In this August 2024 Real Estate Update with Matt Marx and Kent Davis, you’ll find insights into what’s buzzing in the Panama property market.

Sneak Preview: Even though summer is usually slow, the market’s been hopping with investors getting ahead before the U.S. election. Matt and Kent talk about how these local and international politics are affecting our local market, including an update on prices, hot projects, rental yields and trends we as an agency are trying to get in front of.

Whether you’re buying, selling, or just curious, Matt and Kent’s update has the latest scoop on Panama’s real estate scene. Don’t miss out—get the insights you need to make your next real estate market move!

Click here to watch the full video.

How Molino’s Changes Are Shaping Panama’s Real Estate Market

Panama’s new administration is causing a buzz with major updates. The federal government and Panama City’s mayor are getting a lot of praise for fixing up roads, potholes, and flooding issues. We haven’t seen the exact unemployment numbers, but it’d be a shock if it wasn’t around 1%. The city definitely feels lively!

Work on Via Argentina has begun, and Mayor Mizrachi has surprised many by allowing casual attire and pets in government offices—big changes for Panama’s traditionally formal environment.

While the positive energy is high, there’s some caution. The mayor’s talk of constitutional changes has raised eyebrows, though it’s unlikely to signal any drastic moves.

Any Red Flags or Concerns?

July and August are usually slow months in real estate, and Matt would typically take a break, but this year has been nonstop. Investors are particularly active, driven by concerns about the political climate and the upcoming U.S. election. They’re getting ahead of the game, planning their purchases and investments before November.

This is the first time Matt is in Panama during a year when both the Panamanian and U.S. presidents are elected, making this double election cycle unique and worth watching closely.

Have Prices Been Affected?

There’s been a slight dip in prices compared to last year. Sellers who have been on the market for a while are starting to adjust their prices, leading to more sales as they align with current market conditions.

In the luxury market, such as Ocean Reef and Santa Maria, prices remain steady. Ocean Reef units are still selling for over $5,000 per meter, while Santa Maria ranges from $3,500 to $4,000 per meter. Developers are maintaining these price points, but resellers are becoming more willing to negotiate, not wanting to hold onto properties into the new year.

Are Resale Prices Dropping or Are Sellers More Flexible?

It’s clear that long-time listings are seeing price adjustments, while new listings are starting high. Sellers often list high initially but are becoming more flexible and adjusting their prices to attract buyers. Once they set the right price, there’s less need for extensive negotiation, hitting that sweet spot in the market.

Top Selling Projects: What’s Hot Right Now?

While luxury spots like Santa Maria and Ocean Reef are holding steady, Costa del Este is catching a lot of attention. Once a hotspot like Santa Maria was 15 years ago, Costa del Este’s older buildings are now offering some great deals. Prices have dropped a bit, making it an attractive option for investors. With its proximity to multinational companies like Nestlé and Procter & Gamble, Costa del Este is seeing renewed interest from investors looking for reliable rental income.

Yield and Rental Trends

For a real-world snapshot, our company’s seeing strong performance with only 3 out of 80 rental units vacant, and investors are earning net yields of around 4% annually, or 7-8% gross. August is an ideal time to rent or list in Costa del Este, with a 5% price bump due to lower inventory.

Interest Rates and Market Dynamics

Most of Matts buyers are cash buyers. For foreign buyers coming to Panama, a common issue is that we don’t offer fixed rates; adjustable rates can be a concern. Banks are still offering rates around 7%, plus a 1% government tax, making it effectively an 8% loan.

You won’t be cash flow positive if you leverage more than the typical loan-to-value ratios of 60% to 70%. If you want to avoid this, you’ll need to put down more cash and do your own calculations.

Offers and Listings

Current offers typically reflect an 8% discount off the asking price, suggesting that buyers are negotiating harder and sellers may be adjusting their expectations. Last month, 157 new residential listings appeared on the MLS, highlighting a growing trend of sellers seeking broader exposure for their properties. This increase in listings suggests a more competitive market where sellers are leveraging the MLS to attract potential buyers, possibly in response to evolving market conditions or a strategic move to stand out in a crowded marketplace.

Casco Antiguo: A Divergent Market

In Casco Antiguo, there’s a significant gap between developer prices and resale market values. Developers are offering new builds with premium amenities at around $5,000 per meter, while resale prices are much lower. This discrepancy is partly due to the lack of modern amenities in older buildings and the expiration of subsidized mortgage rates, which has deterred some investors.

Casco View: A Promising Project

Casco View is an exciting development outside the historic district with excellent views and amenities like a pool on the 6th floor. Investors who saw its potential early are doing well. The property has good short-term rental performance and offers unique benefits like Marriott point usage.

Overall, while luxury markets remain stable, opportunities in emerging areas like Costa del Este and strategic investments in projects like Casco View are making waves in Panama’s real estate scene.

To wrap things up, Panama’s real estate scene is really lively right now. While luxury spots like Santa Maria and Ocean Reef hold their ground on prices, areas like Costa del Este are shaping up to be great deals for investors. Casco Antiguo shows a big price gap between new builds and older properties, but projects like Casco View are promising for future growth. Whether you’re looking to invest or just curious about buying, keeping an eye on these trends will help you stay ahead and make the most of Panama’s dynamic market.