Mundo promotes Panama real estate at Moscow’s MIPIF in early June and Explains How to Buy an Apartment in Panama City as a Foreigner

Introduction: What Foreign Buyers Need to Know Before Signing a Purchase Agreement

Many of our readers are concerned about the risk of buying property abroad. Any foreigner embarking on such an adventure must make sure that all the legal aspects are covered and that the possibility of risk is as low as possible. 

The first thing one needs is a reliable expert who knows his/her way around the local landscape and understands all the legal aspects of buying property as a foreigner. 

For those who want to buy an apartment, Panama City is thriving with state-of-the-art complexes, many of which offer convenient prices in their pre-sale or pre-construction phases. Now, the matter remains how to buy them safely and how to obtain the most benefit from them.

Why Panama Remains One of the Easiest Markets for Foreign Buyers

Panama has been expat-oriented since its early days, when the French and the Americans came to work in the Panama Canal. The nation's main pride and most distinguished engineering prowess was built with foreign hands, thus forging the local idiosyncrasy.

In our days, this natural trend was reinforced by the government, which established several programs for foreign citizens to obtain legal residency, some through real estate, others through investing in reforestation land, fixed-term deposits, or the stock exchange.

Reasons to buy real estate in Panama

• Excellent prices
• Lower cost when compared to world-class capitals or metropolises
• Convenient tax regime with low rates and a territorial system
• Modern and sophisticated apartments available
• Developments with author design and state-of-the-art amenities
• A dollarized economy maintains inflation under control and prevents volatility
• Ample array of choices across the country and in different backgrounds
• Possibility of obtaining permanent residency through the purchase of real estate
• Possibility of obtaining other visas, such as Friendly Nations, through the purchase of real estate
• Rent out your property for short-term visitors attending conferences, business events, or sightseeing
• Almost no restrictions on foreign ownership
• Reliable legal framework

The Step-by-Step Purchase Process

Step 1: Property Search and Verification of the Seller

The process starts with a decision. Every foreign investor starts by browsing the most popular real estate platforms and listings available in the area of their choice. Areas, neighborhoods, cities, and towns should be carefully researched so that you can make an informed decision and enter an environment that you like and appreciate. In one of our recent articles, we compare different districts in the Central American capital.

Mundo experts recommend going straight to a realtor or a solid team fully dedicated to real estate that can right away introduce you to the most suitable choices. This will save you valuable time, preventing you from navigating endless listings or visiting a home that may end up not having a marketable title.

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Step 2: Title Search at the Public Registry

This is the time to hire an independent Panamanian lawyer to conduct due diligence on the property deed. Their main task will be to verify whether the owners are who they say they are, whether the real estate is free from liens or encumbrances, and whether the title will be under the buyer’s name rather than a “right of possession”.

Step 3: Promise-to-Purchase Agreement and Deposit

Once you've chosen and verified the deed, it’s time to sign the promise to purchase agreement. Both parties will establish their rights and responsibilities, on the buyer’s side, stipulating cost, deposits, and installments, if applicable. On the seller's side, it will include the obligation to maintain the property in the agreed-upon condition until the moment of the sale, and disclose any structural or legal issues.

Step 4: Final Deed, Notary, and Registration

When the final deed is drafted, it's signed before a notary whose main function is to assess whether the parties are signing in their own will and are competent to make the decision of buying/selling real estate. Once purchased, the property must be filed with the Panamanian registry.

Step 5: Handover, Utilities, and Building Administration

After closing the deal, the buyer becomes the full owner and decides what to do with the unit. This stage can be challenging as they have to deal with new things, like payment of utilities, fees, and expenses, and learning building owners' association rules. To simplify things, there's always the option to delegate, especially for time-consuming activities like renting out the property for short-term visitors.

Mundo editor's opinion: "Many investors spend weeks navigating listings, talking to agents, and disbursing large fees for lawyers to conduct due diligence, only to find out that the property deed is not marketable or that the unit has pending liens. As Mundo's editor, I strongly recommend that investors go straight to teams that are 100% focused on offering developments to foreigners. They work only with reputable industry players and units that have impeccable legal standards and short-term rental licenses".

Mundo promotes Panama real estate at the Moscow MIPIF in early June

On June 5 and 6, three members of our team visited the Moscow International Property and Investment Forum (MIPIF), a widely recognized real estate exhibition focused on CIS countries and catering to investors all over the world. 

Over 100 companies took part in the event, displaying their brochures, one-pagers, and profuse materials to show the strength of each particular jurisdiction. 

The Mundo team couldn’t miss it, and was present both days, represented by three of our most valuable team members: our head of the sales department, our CEO assistant, and our sales and social media assistant. 

The possibility of talking face-to-face with players from all over the world is pure gold in this industry; this is why at Mundo, we take every chance we get to participate in such prestigious events. 

This June, the gals talked to potential buyers and showed them the same we show you in each of our articles: the advantages of real estate in this central American region, which, for most attendees, who were mainly from CIS countries, is exotic and puzzling. Thanks to Mundo, they are able to see Panama beyond that exotism and seriously consider it for their investment and relocation plans.

The True Cost of the Transaction

Transfer Tax, Notary, and Registration Fees 

Mundo encourages seeking reliable tax advice, as property sales taxes can vary depending on several conditions, especially if you're a foreigner. According to the General Tax Directory (Panama's equivalent of the IRS), real estate transfer tax is levied at a 2% rate on the higher price, whether it's the declared sales price or the price recorded in the cadastral registry. 

At the moment of executing the transfer, the taxpayer must present the public deed through which they acquired the property, an ID, and the sales-purchase contract. Sellers must pay an advance of their capital gain tax or income tax, in which case they pay 3% with the same logic as above.

Disclaimer: Mundo is not a tax advisory firm; hence, we don’t provide tax advice. The tax information displayed here, as well as prices and general conditions regarding other subjects, is taken from general research and might be inaccurate or outdated at the time of reading. This article doesn’t constitute financial, legal, or tax advice. 

Average apartment prices in Panama

Disclaimer: the above costs are stipulated based on the latest information and for a general comparative analysis. Up-to-date property costs and prices will be provided only through formal consultations. This article doesn't constitute legal advice. 

Pitfalls and How to Avoid Them

Untitled Land and Rights of Possession Risks

One of the worst things that can happen to a real estate investor is buying real estate with a non-marketable title. Marketable deeds or titles show that the property is in good standing for selling or transferring ownership.

A house that's still undergoing succession, a plot without clearly defined boundaries, or a condo in which a mortgage is pending should be avoided at all costs. The same applies to the ownership approach called “right of possession,” through which the buyer doesn't become the ultimate owner but is granted the right to use the land or building. 

More information about the units

Foreigners in Panama should pay special attention when buying in coastal zones, as the territories near the coast are government-owned and, by law, sold only under concession. 

Naturally, the investor can willingly enter into these deals to implement specific strategies and benefit from lower prices. Yet this should only be pursued knowingly as part of a plan and not come as an unpleasant surprise after the sale.

“A house that's still undergoing succession, a plot without clearly defined boundaries, or a condo in which a mortgage is pending should be avoided at all costs”.

Off-Plan Risks: Checking the Developer’s Track Record

As we've recently covered in several editorial pieces, many buyers choose to purchase units before construction or during construction to leverage a lower overall price and developers' payment plans. While this is a perfectly viable approach and is ideal for building a portfolio, it must be addressed carefully and only through reliable developers with verifiable records. 

When the Purchase Also Qualifies You for Residency

There are at least three residency programs that include real estate as an entry to obtain legal status in the country of the Canal. These vary in price conditions and requirements, with the most acclaimed one being the Qualified Investor and its path to permanent residency through a real estate investment of $300,000. 

Unlike the Caribbean, it doesn't limit you to government pre-approved projects, and unlike the United Arab Emirates, it allows you to sell eventually. These factors, plus incredible flexibility when it comes to minimum stay requirements, make it one of the best investment-based choices available today.

Conclusion: A Safe-Purchase Checklist

By following the steps described above and, most importantly, by hiring reliable experts, your real estate purchase in Panama can go through smoothly and safely. In the country of the canal, it's wise to follow the same common sense as in any other place: hire a local independent lawyer, make sure to research the property and the title till the last detail, engage in business only with developers whose history you can verify, and study the choices carefully so that you pick the one that best fits your objectives.

Panama won't disappoint you as it’s a booming market offering better prices and quality than many world-class locations.

How Mundo Experts help you find your ideal real estate

In the same way three of our team members went to Moscow to meet investors, we have a team of experts ready to assist you online. 

Furthermore, we have a physical office in Panama and a team that has lived here for many years, nurturing healthy relationships with developers. Get in touch with our team through any of our channels and ask for a consultation with our real estate advisors. 

In this sector, we're particularly proud because we have a team that's specifically focused on Panama real estate and assisting international clients. 

Whether with real estate, company formation, legal residency, bank accounts, or trustee services, we can help you achieve your goals and support you every step of the way. 

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