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2016 Year in Review

By in Reports & Outlook with 19 Comments

2016 was a year many Panamanians would rather put behind them. As the new year begins, the country is still reeling from the reputational damage of the “Panama Papers”, despite the understanding globally by industry insiders that the role played by Panamanian banking institutions was miniscule. Wounded pride aside, real estate markets in Panama were lackluster at best.

How did markets perform in Panama City?

The Panama City market, particularly the downtown core from San Francisco to Balboa Avenue, saw sharp declines in residential leasing rates, as businesses slowed overseas hiring and cheap hotels started to compete with apartments typically leased out by corporations.  

A strong dollar made buyers from countries like Canada, Brazil, and Colombia think twice about purchasing, keeping several large groups of buyers out of the market.  And volatility in Europe ended up being a double edged sword, with Brexit slowing down Euro-based property buyers, while growing insecurity and crime actually drove a small-scale exodus of families and capital out of the EU, some of it making its way to Panama.

Prices for existing, city-center condos saw little change in 2016. Prices for new construction, particularly 1-2 bedroom units under 90m2 saw single digit appreciation in the form of updated price lists from developers attempting to pass on increased construction costs. Those gains, however, may not stick in 2017, as sales generally slowed in the second half of the year, affecting absorption rates particularly in condos priced above $250,000.

Of all the in-construction condo projects Panama Equity is tracking, nearly 90% of the developments saw slower sales figures in the second part of 2016, with one major exception: Luxor Tower 400, due for delivery in 2021, which saw robust sales throughout the year.


Moving West: Gorgona to Buenaventura

Moving west, the market for beach properties from Gorgona to Buenaventura saw fewer new-project starts than any other time in the last 10 years.  This may be attributed to negative local buyers who chose to forego purchasing a second beach-front home this year.  Prices in the Coronado and Vista Mar communities are down by nearly 10% compared to this time last year, with average days on market tracking at nearly 300.  

Pedasi and Playa Venao

Pedasi and Playa Venao are experiencing the same slow market as the rest of the country, but good news also abound. In 2016 a new 18-room state-of-the-art hospital opened in Pedasi, while the town plaza, church and many homes and businesses also got a face-lift thanks to both public and private initiatives and volunteer efforts to repaint the façade of dozens of buildings in the area. 

In Pedasi, increased government spending will extend to fixing the pothole-filled national highway (already in the budget) and other investments in basic infrastructure should help the area continue its slow but steady expansion.

Playa Venao’s growth has been much faster, with beach and hilltop projects continuing to be built around the bay.  All of these are low-rise (4-story maximum) and the area will welcome over 50 new residences in 2017.  Most of these are small homes and condominiums and represent a mix of full-time and part-time owners. 

Looking ahead: trends to watch in 2017

As the great Peter Drucker said, “Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window.” Hoping our success rate in 2017 will be slightly better than Drucker’s driver’s, here are some predictions for the year ahead.

  • Infrastructure boost: President Varela has reached the mid-way point of his 5 year term, so the pressure is on to execute.  He has 3 major infrastructure projects on the table, some further along than others: Metro Line 3 (which includes a bridge over the Panama Canal), the construction of a cruise ship terminal on the Amador Causeway, and road works that total nearly $1B, including the expansion of the highway from La Chorrera to San Carlos, should all be construction ready.  No major infrastructure projects started in 2016, meaning no new demand for rental apartments from engineers and incoming contractors and managers.  As bids get awarded, we expect to see an uptick in rental rates on apartments ranging from $1,200 – $2,000/month in rent.
  • Mining: The mining sector – 2 copper and 1 gold mine in particular – will be either ramping up or coming into production. First Quantum’s copper mines have allocated an additional $2B in capital improvements for 2017 and the Pershimco mines in Azuero will also be expanding capacity and investing in infrastructure.  There are some minor implications for the Panama City real estate sector in the form of job creation and rental absorption, but the major implications are the impact a doubling of mineral exports will mean for government income (taxes) and trade.
  • Tourism should finally get the kick it’s been missing for the last 4 years in the form of a $20 million/year government sponsored contract, which will bring first-time visitors down to Panama starting January 1 —  and some of whom may end up investing over subsequent visits.
  • Revival and price effects in Panama City:
    • The wildcard for the real estate market is Mayor Jose Blandon.  So far, he’s been on an absolute tear with far reaching improvements in the downtown area.  Downtown residents are already reaping the benefits of his new-urbanist focus of to bring residential developments closer to business and make the city even more pedestrian friendly.  More green spaces and leisure facilities could lower crime, better sidewalks and trash collection could boost tourism, and neighborhood improvements will have an impact on land for development and community building in the downtown core.
    • We expect further major overhauls to the downtown core sponsored by the Mayor’s office.  More than $200 million has been set aside, with works to revitalize the El Cangrejo and Marbella neighborhoods commencing in March with new sidewalks, burying cables, and landscaping.  As Mayor Blandon’s last full year in office draws to a close, expect big changes to parks, parking, and pedestrian life in 2017 (though barring any scandals smart money says he’ll be reelected).
    • Public transportation should also improve, based on a near doubling of Metro Line 1’s wagon capacity and further integration with the bus system’s nearly 500 new buses due for delivery mid-year.
    • We don’t expect the dip in residential rental rates to correct fully next year, nor can we predict appreciation more than a modest 4-5% across the board.  Look for continued softness in areas like Costa del Este, which experienced nearly 40% growth over a 3 year period, much of which was speculation by investors and developers enjoying mild success while passing on increased costs to end-buyers.  
    • As discussed in our 2017 luxury market report, we believe that the Costa del Este and Santa Maria top-end of the real estate market will continue to see price declines, as more sellers compete for a scarcity of luxury-oriented buyers and fewer c-level executives with budgets above $5,000/month enter the market. 


Is there a silver lining?

As the economy picks up steam again on the back of government contracting activity, increased immigration, and the broad benefits reaped from Panama’s expanded Canal, we believe many business owners will be forced to accept lower prices on properties up for sale, in order to free up capital for expansion (or to simply maintain) their businesses.  That will create pockets of opportunity for buyers waiting on the sidelines and may or may not affect the overall market.  Santa Maria, Costa del Este, and to some extent Punta Pacifica and Punta Paitilla neighborhoods are all areas one should be prepared to pounce on for the right deal.

“If you build it they will come” will be a tested mantra this year in Playa Venao, and all signs point to a better year for the in-development beach community.  Expect to see a proliferation of small businesses including basics like gas stations, banks, car rentals and shops to meet the demands of vacationers and locals popping up as apartments get delivered and residents move in.  By all accounts the “vibe” in Playa Venao is getting better now, and this international, eclectic beach will eventually have something for just about everybody- including much needed high-speed Internet!

We believe areas such as Curundu, Calidonia, and Perejil will see a spike in new developments geared to middle-income buyers and land prices based on high density zoning parcels, which, combined with the Mayor’s initiatives, will increase values.

Barring any major scandals, natural disasters, or a Trump impeachment, Panama should continue to hum right along with 5%+ GDP growth, a strong bill of fiscal health.  Compared to the year Panama just weathered, in 2017, no news will be good news!

About The Author

Kent Davis, founder and Managing Director at Panama Equity real estate, has been widely quoted in publications such as Wall Street Journal, Time Magazine, The Miami Herald and the Financial Times for his unabashed views on the Panama real estate market. Panama Equity is regarded as one of the most active real estate agencies in Panama and Kent’s articles, reports, and market research projects have been syndicated by press agencies including Bloomberg and the Associated Press.   Connect with the Author via: Email | LinkedIn | Facebook | Google+


  1. KAY MANUEL says:

    No mention of the Del Monte go ahead in Puerto Armuelles and the construction of the development at Coco Beach. All positives. We are on our way from Canada next month to take a look!

    • Kent Davis says:

      Kay, so true! Lots going on out in Chiriqui…wish I was more up to speed on that area but since we dont do any business in that province it doesnt really hit my radar. But you’re absolutely right, and a company like Del Monte, who will create thousands of jobs HAS to be a good thing!! And yes, Coco Beach, another good one. Have a great trip!!

  2. Sean says:


    Do you have any idea about the Bala Beach apartments? Are the future prospects looking good. in your opinion

    • Kent Davis says:

      Sean, thanks for taking the time to comment. Bala Beach had a slow start but seems to be gaining some momentum both on the short-term rental side for existing units (most being targeted to weekenders who want to spend some time on the Atlantic coast) and also gaining some ground on new sales. I havent been tracking the project pricing but in general, that area seems to have “woken up” now that Varlea has started to channel alot of development money for the Colon area. Let’s hope that momentum continues through 2017!

  3. Linda Michaud says:

    Kent, do you know if Air Panama will return service to Pedasi? Just bought our home there and love it. Linda.

    • Kent Davis says:

      Hey Linda, thanks for dropping by and congrats on your purchase in Pedasi! Oh Air Panama…they’ve been flirting with us for years on those flights. Sometimes they’re on, sometimes they’re off. Our agent Jonathan Clay has a personal mission to bring them back this year, and he’s been on a tear bringing new people down to Pedasi, so hopefully the higher-ups at Air Panama will catch wind of what’s going on in the Azuero area. I’ve heard talk of opening that airport, have heard talk of re-opening Tonosi for flights…and hope that the Chitre route will remain a regular fixture.

      There’s a big internal-tourism campaign going on right now aimed at Panamanians, so maybe enough of them will call their Air Panama rep and demand a flight. Maybe we should take a cue from MTV…do you remember the “I want my MTV campaign”? 🙂

  4. Lyn says:

    Is there any hope that the money budgeted for bringing tourists to Panama will be spent outside of the city area. For example Chiriqui or Bocas?

    • Kent Davis says:

      Hi Lyn, great question! So the government actually has two big “tourism” campaigns that I know of. One of them is aimed at a mostly English speaking market based in the south and east USA and parts of Europe, and the other campaign is based on people living in Panama. I think your question refers to the former and I wish I had the answer!! Keep an eye out for their campaigns and let’s circle back in a few months once the campaign gets some teeth. Im sure they’ll be promoting some areas outside of Panama City, particularly the mountains around Boquete and the islands in Bocas. It would be a shame if they didnt, no?

  5. Patty says:

    Boca Chica area in Chiriqui is seeing more interest due to the near 4 lane completion of The Panamerican Highway. The most beautiful beaches & sports fishing in the world is here .

    • Kent Davis says:

      Patty, thanks for your comments about Boca Chica. It’s a great area and with the international airport in and highway expansion finishing up, hopefully it’ll land squarely on the tourism radar once and for all. I visited out there in 2007 and there wasnt much. Have heard it’s really quite nice now, with alot of new construction and as you said, some great fishing!

  6. Nitzia Anguizola says:

    Could you clarify your comment “if Trump is impeached”? Would this be a positive or negative impact for Panama’s economy? 

    • Kent Davis says:

      Hi Nitzia, thanks for your question. I think an impeachment would be a very disruptive event for the world economy, regardless of anyone’s thoughts on Trump’s ability. So, I’d say it would certainly be a “negative” impact. How a Trump presidency will affect Panama remains to be seen, let’s check back in mid-year to see how things are shaping up!

  7. Rafael P says:

    I think that eventually the USD will weaken back to 2015-2016 levels, Trump needs to fund his projects by taking additional sovereign debt; though its imposible to time the market. 

    Anyway, real estate is a mid-long term investment, and opportunities can always be found, just need to look closely 🙂 

  8. Rafael P says:

    Dear Kent, thanks for the article, I think it provides a great 360 overview.

    For me the key influence revolves in terms of the USD strenght, it will keep playing a major role in the 2017 economy: tourism, the canal, import-export activity, multinational corporations expansion (SEM companies), foreigners investmenting…


    • Kent Davis says:

      Indeed Rafael! Where do you think the dollar will head? The interesting thing is, a strong dollar is a double edged sword: great for imports on our end, not so great for non-dollar based buyers. But then again, to some Dollar = Stability. Let’s see how the year plays out. I can tell you one thing: It’s already started off quite strong in this office 🙂

  9. Glen Hammer says:

    Contadora, one of the Pearl Islands located in the Bay of Panama and one of the most beautiful islands in the world, has received notice from IDAAN, a desalination facility will be installed to provide the residents, hotels and visitors fresh water. The intention is to install the system during calendar year 2017 and have it fully on-line shortly thereafter. This will create a land rush on the island, which is easily accessible to Panama City via ferry, commercial and private aircraft and private boat. Contadora is renowned for 13 pure white beaches and turquois ocean waters.

  10. morand patrick says:

    Sorry but you forgot as everybody,le construction of the thirs bridge on the atlantic.
    With that bridge a big part of gatun lake very nice and savage will be accessible.A lot of Touristics projects tare possible ,specialy with golf ( abundant water on the lake ).
    A 375 Millons projects for nothing ?
    It is time to think a bout that !!!!

    • Kent Davis says:

      Morand, such an important point and you are right! The new bridge over the Canal “El Tercero Puente” will open up a large part of the Costa Abajo for development. I particularly like the idea of some low income housing and as you said tourist projects because now all of the heavy equipment and materials will be able to gain access to the area. Thank you for sharing!

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