Is Panama Real Estate Still Cheap

Real Estate Investments represent one of the highest assets in the world, and promotes economical growth. From a Business Point of view Real Estate investment can be viewed from different perspectives: a type of asset, Expenses for a new Business launching, a strategic asset used to generate income, or a source against competitors in the Market.

These assets are also one of the main sources of wealth, and are directly incorporated in the Assets Administration, or indirectly incorporated in Investments buckets.

Panama Real Estate is very cheap compared with other Countries. Currently foreigners are allow to own Titled Real Estate, the have the same rights as Panamanians also taking into consideration that Panama has very strict property protection rights. Foreigners can also acquire Mortgages, Panama has over 100 Banks for you to choose from, Rates are similar to US (about 6% - 7%),Terms up to 30 years, Financing up to 80% of Value of Property, Loans on Land are not common, Fire & Life Insurance will be required. Life Insurance can go up to 75 years, which limits the Term of the Loan, Personal References, Tax Forms, Credit History Report and other documentation are required.

Please see a list of the common Real Estate Costs:
-    Panama City Land – from $15 (Mid Class Residential) to $100 (Commercial) a square foot.
-    Panama City Ocean Front Condos - from $80 (older property) to $200 (newer projects) a square foot.
-    Panama City Condos – from $60 (older property) to $120 (newer projects) a square foot.
-    Beach Front Land (Close to Panama City Sector) - from $5 to $25 a square foot (based on ¼ to 1 Acre Lots.
-    Beach Front Farms (Undeveloped Areas) – from $4,000 to $20,000 an acre.
-    Highland Lots – from $2 to $5 a square foot.
There are also closing fees that can vary from $500 to $2500 it depends on value of property. This closing fee must be paid by Buyer and accounts for Legal Fees, Notary and Registry fees.
In addition the Seller assumes the payment of a 10% Capital Gains Tax which is equal to the Sales Price minus Registered Price and Sale Cost and the 2% Transfer Tax.
Construction Costs Can be from $45 to $75 a square foot (varies depending on finishes)
Investors also need to take into consideration when buying a Real Estate that There is a Land Tax and Improvements Tax :
-    Land Tax is exempt for the first $30,000 of value, over $30,000 tax is about 2% of value. Example: On a Lot of $100,000 you will pay a yearly tax of $1,400 ($70,000 x 2%).
-    Improvements Tax is Exempt for 20 Years, over this period it is about 2% of value. Starting September 2007 the Tax Brake will vary depending on value of property as shown below:
-    Under $100,000 - 15 years
-    From $100,000 to $250,000 - 10 years
-    Over $250,000 - 5 Years
Tax Brake on Improvements goes from one owner to other, example if you buy a property built in year 2000 you will still have a Tax Brake of 14 Years.

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