After COVID wreaked havoc on the global economy, Panama’s real estate market bounced back in dramatic fashion. If 2021 was the recovery, 2022 was the year of the rebound, with buyers and investors actively making deals at pre-pandemic levels.
Several factors helped boost Panama’s real estate market, which saw record sales and an uptick in prices, despite the global economic downturn. For one, people fled turmoil in their home countries to seek Panama’s stability and sunny skies. Panama is still seen as the perfect hedge against the political and economic swings of the major powers.
At the same time, the market continues to be fueled by the economy’s growth, the solid foundation of the real estate market. Multinational companies continued to grow their operations and new businesses sprouting, supplying a steady stream of buyers and renters to the property industry
In 2022, there were many highlights, but several stand out.
Sale Price Increases
While markets crashed around the world, many neighborhoods in Panama City saw steady price increases in 2022. Many buildings saw price increases of 10% or more for in-demand apartments, especially in high-end buildings. People who expected to find pandemic-era pricing were quickly disappointed; the deals went to buyers who were willing to act in an evolving market.
Ocean Reef Blossoms
The community on Ocean Reef Islands took large strides forward, as more families moved into their homes to take full advantage of the island lifestyle minutes from the heart of the city. Skyhomes and Casa Del Mar, part of the Ocean Reef Signature Resort Collection, were 100% sold out. Beach Club Residences completed, delivering on all the promises of its spectacular location and amenities. The Palms, a resort-style complex with 120 meters of private oceanfront, opened to rave reviews, and units in the first phase quickly sold out.
Rentals Take Off
PPR’s industry-leading property management team was busy in 2022. Vacancy rates fell to 5% in many top buildings, as supply quickly dried up for top units. PPR benefitted from its relationship with top multinationals, who continued to bring executives to the capital. One of the few new developments to enter the market in 2022 was Beach Club Residences on Ocean Reef, where PPR was marketing a few available waterfront units.
In the last year, investors snatched up multiple unit packages in unprecedented numbers. With rental rates increasing, PPR brokered several bulk sales to buyers diversifying their portfolios. In most cases, the investors were able to generate immediate income from already-rented units.
The Plan B Option
Around the world, more and more people are exploring their options and choosing to reject the traditional path. Panama was a natural beneficiary. Flexible visa policies (see below), a great climate, and a lifestyle far removed from the tensions around the world drew a new wave of travelers and ex-pats from around the world. Panama is the poster child for the Plan B phenomenon.
Supply Beating Demand
More and more we are seeing a significant shift in the market. Demand in many developments is outpacing supply, a trend we expect to grow more severe in the years ahead. Many of the buildings under construction have already sold out. There is typically a five-to-seven-year lag for new construction. The pandemic dramatically slowed new project startups. The math adds up to a looming supply crisis.
Bitcoin prices may have plummeted as scandals rocked the crypto-currency world, but there continued signs in 2022 that crypto is here to stay. More and more PPR clients expressed a willingness to accept digital currencies and the Panama government worked on regulations that would make crypto an accepted part of the local finance community. PPR grew its expertise in crypto-currencies, helping clients navigate the new worlds.
Our sales and rentals saw an unprecedented number of clients take advantage of Panama’s welcoming visa policy in 2022. The two-year-old Red Carpet Visa, Panama’s version of the Golden Visa, is a game changer, offering investors a clear track to residency. A short-term visa is perfect for digital nomads. The visas make it easy to live and work in Panama and get a taste of what it is like to live in Central America’s most vibrant city.
Tocumen Terminal Opens
Panama City’s role as the “Hub of the Americas” took a huge leap forward in 2022 with the opening of a new terminal at Tocumen International. Designed by internationally acclaimed architect Foster + Partners, Terminal 2 brought more gates, a new Copa lounge, and all the conveniences of a modern international airport to Tocumen. Copa started things off by operating more than 280 daily flights from the new terminal.
As the world emerged from the pandemic, Panama led the way. Economic growth far surpassed the region, thanks to the continuation of several large public work projects, including the expansion of the Panama metro. Foreign investment flowed back into Panama. New energy companies targeted Panama as the headquarters to develop next-generation fuels. And the government increased efforts to grow the tourist market, ensuring a steady flow of visitors in the years ahead.