Panama’s Residential Property Market Analysis 2025

The Panamanian housing market entered the year with cautious optimism, with sales prices in moderate but sustained recovery, most notable in the off-plan segment, and expats and tourism activity driving demand for rental properties.

This extended overview from Global Property Guide covers key aspects of the Panamanian housing market and takes a closer look at its most recent developments and long-term trends.

Table of Contents

• Housing Market Snapshot
• Demand Highlights
• Supply Highlights
• Rental Market
• Mortgage Market
• Socio-Economic Context

Housing Market Snapshot

In early 2025, Panama's housing market underwent a measured adjustment phase, marked by a moderate yet sustained recovery. According to the latest edition of the Real Estate Survey of Latin America (RIAL), published biannually by the Center for Financial Research at Torcuato Di Tella University, the average asking price for residential properties in the country's capital, Panama City, reached USD 1,804 per square meter as of March 2025. This reflects a year-on-year increase of 2.38% and a cumulative rise of 7.38% from the market's most recent low in September 2021.

Panama's house price annual change:

Data Source: Encuentra24.

"After several years of discounts, aggressive promotions, and depressed prices due to excess inventory, 2025 is showing a gradual but segmented recovery," noted analysts at MLS Acobir.

Data Source: RIAL Di Tella-Zonaprop.

Meanwhile, the price gap between new and resale properties has continued to widen. Research by Galleria Inmobiliario, cited by the local agency Panama Equity Real Estate, highlighted notably higher asking prices for off-plan units in neighborhoods popular with expatriates, ranging from USD 2,720 per square meter in San Francisco to USD 4,150 in Casco Viejo.

"In some cases, it's a sign of financial pressure on developers who need higher prices to make their numbers work. In other cases, it's an example of developers trying to test the limits of the market, prior to starting construction," commented Kent Davis of Panama Equity Real Estate.

Average asking prices for off-plan properties in Panama City, selected neighborhoods:

Across the country, average residential prices remained highly location-dependent. MLS Acobir estimated the national average prices to vary from USD 800 to USD 1,500 per square meter, depending on the type and location of the property.

Estimated unit price by type of housing, 2025:

Looking ahead, the recovery in housing prices is expected to continue, supported by macroeconomic stability, public infrastructure investment, and favorable conditions for both domestic and foreign buyers. The expansion of metro lines, improvements in road connectivity, and the decentralization of services are seen as drivers of demand in secondary markets, especially in the mid- and lower-price segments. Meanwhile, sustained foreign capital inflows, encouraged by investor-friendly tax rules and visa incentives, are likely to reinforce growth in the high-end segment.

Among the key residency programs attracting international buyers to Panama is the Pensionado Visa, which grants permanent residency to retirees with a lifetime pension of at least USD 1,000 per month. This threshold may be reduced to USD 750 for applicants who acquire Panamanian property valued at USD 100,000 or more. Foreign nationals who do not qualify under this program may apply for residency as Qualified Investors, which requires a minimum real estate investment of USD 300,000, either through direct purchase or a promesa de compraventa (purchase agreement), provided the investment is maintained for at least five years.

The country benefits from a territorial tax system, under which income earned outside the country is not subject to local income tax. The national currency, the Balboa (PAB), has been pegged to the US dollar (USD 1 = PAB 1.00000) since 1904, with both currencies circulating freely as legal tender.

Demand Highlights:

Sales Drop in Affordable Segment, High-End Market Remains Firm

Following three consecutive years of growth from 2021 to 2023, residential demand in Panama declined sharply in 2024. According to the latest figures from the National Council of Housing Developers (Convivienda), a total of 6,126 dwellings sold were reported by participating members during the year, representing a 20.31% year-on-year decrease. The total value of transactions also declined by 17.67%, reaching PAB 616.83 million.

In her official address, Convivienda's Executive Director, Elisa Suárez de Gómez, attributed the contraction primarily to political uncertainty surrounding the 2024 general elections and the non-renewal of the Solidarity Housing Grant Program, which expired in June 2024. The discontinuation of the program by the incoming administration created uncertainty around already approved mortgages and the timely delivery of ongoing housing projects. "The lack of payment of Preferential Interest incentives by the national government, coupled with rising unemployment and weakened purchasing power, led to a 20% drop in sales compared to 2023," she stated.

The downturn was most pronounced in the lower- and middle-income segments, particularly in the PAB 40,001 to PAB 120,000 price range, where banks became increasingly cautious in issuing new mortgages. In contrast, the higher-end segment, particularly homes priced above PAB 250,000, demonstrated greater resilience. "This segment continued to benefit from interest among international buyers, including migrants from Canada, Venezuela, Colombia, and other politically unstable countries in the region, as well as retirees from colder climates - drawn by Panama's investor- and retiree-friendly legislation," added Suárez de Gómez.

Data Source: Convivienda.

Looking ahead, the housing sector enters 2025 with cautious optimism. Convivienda forecasts a 17% increase in residential sales, with an estimated 7,163 units expected to be sold during the year, representing a total transaction value of PAB 738.42 million. While this projection remains below pre-pandemic levels, it signals a potential step toward market stabilization, contingent on regulatory clarity and the restoration of investor and consumer confidence.

Supply Highlights:

Supply Growth Driven by Outlying Districts Despite Overall Slowdown

According to statistics compiled by Convivienda, a total of 14,005 residential units were completed across Panama in 2024, as measured by the number of occupancy permits granted. This represents a slight year-on-year decline of 1.06%, highlighting the market's continued inability to return to the recent peak of 17,729 units recorded in 2022, or to pre-pandemic levels. Of the total completions, 10,600 units - or 76% - were located within the Metropolitan Area, which includes the districts of Panama, La Chorrera, Arraiján, and San Miguelito. The remaining 24% were distributed across the country's main interior districts.

Note: Interior districts monitored by Convivienda include Chitré, Penonomé, Aguadulce, Antón, Santiago, Colón, David, Dolega, Boquete, Bugaba, and San Carlos.
Data Source: Convivienda.

Within the Metropolitan Area, total completions remained broadly stable year on year at around 10,600 units. However, performance varied considerably at the district level. In Panama District, 5,753 units were completed, reflecting an 11% decrease from the previous year. Convivienda noted that development activity is increasingly shifting toward the district's outer areas, driven by rising land prices and the lack of planned, sustainable, and coordinated densification. This trend is expected to place additional pressure on infrastructure and public services.

La Chorrera diverged from the broader metropolitan trend, recording a 73% increase in completed units compared to the previous year. This growth was led primarily by Playa Leona, where completions rose sharply from 634 to 2,380 units. Despite this surge, overall output in La Chorrera remains below the district's 2017 peak. Experts caution that continued growth will require targeted infrastructure investments, including a new canal bridge, upgrades to the electrical grid, and the implementation of development zone legislation for the western corridor. As in Panama District, development appears to be expanding toward the outskirts.

In contrast, Arraiján experienced a 42% drop in residential completions, which reflects "challenges with transport, water, and energy" that have constrained housing activity despite moderate growth between 2021 and 2023. San Miguelito reappeared in the official statistics for the first time in several years, though with just 61 completed units, underscoring previous data gaps.

Number of occupancy permits granted, by metropolitan district:

Rental Market:

Expats and Growing Tourism Inflows Increase Demand for Rentals

The overall size of the traditional long-term rental market in Panama is relatively limited. Based on the data from the 2023 Population and Housing Census, only 13.12% of residences (about 158 thousand units) in the country are rented, against 63.50% fully owned and 18.08% mortgaged residences.

Panama's rent price index:

Data Source: Instituto Nacional de Estadística y Censo.

Rental inflation on existing contracts, measured by the actual rentals for the housing component of the national urban consumer price index (CPI), registered a marginal 0.2% year-on-year growth in May 2025, still above the overall inflation, however, which remained in the negative territory at -0.7% during the same period.

At the same time, according to Engel & Völkers Panama, rising demand for rental properties is one of the key trends defining the Panamanian real estate market in 2025, especially in popular tourist destinations like Bocas del Toro, Playa Venao, and Río Hato, as well as urban centers like Panama City, where the demand is driven by expats waiting before they purchase a property and local families forced to rent after losing creditworthiness during the pandemic.

The analysis based on housing listed for rent at the property platform Encuentra24 shows that the average asking rent per square meter in Panama City reached USD 12.96 for apartments and USD 8.10 for houses in June 2025. Local agency Panama Equity Real Estate estimates that asking rents for apartments have increased as much as 12% year-on-year in key areas of Panama City, with demand outpacing supply in neighborhoods like Costa del Este and El Cangrejo.

The research conducted by Global Property Guide in April 2025 found the average monthly rent in Panama City at USD 1,550 for studios and 1-bedroom units, USD 1,600 for two-bedroom units, USD 2,400 for 3-bedroom units, and USD 5,500 for larger units with 4 or more bedrooms. The corresponding gross rental yields for residential properties averaged 7.83% (up from 6.78% previously reported in May 2024). On the nationwide level, the average yield level stood at 6.84% (up from 6.42% in May 2024).

"Yields on long-term Panama real estate rentals are also improving, especially in mid-market neighborhoods like El Cangrejo, where value and demand align," commented Kent Davis, Managing Director of Panama Equity Real Estate. "Premium areas like Punta Pacifica and Santa Maria, on the other hand, are seeing slower rental absorption and declining yields."

Data Sources: INEC, ATP.

Adding to the demand in the housing market are the growing tourism inflows. In the first four months of 2025, the Panama Tourism Authority (ATP) reported a total of 1.1 million visitor arrivals (+3.7% year-on-year), including over 809 thousand overnight tourists (+8.9% year-on-year). Tourism expenditures during the same period reached USD 2.3 billion, showing a 7.7% annual increase. Hotel occupancy in January-April 2025 is estimated to reach 60.5%.

Based on arrivals at the Tocumen International Airport, the majority of international visitors came to Panama from South America (34.6%), North America (30%), and Europe (15%). Key markets of origin are the USA (over 176 thousand visitors) and Colombia (over 103 thousand visitors).

The recovery of Panama's tourism sector from the impact of the global pandemic and its return to a growth trajectory increases the relevance of vacation properties and short-term holiday rentals to the country's real estate market. Some local experts, however, question the short-term rental (STR) ownership model and potential returns, based on current regulations (prohibiting, for example, rentals shorter than 45 days in Panama City unless the property is registered as a hotel or similar tourism accommodation) and average hotel occupancy levels. "Until Panama passes legislation that formalizes Airbnb legality, any short-term rental play comes with elevated risk, unless the property already has a license," believes Kent Davis of Panama Equity Real Estate.

The July 2025 data from AirDNA shows the largest number of active short-term rental listings and the highest average occupancy in the province of Panama. Among the more active local submarkets (with 100 or more active listings), the highest average daily rates over the last twelve months were observed in the provinces of Colon, Cocle, and Los Santos. Occupancy for short-term rentals remains highly seasonal, fluctuating from 76% in March to 41% in September.

Key short-term rental indicators across selected submarkets as of July 2025:

Mortgage Market:

Interest Rates Remain Elevated, New Lending Subdued

As Panama's economy is dollarized, with the US Dollar used as legal tender alongside local currency the Balboa (exists only in coins at 1:1 parity with USD), interest rate trends in the country largely follow those observed in the United States, where the Federal Reserve has been maintaining its monetary policy stance since late 2024 and the average mortgage rates remain elevated.

The Local Mortgage Reference Rate, published on a quarterly basis by the Superintendency of Banks of Panama (SBP), the country's banking regulator, has remained at 6.25% for Q3 2025, unchanged for the fifth quarter in a row. The reference rate is determined as a weighted average of the interest rates on mortgage loans with a term of no less than 15 years, reported by the five private banks with the largest residential mortgage loan portfolios, plus the Savings Bank.

In parallel, the interest rate on non-preferential housing loans in the national banking system continues to trend upward, most recently reported at 6.24% in May 2025, up from 6.05% a year ago and 5.83% two years ago.

Data Source: SBP.

For the subsidized housing loans under the preferential interest rate regime, the recently enacted Law 468 of 2025 (scheduled to fully replace Law 3 of 1985 from January 2026), effectively capped interest rates for eligible borrowers at between 4.0% and 5.5%, depending on the region and house value. The benefit will apply to new primary residences with a purchase price of up to USD 120,000 at the time of financing for a non-renewable term of 5-8 years, after which loans will revert to full commercial rates.

Although the passing of the new law in April 2025 was generally positively received by the business sector, it also raised concerns about some provisions that could discourage banks from participating in the subsidy scheme under new conditions, specifically Article 12, which establishes a requirement for the banks to conduct a comprehensive financial reassessment of borrowers six to twelve months before the end of the subsidy period.

"Law 468 is worded in a way that has caused concern to both banks and real estate developers, so it is important to first clarify that the previous law remains in force until December 31, 2025, and secondly, that Article 12 can be addressed <…>, the wording could be better, because some banks have stated that they will not express preferential mortgage loans until this issue is resolved," Raúl Guizado, chairman of the board of directors of the Panamanian Banking Association, was quoted saying by La Prensa.

"We need to review that article," commented Elisa Suárez, director of the National Council of Housing Developers (Convivienda). "If banks aren't going to lend in the preferential interest sector, we'd have a dead law that we couldn't enforce."

According to Suárez, of each 100 loans approved in Panama in 2024, at least 92 were preferential interest loans; hence, the importance of reactivating these loans and clarifying the concerns expressed by financial institutions. Based on the SPB reporting, the residential mortgage portfolio under the preferential regime reached USD 9.4 billion in May 2025.

Data Source: SBP.

Against the backdrop of elevated interest rates and delays tied to the legislation in the preferential segment, new lending remains subdued in Panama, with the value of mortgages granted in decline since 2023. In the first five months of 2025, the SBP reported a total of USD 723 million in new mortgages, which was 13.5% below the comparable period last year.

At the same time, the overall size of the mortgage market in the country continues to grow. The rate of expansion, however, has slowed considerably from double-digit annual increases in 2011-2016 to just 3.9% in 2023 and 2.7% in 2024, according to the SPB figures. The relative size of the market, represented by the ratio of outstanding mortgages to GDP at current prices, moderated from an estimated 31.5% peak level in 2020 to 24.1% in 2024.

As of May 2025, the total value of outstanding mortgage credit in Panama stood at USD 21.3 billion, of which nearly 94% was represented by loans on owner-occupied housing, and about 6% by loans on commercial properties. The larger share of the stock is split between domestic private banks (39.5%) and foreign private banks (35.8%), with state-owned ("official") banks holding 24.7% of mortgage credit.

Data Sources: SPB, IMF.

Socio-Economic Context:

Robust Growth Prospects Counterbalanced by Domestic Challenges and External Uncertainties

Despite high growth in previous decades, poverty reduction, and reform progress, new challenges have emerged for the Panamanian economy in recent years, points out the spring 2025 macroeconomic outlook from the World Bank. A legal dispute over Cobre Panama, the country's largest mine, previously led to the suspension of extraction there. Additionally, recurrent droughts temporarily reduced the number of vessels crossing the Panama Canal. These events have impacted the economy and increased fiscal strain, given Panama's low tax revenues and new spending pressures, noted the World Bank.

Impacted by the suspension of activities at Cobre Panama, the country's real GDP growth decelerated from 7.6% in 2023 to 2.9% 2024, according to the figures from the International Monetary Fund (IMF). At the same time, government and private consumption, along with public investment and private ventures, helped mitigate a stronger deceleration. As the economy recovers from the significant slowdown in the construction and mining sectors earlier in 2024, accelerating growth is expected to resume. The World Bank projects the Panamanian economy to gradually pick up pace and expand by 3.5% in 2025, 3.8% in 2026, and 4.3% in 2027.

In parallel, supported by stable energy and food prices, Consumer Price Index (CPI) inflation in the country decreased from the annual level of 1.5% in 2023 to 0.8% in 2024, according to the IMF. Most recently, the National Institute of Statistics and Census (INEC) reported the national urban consumer price index inflation in negative territory at -0.7% in May 2025. Over the medium term, the World Bank expects the inflation in Panama to stabilize around 1.5%.

Data Source: IMF.

In the Panamanian labor market, the World Bank outlook notes, economic growth was accompanied by higher labor force participation but limited gains in labor income among low-income households. The discontinuation of pandemic emergency transfers also affected non-labor incomes, leading to an increase in the poverty rate by 0.7 p.p. to 13.6% in 2024.

According to the ILO estimates published by the World Bank, overall unemployment in the country stood at 6.5% in 2024 and remained significantly higher (16.8%) for the young population aged 15 to 24.

Data Source: World Bank.

Overall, due to its strategic location, the Panama Canal's role in global trade, and a dollarized economy, Panama remains a key logistical and financial hub in Central America. At the same time, the country's development prospects are vulnerable to risks from global trade uncertainties, tighter global financing conditions, and geopolitical tensions affecting prices. Domestically, fiscal pressures, uncertainty over the Cobre Panama mine closure, and challenges in advancing the fiscal reform agenda could slow down consolidation efforts and increase reliance on external debt. "These risks may exacerbate poverty, as 1 in 10 Panamanians are vulnerable to falling back into poverty due to a shock," said the World Bank.

In December 2024, Fitch Ratings affirmed Panama's 'BB+' standing with a stable outlook, noting its robust medium-term growth prospects, counterbalanced by weaknesses in governance and public finances, including a narrow and eroding government revenue base, high and rising government debt and interest burdens, and a heavy reliance on external markets for funding.

Sources:

1. The National Institute of Statistics and Census (INEC)
   1. National Accounts: https://www.inec.gob.pa/
   2. Price Index (ES): https://www.inec.gob.pa/
   3. Labor Market (ES): https://www.inec.gob.pa/
   4. Population and Housing Censuses (ES): https://www.inec.gob.pa/
   5. International Passenger Movement (ES): https://www.inec.gob.pa/
   6. Exchange Rates (ES): https://www.inec.gob.pa/
2. Superintendency of Banks of Panama (SBP)
   1. Financial Statistics (ES): https://www.superbancos.gob.pa/
   2. Interest Rates (ES): https://www.superbancos.gob.pa/
   3. Publications (ES): https://www.superbancos.gob.pa/
3. The Ministry of Government (Mingob)
   1. Application for Permanent Resident Permit as a Retiree and Pensioner: https://www.panamadigital.gob.pa/
   2. Permanent Resident as a Qualified Investor (ES): https://www.propanama.gob.pa/
4. Panama Tourism Authority (ATP)
   1. Panama Tourism Performance Analysis: Report from January to April 2025 (ES): https://www.atp.gob.pa/
5. Gaceta Oficial
   1. Law 468 of 2025 (ES): https://www.gacetaoficial.gob.pa/
6. Justia Panama
   1. Law 8 of 2010 (ES): https://panama.justia.com/
7. International Monetary Fund (IMF)
   1. Country Overview: Panama: https://www.imf.org/
   2. 2024 Article IV Staff Report: https://www.imf.org/
8. World Bank
   1. Panama MPO, April 2025: https://thedocs.worldbank.org/
   2. World Development Indicators: https://datacatalog.worldbank.org/
9. National Council of Housing Developers (Convivienda)
   1. Results and Projections Report, 2024-2025 (ES): https://convivienda.com/
   2. Results and Projections Report, 2024-2025, Speech by Executive Director (ES): https://convivienda.com/
10. Encuentra24
    1. Property Pricing Trend in Panama: https://www.encuentra24.com/
11. AirDNA
    1. Short-Term Rental Markets: Panama: https://app.airdna.co/
12. Center for Financial Research, Torcuato Di Tella University
    1. Real Estate Survey of Latin America (RIAL) (ES): https://www.utdt.edu/
13. MLS Acobir
    1. Real Estate in Panama: What's Happening in the Real Estate Market in 2025 (ES): https://blog.mlsacobir.com/
    2. Homes for Sale in Panama in 2025: Prices, Trends, and What's Next (ES): https://blog.mlsacobir.com/
14. Engel & Völkers Panama
    1. The Hottest Real Estate Trends Shaping Panama's Market in 2025: https://panama.evrealestate.com/
15. Panama Equity Real Estate
    1. Panama Real Estate Market Report Q1 2025: A Market in Transition: https://www.panamaequity.com/
16. Benoit Properties International
    1. Panama Property Market Forecast 2025: https://www.benoitproperties.com/
17. KPMG Panama
    1. New Preferential Interest Rate Regime for Mortgage Loans (ES): https://kpmg.com/
18. Fitch Ratings
    1. Fitch Affirms Panama at 'BB+'; Outlook Stable: https://www.fitchratings.com/
19. Reuters
    1. Cobre Panama Mine Ready to Suspend Arbitration Against Panama: https://www.reuters.com/
20. La Prensa
    1. Preferential Interest Mortgages Remain Paralyzed; Banks Request Review of the New Law (ES): https://www.prensa.com/