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Nito Cortizo’s Effect On The Panama Real Estate Market

Consumer confidence drives markets, and right now there’s a lot of pent-up anticipation for what Laurentino “Nito” Cortizo could do for Panama’s real estate market. 

Has the Market Bottomed Out?

Property prices in Panama City’s downtown core have been beaten down by oversupply, a slowing economy and red-hot property markets in the US, Canada, and Colombia, all competing for investor dollars.  In some cases, rents have fallen by as much as 40 percent, taking yields and the underlying value of the asset down along with them. And these factors do not disappear overnight.

Or do they?

In a city-district such as Bella Vista that comprises nearly half of the area considered ‘downtown,’ an average of only 12,000 apartments are available for sale at any given time, meaning it doesn’t take much to quickly change things.

Take, for example, one scenario that played out between 2008-2009 when more than 20 multinational companies converged on Panama bringing 3,000 employees who drove up rental prices along Balboa Avenue and Punta Pacifica practically overnight.  

Granted, supply was tighter back then, but the fact remains that it doesn’t take much to move what is essentially a very small property market.  All signs point to the fact that the incoming president is poised to make some sweeping decisions that could impact Panama’s real estate market. Particularly for the downtown corridor which includes neighborhoods such as Balboa Avenue, El Cangrejo, Punta Pacifica, and Paitilla.  

Airbnb: A Potential Game Changer

Word in political circles say that Nito may be in favor of a regulated Airbnb within Panama City limits. Something his predecessor Varela was strongly discouraged to do by the powerful hotel lobby, decrying unfair competition.

But what many markets like Norway, USA, and South Africa have discovered is that a rising tide lifts ALL ships.

What Could Happen

If Airbnb does end up getting legalized, it will likely be as a result of levying the same 10% percent hospitality tax on Airbnb income that hotels currently pay, with hosts likely passing along those costs to their guests.

The benefits are obvious for the average Panamanian property owner: increased revenue for unused capacity (à la Uber).  Meaning Grandma and Grampa Perez who own an empty-nest, four-bedroom home in Paitilla are now able to rent out three of those four rooms to travelers, show them some true Panamanian culture, and realize an added and much-needed revenue stream.

Recently, Airbnb reported that in South Africa, host and guest activity on Airbnb generated an estimated US $678 million for the local economy, from June 1, 2017 – May 31, 2018. The result of this activity? A total of more than 22,000 jobs supported across the broader South Africa economy.

And what about those same travelers who prefer not to eat and drink at Grandma and Grampa Perez’s Airbnb?  They are just as likely to cross the street and eat at the Hard Rock Hotel for breakfast, lunch on some sushi at Megapolis and perhaps make their way to the JW Marriott for some dinner and dancing later that night.   

Naturally, the average spend/day, plus days in the country are likely to increase as a result of the uptick in tourism volume because of the increased availability and variety of lodging. This could offer hotels the ability to hire more employees in their highest profit center activities (food and beverage) based on the upward trend.  

Airbnb Experiences

However, it is not just host and guest activity on Airbnb that offers to provide income. The relatively new aspect of Airbnb Experiences has also opened up the platform to those who may not have a property to offer but are willing and able to share their talents, skills, knowledge, and experience with Airbnb users.

And while a few may have a clouded view of the great benefits Airbnb could have, it isn’t slowing down anytime soon as the peer-to-peer marketplace continues to learn and develop new ways to help countries increase their tourism and income with the platform.

That’s called a win-win — and word on the street is that Nito ‘gets it.’  But let’s see if he’s able to sell that to the powerful hotel lobby, whose support brought him into office.

The effect on real estate values of legalizing Airbnb in the city center would be felt immediately. With higher revenues in the form of nightly rental income translating to higher property values in any market, including Panama.  

Property Yields 

A stimulus of US $20 million was earmarked as a tourism fund initiative. The first US $8 million was released last month, taking nearly two years to finally fund.

If Nito is able to leverage the $20 million effectively, it should stimulate job creation in the hospitality industry and help bolster complementary businesses such as retail. Hotel and retail industries have been forced to slash $700 – $950/ month on most managers and mid-level employees’ salaries.  These are the same workers who have traditionally lived in apartments in areas like El Cangrejo, San Francisco, and Avenida Balboa who, for the last three to four years, have been either been laid off or forced to rent individual rooms in the $300-$500/month market.

The hope is that as hotels see more traffic, they will likely scale up employment again, bring back those same tenants who were renting — sometimes three to four persons renting in each apartment with the whole unit renting from $1,200 – $1,500/month.  

Rents in the city center have fallen by more than 40 percent in some cases, and the hardest hit segment is the under $1,800/month rentals which stand to see higher occupancy as hiring scales up.  And again, with increased rents comes higher property yields, which drive up the value of investment properties.

But it’s anyone’s guess how quickly the notoriously cheap hospitality industry will scale up on their headcounts.  

Location-Specific Initiatives

The lowest hanging fruit on the tourism real estate market is, of course, foreign direct investment. These are first-time visitors to Panama who decide to take advantage of a real estate market that’s been battered.

But those purchases, given the typical six to 18- month sales cycle, are not likely to move the needle and drive property appreciation in Panama until mid-2020.

Other location-specific initiatives of President Cortizo likely to have a positive impact on real estate prices in the mid-term include the Amador Causeway (site of a proposed road diversion and land reclamation project often mentioned in Nito’s campaign promises), the area between Veracruz and Vacamonte (due to an ongoing road project), and the most mysterious “urban beach” project, rumored to be along Balboa Avenue and supposedly carry a US $100 million-plus price tag that could really spice up the downtown core.

But there are headwinds.

Much of Panama’s real estate sector is overbuilt, that’s no secret. From the luxury highrises in Santa Maria to the middle-income homes in La Chorrera, inventory is not turning as it has in the past.

According to a recent report in Galeria Inmobiliaria, pre-construction sales totaled 1,021 units, down from highs two years ago of nearly twice that number. This is a trend that is likely to get worse before it gets better.

Banks have made credit more difficult to obtain and have also increased interest rates.  Developers continue to flood the market with undifferentiated product. And unemployment, while still within reasonable levels, continues to climb.

Will Nito have the golden bullets?  It’s hard to say, but Panama still has a lot in its favor which optimistically could make for a fast recovery.

As mentioned above, we are talking about what is essentially a very small property market of fewer than one million residents. Meaning small changes can have big impacts.   

Panama also continues to be a safe haven for capital and human immigration. This means that more turbulence in Europe, an economic slowdown in Mexico, and the recovery of the Canadian dollar and Brazilian real could also have a positive effect on foreign direct investment. In this case, in the form of property acquisition.  

All in all, Nito could bring forth many potential changes to the real estate market in Panama by paying attention to and setting new policy in a few key industries such as tourism. 


  1. Fred Clark

    on said  

    Investors in the US who have land, home site holdings would exchange for downtown apartments.
    Fred Clark

  2. alexandra

    on said  

    Very interesting, thank you for your insight.
    I want to put my house on sale here in Boquete, it is a beautiful house with high ceilings, big windows, lot’s of light. Big garden with a beautiful yoga studio, in a very quiet area in Volcancito. Can be used as a retreat for wellness, yoga, meditation etc.
    If you are interested in my property, let me know.
    Kind regards,

    • Kent Davis

      on said  

      Hi Alexandra, thanks for reaching out regarding your property for sale in Chiriqui. Unfortunately, we dont have offices there yet. I’ll write to you via email to see how I can help.

  3. Airbnb could have a positive effect, however, I believe more in the interior. We have found that the Airbnb units in PC are often not as described and in many cases more expensive than middle ground hotels with better amenities, especially if you search diligently on the hotel booking sites such as &

    • Kent Davis

      on said  

      Hi Mikkel, great point! I think the fact that airbnb is still very unregulated (one of the hotel industry’s complaints) and for that reason, you get an inconsistent experience. If it were to become legal, I think you would have larger groups step in to offer a more uniform experience including better amenities, etc. Let’s see what happens.

  4. Jim Sellars

    on said  

    Great blog Kent, lots of positive outlook for real estate. Here’s hoping that the new President can make an impact. Jim


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