In the News from Panama

PPR Report: ‘Significant Shifts’ in Panama Real Estate Market

Data compiled by Punta Pacifica Realty for the third quarter of 2021 shows price increases in many of Panama City’s top luxury buildings, as the real estate market continues to emerge from the pandemic.

Buyers are focused on high-end units in Panama City’s top buildings and the inventory of available units has shrunk considerably in recent months. COVID fire sales are now a thing of the past, with sellers holding their ground on pricing and discerning buyers targeting the best apartments.

In the third quarter, we saw a significant shift in pricing in The Ocean Club, which remains the bellwether of Panama City real estate. High-floor apartments are scarce in The Ocean Club and we’re seeing competition for the best units. Prices rose as much as 10% in the quarter for coveted high-floor, two-bedroom apartments with unobstructed views. 

In Q3, PPR tracked 16 transactions in The Ocean Club in Q3, with average prices for 1- and 2-bedroom units ranging between $300,000 and $500,000. Three high-floor 2 bedroom apartments sold for more than $500,000, highlighting the demand for these popular units with the best views in the building.

For developer sales, Ocean Reef is still the star of the show. Two new Ocean Reef developments officially launched in Q3 and both are almost sold out. Seascape’s, the health and wellness-focused resort on the second island, sold 20 of the 22 apartments in the second phase. The newest project, Casa del Mar, a spectacular boutique project overlooking the marina, only has four condos left of 17 that went on the market.

Developers are getting more creative in their offerings, pushing the bar on amenities and services. Casa Del Mar is the first new project in Panama to offer owners shared use of a luxury powerboat (Pursuit 365), a perk that is clearly resonating with buyers.

The luxury golf course community of Santa Maria is another area experiencing a resurgence of demand across the spectrum, from large free-standing homes to luxury highrise options. The uptick in activity was apparent in La Maison by Fendi Casa, which is under construction, as well as the smaller boutique development Ocean House which offers a long list of amenities at price points in the $300,000 to $400,000 price range.

Quality buildings that offer amenities and style are in demand from both investors and renters. A good example is the Regent in Costa del Este, a 55-story tower with parks, trails, and recreational areas on the grounds, in addition to a soccer court, a fully equipped gym, tennis court, sports bar, and VIP cinema.  After the Q3 opening of the 8,000-square-meter Regents Casa Club social area,

The Regent experienced a major uptick of renters, with rates for apartments in the $2,000-a-month range, which is very reasonable considering the amenities and quality of the complex. Investors are now following the trend; during the quarter several buyers purchased multiple rental units with established cash flow in the Regent, which will produce yields of more than 5%.

Investors also targeted the Wanders and Yoo, which is also under construction and moving toward completion. There was a noticeable uptick in sales of the smaller units, with price points between $250,000 and $350,000, as investors opted to pick up multiple units at lower price tags instead of going for single more expensive units.

In the last year, the majority of the buyers have been investors, in most cases looking to diversify their portfolio with income-generating Panama rental property, but we’ve seen a shift in the buyer profile. In the third quarter, the percentage of end-users making purchases increased significantly, especially in the Punta Pacifica buildings of Aqualina, Grand Tower, and Aquamare (Click to learn more)

At the same time, the rental market is picking up as the city fully reopens. The vacancy rate is sliding in many of the top buildings, which is pushing rental prices higher. In The Ocean Club and Yoo, two of the most popular buildings, PPR is seeing occupancy rates move above 90% for the first time in years.

With so many factors trending upward and COVID coming under control, PPR is very bullish on the direction of real estate in Panama as we head into the last quarter of 2021. Several larger economic indicators point to continued growth in the real estate market as the world reopens, including a loosening of bank lending restrictions. Panama’s economy is expected to expand by a healthy 5.8% in 2022, according to Fitch.

Meanwhile, Panama’s new visa and residency incentives will continue to draw more foreigners to Panama, providing the real estate markets with a steady stream of renters and buyers