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Panama real estate has had a good ten year run based upon foreigners purchasing second homes or moving to Panama to retire. Now there is talk of a housing market bubble in Panama. The seemingly overlooked aspect of real estate investment in Panama has to do with Panama’s economy, trade, and high rate of foreign commercial real estate investment. The current negotiations for a free trade agreement with Canada are a case in point.

The Costa Rica Experience and a Panama Real Estate Bubble

Reuters reported in August 2008 that “Costa Rica vacation homes [are] hit by [a] crisis.”

Asking prices for beach homes in Costa Rica have dropped 40 percent from their peak three years ago. Twenty percent of the decrease has been in the last six months. According to Reuters developers are holding on to empty buildings in some cases instead of dropping prices.

To the extent that United States citizens have borrowed against their homes in the USA to purchase property in Panama there could be a real estate bubble that burst in Panama as well as in Costa Rica. However, Panama has a lot more going for it than North American retirees.

Panama

Panama is the narrowest point in the Americas where the Panama Canal connects Atlantic and Pacific. This tropical country has untouched rain forest and pristine beaches on both the Pacific and Caribbean coasts. Panama also has a first world infrastructure with the best roads, airports, ports, and telecommunications in Latin America. Panama is currently enjoying an economic boom and a flood of North American retirees attracted by easy residency laws.

Panama has the highest rate of foreign investment per capita and roughly the highest overall next to Chile in all of Latin America. Panama is improving its foreign trade status with it current negotiations of a free trade agreement with Canada.

Foreign Trade and Panama

Currently Panama involved in negotiations for a foreign trade agreement with Canada. Government ministries are dealing with Panama interest groups to hone their negotiation strategy.

Besides the negotiations with Canada, Panama already has free trade agreements with Taiwan, El Salvador, Singapore, and Chile. A free trade agreement signed with the United States is pending approval by the US congress.

The pro business Panamanian government believes that more free trade to include Canada will lead to more prosperity. It is hard to argue with an economy that grew at 11.2% last year (2007) which is the highest real growth rate in all of Latin America and the Caribbean.

Panama Real Estate Investment

So, you have two arguments. One is that all the Americans will need to take their money home because credit is tightening in the US housing market. Thus the US economy’s woes will affect Panama and prices will drop all over the place. For up to date panama real estate for sale please see our listings.

The second argument is that Panama’s prosperity is linked to world trade, its own trade agreements, an enlightened administration that favors and attracts foreign investment, and the ownership a unique role in world shipping, the Panama Canal. When fuel costs go up more boats use the Panama Canal to same money. When fuel costs go down and economies thrive there is more shipping and more boats use the Panama Canal.

Panama’s long term prosperity will drive its real estate market over the years. Free trade agreements such as one with Canada and the increased foreign investment it can bring will keep Panama’s economy expanding. Expect Panama to have more investment in real estate and a stable, growing real estate market for years to come. Panama commercial real estate

A look at the Panama City skyline tells you of the real estate investment here. For as many building you see under construction there are more on the drawing boards with leases already signed.

If you are interested in exploring real estate investment in Panama come to see us at ABPanama. We have over 23 years experience managing real estate portfolios and do business throughout the country.