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Taking The Pulse Of Panama City’s Property Market

16 Apr
panama skyline

Taking The Pulse Of Panama City’s Property Market

The Lights Aren't On, So Nobody's Home, Right?

Panama City must be hiding some real estate bargains, a colleague in town for this week’s Live and Invest in Panama Conference suggested over lunch yesterday. When I asked how he came to that conclusion, his response was one I’ve heard many times, not only for Panama City but for other cities with lots of high-rise buildings around the world, as well.

“Looking out my hotel window last night,” my friend told me, “most of the windows of the apartment buildings I could see were dark.”

The assumption is that because the windows are dark at night, no one is living in the apartment. A bank of 30 floors of windows with only a handful of lights on here and there must mean the building is mostly vacant… right?

While many apartments in Panama City have been bought by overseas investors who don’t bother to rent their properties—in particular by Venezuelans who park their money in real estate in general to have it outside Venezuela, and in Panama real estate in particular because they see Panama as the safest haven in the region—most buildings in the city are occupied.

So, if people are living in the buildings, why are so many windows dark? Lots of reasons—curtains are closed, people are out to dinner, people are asleep, people are watching TV in the dark… Electricity is expensive in Panama City. Speaking personally, we turn the lights on after dark only in the room we’re occupying.

Which gets to what I think is the real reason you see so many dark windows in Panama City high-rises at night. Many of the buildings in this city have been designed with just two apartments per floor. The way apartments are configured, whole sides of buildings can be dark most of the time.

The "How Many Lights Are On" Theory

I’ve heard this “how many lights are on” theory for years. It seems clever on the surface but can be deceiving. I wouldn’t recommend it as a strategy for determining the state of a real estate market. Speaking with local experts is a much better way to analyze a market. You have to choose your experts, though. Real estate agents have an agenda, of course. You want to know what local agents think, but the way to do this is to speak with as many different agents as possible, to get and then filter as many different perspectives as you can.

Panama City agents and other local experts who joined me at the conference this week showed us that this market is on the move. While prices in Panama City probably fell by as much as 25% on average post-2008, property values are back to their pre-global crisis figures and higher.

In fact, the real estate agent I use to keep my Avenida Balboa rental property filled told me she could sell my apartment today for about 10% more than the previous high valuation in 2008/2009. I’m not selling, as annual rental yields from this property have been and continue to be strong. Figured on what I paid for the apartment, they’re mid-double digits. Calculated on the value my agent thinks she could sell the apartment for in today’s market, they’re still 6.5% net.

Long term, I’m more bullish on the prospects for Panama City’s property market than ever. This country and its capital continue to push themselves into the first world.

The current average cost per square meter to buy in Panama City today is US$2,000. The range (in neighborhoods that make sense for investment or for an expat looking for a place to live) is from a low of about US$1,500 per meter to a high of US$2,600 per meter.

One real estate agent who presented at this week’s conference showed the current costs per square meter to buy in key cities around the world, including Hong Kong, Singapore, and Miami, cities that Panama City is increasingly compared with. You’ll spend US$3,633 per meter on average to buy in Miami today, US$15,385 per meter on average to buy in Singapore, and US$19,574 per meter on average to buy in Hong Kong.

Compared with US$2,000 per meter in Panama City.

That leaves a lot of room for growth.

Lief Simon


“Lief, you say the canal is the main driver of the Panama economy. What is your prediction on how Panama will fare after the Nicaragua canal is operating? Estimates say it will take away about 70% of the canal traffic/revenue. I would like to know how you feel about this and why.

“I like Panama a lot. Am a resident but concerned.”


I’m not sure where you’re seeing the figure of 70% reduction in revenues for the Panama Canal. I haven’t seen that myself. It sounds like a number invented by some blogger trying to cause trouble.

Note that the Nicaragua canal isn’t actually under way. When it’s started (if it’s started… it’s still not a done deal), it will take at least a decade and likely longer to complete. The current expansion of the Panama Canal has been in process for nine years and won’t likely be completed this year.

Therefore, we’re looking at a generation before any potential impact of a Nicaragua canal on the Panama Canal comes into play. By that time, I predict that global shipping will have caught up to capacity. It’s expected that the expansion capacity for the Panama Canal will be reached quickly following completion. Remember, right now, ships that are too big for the canal either travel around South America or unload their cargo on one side of the canal so it can be shipped via rail to the other side. Many of those larger ships will begin using the canal as soon as it opens. The demand is already there.

Meanwhile, Panama’s economy continues to diversify. Tourism revenues surpassed canal revenues for contribution to GDP for the first time ever last year. The country’s banking industry continues to expand, as does its agriculture industry, which I believe will be the next big boom for this market.

So, again, by the time a Nicaragua canal comes online, the impact on Panama won’t be significant.