase in areas where infrastructure is improved, and the government’s emphasis on these projects suggests that both residential and commercial real estate in emerging areas will experience growth.

Potential Challenges

While the new government is promising continued development, there are also concerns among investors about potential policy shifts that could negatively affect the market.

One area of concern is the government’s approach to fiscal policy. Possible changes in property taxes, foreign investment regulations, or rental laws could alter the attractiveness of the market.

Additionally, the global economic environment and Panama’s recovery from the effects of pandemic are other critical factors. The pandemic slowed the real estate sector as economic uncertainties impacted buyer confidence. While the recovery is underway (and faster when compared to other countries in the region), how the new government navigates economic challenges, such as inflation or rising interest rates, will definitely affect real estate growth.

The new government in Panama presents both opportunities and challenges for the real estate sector. With continued investment in infrastructure and the potential to maintain pro-investment policies, the real estate market has the potential for further growth.

If managed well, Panama’s real estate market can continue to perform well under the new administration, offering considerable benefits to both local and international buyers.