Will the Panama Real Estate Market improve in 2024?

In this article we summarize what are the positive factors that could keep driving the real estate market growth finishing this year 2023 and entering into 2024 in Panama, but we also identify some of the possible challenges that can be slow down not only the market, but also the overall economy of the country.

The Panama real estate market has been, for quite a while, a center topic for international investors, retirees, and those seeking a desirable location for both residential and commercial properties.

Over the last years, Panama’s economy has experienced stable growth (excusing the pandemic) which is also accompanied by a surge in real estate development, this has been happening for more than a decade now.

So it is quite essential to overview those factors that could influence the future trajectory of the real estate industry in the country.

Current Market

As of our knowledge in 2023, the Panama real estate market has been characterized by a combination of domestic and international demand.

Overall positive points such as a stable economy, us dollar and attractive tax incentives, but also a potential growing tourism, characterized now by a new cruise terminal settled in Amador Causeway, and a strategic geographic location, supported by Tocumen Airport expansion making it a connecting hub in the airline industry in latinamerica.

The capital, Panama City, has been a focal point of real estate development, featuring modern and tall buildings, luxury apartments, and upscale commercial sectors comprised of malls and high end restaurants.

In addition to urban development, Panama’s coastal regions, particularly areas along the Pacific and Caribbean coasts, have also seen significant real estate investment, driven by the allure of beautiful beaches and a relaxed lifestyle.

Factors Driving the Future of the Real Estate Market

Infrastructure Development

One of the main levers that could improve Panama real estate market is continued investment in infrastructure. The Panamanian government has shown some commitment since already years ago, from expanding the Panama Canal to improving specific roadways, to creating Cruise Terminals and developing new metro lines.

These improvements not only facilitate the movement of goods, improving the economy, but also the transportation of people, which makes more underdeveloped areas attractive for real estate growth.

Tourism and Retirement Interest

Panama’s appeal as a retirement destination and tourist hotspot is still likely to persist. The country has a lot of natural beauty, diverse ecosystems, and cultural heritage that continues to attract travelers from all around the world.

As global connectivity improves with the expanded airport, and more people seek unique travel experiences, Panama tourism could keep growing, which in turn, could drive demand for both short-term vacation rentals and long-term retirement properties.

Economic Stability

Economic stability is a foundation for a developing real estate market. Panama’s attractive tax policies and favorable business environment have contributed to its economic stability.

Considering history, a long-sustainable economy and political environment in Latin-American is hard to see, and Panama offers that. This can keep boosting international investors’ confidence, encourage more real estate development, and attract more overseas capital.

Panama’s real estate market has historically benefited from international investors seeking opportunities outside their regions.

As global markets continue to evolve, Panama’s strategic location and business-friendly currency could attract further investment. And since political and economic uncertainties happens often in other regions, Panama’s real estate market and overall economy becomes more and more a viable alternative.

Sustainability

With growing awareness of environmental issues, sustainable development practices are gaining more attention in the world. Panama has the opportunity to position itself as a leader in eco-friendly real estate projects. By prioritizing green building standards, energy efficiency, and conservation efforts, Panama could attract environmentally conscious investors and buyers who value responsible development.

Factors that Can Become Potential Challenges

While the Panama real estate market has a lot of optimistic factors in terms of growth, there are some possible challenges that could impact its future trajectory:

Economic Challenges

Despite its stability, Panama’s economy remains susceptible to global economic fluctuations. Changes in commodity prices, shifts in trade dynamics, or geopolitical tensions could affect the country’s development, which can indeed influence negatively over the real estate market.

Regulatory Challenges

An evolving regulatory environment could pose challenges for investors and developers. Changes in tax policies, zoning regulations, or legal procedures could create uncertainty and affect investment decisions.

Oversupply

As we have seen in prior years (and during pandemic), real estate development could accelerate way faster than the market demand, there are always risks of oversupply in certain segments of the market. This oversupply could lead to price stagnation or decline, particularly if demand does not keep pace with the introduction of new properties.

Environmental Impact

While sustainable development is a positive trend, it also requires careful planning and execution. Inadequate environmental assessments or lax enforcement of green building standards could lead to negative ecological impacts and damage Panama’s reputation as an eco-friendly destination.

In conclusion, the overview of the Panama real estate market in 2024 holds both promise and challenges. The market’s potential in points such as infrastructure, continued appeal to retirees and tourists, and stability, can continue its attractive for years to come.

But it is important for real estate developers and organizations to work hand in hand with the government to prepare for those challenges that might come ahead.