Panama is a country where real estate investment expectations are met in a safe and risk-free manner as it has a consolidated democracy, which leads to legal certainty, creating an ideal framework to invest. It has a stable government and a strong economy based on the US dollar. Even after the COVID-19 pandemic, real estate investing in Panama is advantageous. Randall Castillo Ortega, the founder of RACO Investment, explains why.
Despite the crisis, Panama continues to lead expectations for economic growth in the region. So much so, that recently five multinationals known as Spectrum Biomedical Latam (Canada), Inceca Regional Services (Nicaragua), ABB Central America and the Caribbean, SA (Switzerland), Alórica Panama (United States) and EY Latam North Holding SA (United Kingdom and USA), will establish their headquarters in Panama. This will positively impact economic revival, increasing demand in the real estate sector.
At times of uncertainty, where market fluctuation is not clear, it is necessary to analyze which investments present risks and which do not. For example, investing in stocks on the stock exchange is a risk. However, investing in Panama in the niche of real estate will always be a good option as it will remain an unwavering investment. Adds Castillo, “Capital gains must be taken into account, i.e., when a property acquires value over time. If this factor is combined with inflation, we will help a project set a value at the time of purchase and that over the years, in a positive way, that price will increase. In addition, real estate has easy accessibility to investment liquidity unlike other investment methods.”
In Latin America, the real estate sector remains in an optimistic scenario. Housing investment continues to be conceived in the medium and long term as a solid and intelligent opportunity. The Panama Canal, which since its opening in 1914 allows more than 5% of world trade to pass through it, allows the country to obtain a high return and attracts investors from all over the world to invest in various activities, including real estate investment.
Panama’s economy is stable, with the US dollar as legal tender. Investing in dollar-traded root bins can be a way to reduce risk. The support in the capital gains and the value of the property attest to the minimization of any insecurity that the currency may have.
The real estate sector offers a wide range of real estate projects to invest in, presenting a diverse geography, with unspoiled jungles, mountains, tropical islands and a modern capital with great urban development with all facilities.
Panama presents itself as the hub of the Americas for its strategic air, commercial, logistical, financial and maritime situation of global scope. It also has several Special Economic Zones, such as The City of Knowledge, Panama Pacific, Export Processing Zones and the Colon Free Zone.
Compared to other Latin American neighboring countries, Panama is a safer country. The cost of living is lower and the quality of life is high. In addition, it has no natural disasters such as hurricanes or earthquakes.
There are exemptions and discounts for retirees and seniors, which would be similar whether you are a retired foreigner residing in Panama or a national. These include discounts on land and air transport, cinemas, medicines, restaurants, shopping and services.
There’s also a high-strength banking system in Panama. Explains Castillo, “In the last 20 years, there have been mergers, transformations and incorporations of new banks that have helped regulate and resize the sector. As a result, Panama is now one of the most important financial centers in Latin America.”
Foreign investments are protected by the Civil Code of Panama, its Constitution and its Foreign Investment Law. This protection provides a guarantee that foreigners have the same rights as Panamanians in terms of ownership of property, investments and trade.
Lastly, investing in Panama has the advantage that it is considered a tax haven. The revenue generated within the country, including those generated by sales made within Panama, does bear the Panamanian tax, since the tax law is based on the principle of territoriality. All real estate sales in Panama are subject to a 2% transfer tax on the root good.