The COVID pandemic continued to plague the global economy in early 2021, providing challenges and opportunities in real estate in Panama. As soon as markets began to reopen, sales and rentals in Panama surged as buyers viewed the country’s established market as a safe haven in these tumultuous times.
As the year draws to a close, let’s take a step back and highlight the major trends in 2021.
The American alternative. With house prices soaring in the United States, investors were looking for real estate investments that could deliver real growth in the years to come. Panama was once again seen as a great alternative, offering stability, a dollar-based economy, and premium properties below market value and replacement cost.
The rise of crypto. Cryptocurrencies have started to play a role in sales as more owners have expressed their willingness to accept bitcoin and other forms of crypto. This is no longer a theoretical concept, it is clear that crypto will play a bigger role in the future. The government is also considering legislation that would make crypto an accepted currency and create a regulatory framework for transactions.
Ocean Reef is thriving. It was the year that the man-made islands of Panama Bay took their place among the most prosperous in the world. Sales were on fire, with Beach Club Residences, Seascape, Almar, Waterfront 21 and Casa del Mar joining the list of sold-out developments. Construction has also moved forward on key infrastructure, with the opening of the marina and the largest water sports club in Panama City.
Rental rebound. Vacancy rates have jumped and rates have fallen at the height of the pandemic. Everything changed in 2021. PPR’s property management department has seen its occupancy rates rise to over 95% and rents rise steadily. There was a clear flight to quality, as apartments in high standard buildings attracted competition. During the year, PPR’s property management department added 75 units under management, as more investors turned to our team of trusted professionals to take care of their investment properties.
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Decrease in supply. The pandemic has prompted the cancellation or postponement of an unprecedented number of developments. In 2021, there were hardly any new projects launched and banks were reluctant to fund new construction loans. As a result, there was an increase in sales volume and an absorption of inventory from unsold developers, as well as resale apartments that had been on the market for a long time and eventually sold out. The decrease in supply will have a profound impact on the market – and prices – in the future.
Bulk sales are skyrocketing. Investors have increasingly focused on portfolios of previously rented condos in buildings with the highest rental demand, such as Ocean Club in Punta Pacifica, Yoo Panama on Avenida Balboa and the Regent in Costa del Este. Investors typically bought sets of 5 to 15 units of rented condos in these popular apartment buildings, generating cash flow from day one. These wholesale buyers focused on buildings with unique equipment packages and high demand from multinational executives.
Main developments nearing completion. Construction continued on some of Panama City’s most anticipated developments. The list includes Wanders & Yoo downtown, La Maison by Fendi Casa in Santa Maria and Beach Club Residences on Ocean Reef. In many cases, buyers who bought units at pre-construction price are on the verge of making big increases as buildings are completed and move-in begins.
New visa rules. Panama has established a new “Visa d’Or” rule providing a gateway to residency for property buyers, a huge advantage in the international market. The visa has been a big step forward and has been one of the most discussed topics among PPR clients. The government has also implemented a new “digital nomad” visa making it easier for remote workers to settle in Panama. Both policies have reinforced Panama’s image as one of the friendliest countries in the world for international property buyers.
All of these 2021 trends are expected to continue into the new year. On the contrary, they are likely to grow, as the pandemic continues to subside and markets return to normal. With all of these factors in place – and the economy is expected to grow significantly – next year is shaping up to be one of the best in the history of the Panamanian property market.
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