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Panama’s Growing Economy

The Republic of Panama is a Spanish speaking country on the isthmus between central and South America. Running through its center is the Panama Canal, a 50 mile feat of engineering which connects the Atlantic and Pacific oceans. This shipping route has proved to be invaluable over time and assisted in Panama’s economic growth.

Taking this into consideration, Panama has 13 ports and is a hub of international exchange. Panama City’s up to date skyscrapers offer a stark contrast against the rest of the environment, with old colonial buildings and a dense natural rainforest.

No further than ten minutes away from the capital city is this natural marvel, attracting nature lovers and tourists from all corners of the world. The Metropolitan National Park hosts a diverse ecosystem with animals ranging from deer to monkeys.

Panama has a beautiful coast on both sides and offers unparalleled opportunity as of recently. The Chamber of Commerce in Panama predicts a growth of 5.4% in 2018.

Why are investors interested in Panama?

In 2012 investors revisited Panama for the first time since the global financial crisis. What they saw was a number of infrastructure projects being put into place that would make Panama an economic powerhouse in the long-term.

Now in 2018 many of those projects are reaching completion and further fueling Panama’s economy. In 2007 plans to expand the Panama canal were made and only in 2016 were these new lanes finally opened up allowing for more and larger ships to pass through. This meant a 22.2% increase in tonnage.

What is the real estate market like in Panama?

Panama is a prime real estate investment as its market is pro-landlord with low transaction fees and a fair rental income tax. Foreign investors are boosting the property prices as more and more see its potential.

Some countries are wary of foreign investors, this is not the case in Panama as they have recently passed a law which grants tax exemptions to properties valued at over $120,000 USD.
Dependent on the location property prices can range from $900 USD to $2,900 USD per square meter. Many investors are attempting to secure property before its all gone.

Though rental yields have declined they are still considered to be above average on the international scale. Capital gains are taxed at 10%.

Where are the investors coming from?

Panama is an international hub of multinational corporations, banking and investment. This has drawn a large number of foreigners to invest in Panamanian real estate.

Foreigners are allowed to own property in Panama and are given the same rights as a citizen property owner. This is extremely enticing to expatriates.The tourism industry in Panama is not just a source of revenue but a showcase of their natural resources and alluring lifestyle. The expatriate community in Panama is large and only growing.

As of recently there have been a large number of Venezuelans migrating to Panama, living alongside American and Canadian expatriates. In metropolitan areas the expatriate population is spread out but in certain cities it is hard to not notice their presence.

Following Air China’s new direct flights to Panama the number of Chinese tourists has risen massively. This means further revenue from the tourism industry and potential investors.

What other infrastructure projects are underway?

Panama is soon to be the first Central American country to have a metro system. They are updating the port of Colon and the second Tocumen International Airport is nearly complete.

A new port, transcontinental railways, a new international airport, subways, and plans to update roads and freeways. The infrastructure of Panama alone is enough to draw an investor’s eye as we watch a country connect their East and West coasts.

With their strategic importance for shipping and the observed effect the canal has now that it has been updated there is no doubt that Panama’s economy will surpass many in a short time.

Panama’s growth is fortunately expected and being planned ahead for as many countries find themselves outpaced by their own growth which leads to a number of issues. Overcrowding, long commutes, high levels of crime and over saturation in various aspects.

The key is to establish oneself before Panama has peaked otherwise forcing your way into business further down the road will be much more costly if not impossible.