Panama Real Estate Market in 2021: Overview

2020 has been a difficult year for all sectors in Panama, including real estate. Due to the COVID-19 pandemic and its impact on the economy, there is no doubt that has been a year that did everything but what was originally forecasted.

Looking forward to 2021 and the overall performance of the real estate market in Panama, we see a lot of important key points to pay close attention to, not only related to housing, but also to the economy overall, to understand where the market stands and how it can be beneficial for those interested in buying or selling.

Here we will point out some key takeaways primarily related to the economy, political actions and safety measures, that we believe it will be directly related to real estate market performance not only for 2021, but also as a set point for the near future.

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Panama’s Economy and COVID-19 vaccination plan

In overall, Panama’s GDP went down by 20.4% from January until September 2020, but according to the National Institute of Statistics, it cannot consider Panama’s economy going into recession since there are expecting to see improvements 2020’s last trimester and for 2021.

By the end of 2020 there are improvement trends on the economy due to the reopening of several activities and sectors, including the airport. The private sector in general estimates, an economic recovery in 2021 of around 7.3%.

Panama already made purchase agreements with pharmaceutical companies Pfizer, Johnson & Johnson and AstraZeneca, and already approved emergency use of the Pfizer/BioNTech vaccine, which the delivery of the first batch is expected between January and March 2021, with plans to begin the immunization process, starting with healthcare workers, the elderly, and security personnel.

Moratorium and foreclosures

We have noticed a growing trend online for some prospective buyers looking either for more information on increasing inventory of foreclosed properties or discounted real estate due to the pandemic’s economic impact.

However, banks have not yet increased their inventory of properties since the financial relief plan (moratorium) of mortgage and other debt payments are still on until mid-year 2021.

During the first months of the pandemic, the Bank Superintendency of Panama (Superintendencia de Bancos) decreed a financial moratorium law, dictating several economic and financial relief measures which allowed to apply for moratorium of debt payments until December 31st, 2020. Recently, the same institution dictated an extended agreement to keep this moratorium until June 30th, 2021.

Real estate market: looking ahead

In Central America, the economic environment in the region is being heavily affected due to the COVID-19 crisis, Panama is among those affected, however, there are plans in action from the government with measures that aims to boost the recovery.

Moodys and other renowned institutions still see Panama’s economy as one of the less affected by the pandemic. The whole construction sector, being one of the largest job generators in the country, is back on track with the development of the previously mentioned top infrastructure projects, starting the construction of Metro Line 3 by the first quarter.

Currently in the real estate market, there is high inventory for sale of luxury apartments, houses and new condo projects that have resumed construction.

Although the current supply of condos in the capital is high (and keeps increasing), property sale prices have not yet dropped down much (with some exceptions), rent prices on the other hand, have lowered significantly.

As for the real estate scenario in 2021 in Panama, there are some key factors that will weight significantly on the performance of the housing market, like how fast vaccines will arrive and given to the population, what measures taken from the government will work on speed up the recovery and finally, the actions from the banks and the regulating bureau in terms of interest rates and the moratorium.

Panama scenario in 2021 aims to be a buyer’s market, giving them chances of discounted properties and flexible options in terms of financing. The country is still attractive in the region due to its strong financial institutions, dollarized economy, safety and strategic location. So as the economy will be entering in a recovery process, it is very likely to perform better than other countries in Latin America.