The above video is my analysis of the Boquete real estate market.
I like Panama. Though not particularly exciting, it’s a place that just makes sense. The tax system is very attractive, it’s easy to obtain residency, thecountry is pretty, financial services are developed, the gun laws are loose, and the airport is very well-connected. I obtained residency there myself.
But things are blowing up right now. There are huge protests all over thecountry and the economy is effectively paralyzed. Why? Because the locals are protesting a deal that was cut by the government with a large mining company. It’s essentially a massive environmental protest.
Should anyone be surprised?
No. I discussed this in a video last year. There is no such thing as a perfect place, including Panama.
If anything, it is the norm in Latin America
Look, there is a reason Latin America is not financially rich; because of things like this. In most Latin American countries, once in a while, people either paralyze the economy through massive protests or vote for hardcore socialists.
It’s the natural cycle of Latin America. There is a cap on how developed these markets can become due to their inherent socialist culture.
But it doesn’t mean it’s not a great Plan A or Plan B
All the positive points about Panama are still valid. You just need to manage your expectations in terms of the occasional bout of volatility. I absolutely still encourage you to get residency in Panama.
This might present us with opportunity
I hadn’t gotten around to publishing this video about the real estate market in Boquete, northern Panama. It is a cute, wealthy town in northern Panama with a lot of expats who live there full time for retirement or to work online. I spent a short week there last year and enjoyed it.
My key issues with this market were the low liquidity and the relatively low rental yields.
However, seeing the protests taking place, I am sure some Gringos will panic sell now that their “paradise” is not turning out to be perfect anymore. Why? Because they just read things online or listened to podcasts and got all pumped up thinking they had found “the perfect place” and now they are distraught and want to go back home where “such things don’t happen”.
As a reminder, in many cases buying real estate qualifies you and your family for residency in Panama.
Build resilience
Covid, Russia/Ukraine war, culture wars in the West, and now Biblical times in the Middle East – the world is changing fast. It is unrecognizable from January 2020. If the rate of volatility and change is to continue at this pace over thecoming years, you better ensure that you build resilience in your portfolio of investments, residencies and citizenships.
The vast majority of people in the West still do not grasp the significance of everything that is happening, though many have a gut feeling they try to suppress.
Don’t ignore the gut feeling – act, with prudence of course. But what worked for our grandparents and parents is unlikely to work for us.
I help clients in one-on-one calls. I’m not the oracle. I won’t have answers to everything. But I can share of lot of what I’m doing for my family and investment portfolio.
To a World of Opportunities,
The Wandering Investor.
Other articles on Panama:
- Panama Friendly Nations Visa through Work Permit and Company Formation
- The Pros and Cons of creating a crypto and stock trading Corporation in Panama
- Affordable Tax-Free Caribbean Lifestyle and Real Estate
- The Pros and Cons of investing in the Boquete Real Estate Market in Panama
- How to Obtain the Panama Retirement Visa
- Panama Permanent Residency in ONE trip
- What is the Panama Travel Passport and how to get it?
- The Pros and Cons of living in Panama
- The pros and cons of Bocas del Toro real estate
Services in Panama:
- How to obtain Residency in Panama
- Real estate Lawyer in Panama
- Open a Bank Account Remotely in Panama
If you want to read more such articles on other real estate markets in the world, go to the bottom of my International Real Estate Services page.
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Transcript of “Is investing in the Boquete, Panama, real estate market worth it?”
Hello, everyone. Ladislas Maurice from thewanderinginvestor.com. So today, we’ll be discussing investing in real estate in Boquete, in northern Panama. So a lot of people have been asking me about Boquete. Why? Because you regularly find the city on many lists in terms of top 10 places to retire in Latin America, top places for digital nomads, etc. So people often inquire about this place.
Why invest in Panama?
So from a macro point of view, Panama has a lot to offer. It’s a stable economy, the government finances are better than in most Latin American countries, the economy is pretty dollarized, they have perpetual income from the canal, so it’s a bit like a petrostate in many ways. Without doing much, they always get this free money. So this helps a lot with the development of the country. And it’s a safe place, unlike many Latin American destinations.
And finally, the tax system is very attractive. It has a territorial tax system, which means that, in most cases, you need to structure things properly, you can get away with paying 0% taxes on all income stemming from outside of Panama. So for a lot of non-US people, it makes a lot of sense, you can move here, and if you structure things well, you can end up paying 0% taxes. So it’s quite amazing.
So what this results in is a constant flow of people moving to Panama. More people come, then people leave. So its immigration balance is a net positive. So from an investment point of view, as a real estate investor, this is important.
Why do people move to Boquete in Panama?
And then why Boquete? It’s because when people move to Panama, typically, they look at Panama City, they look at Bocas del Toro, I’ll do a bit of content on there, it’s on the Caribbean coast, and then here, Boquete. Those are the top three places that people tend to consider when moving here.
And so Boquete is this little town in the north of Panama, where the weather is very pleasant all year long. It’s quite temperate. You never really need a sweater except in the evenings. Generally, it’s fairly, there’s a dry season, there’s a bit of a wet season as well, but it’s never too cold, there aren’t too many bugs. So a lot of retired people like to come here because of the weather that people like.
The city has a lot to offer. So this is why people come here. So again, when you invest in a city, you want to ask yourself, what are the catalysts? Why do people come here? Is it sustainable? Are more people going to want to come here? Well, it’s a great place from a lifestyle point of view. So not only the weather, but also it’s a farming area here in the mountains. So a lot of fresh fruit, vegetables. There’s a lot of cattle, so the meat is really good and affordable. The Pacific Ocean is an hour half away, so if you want to go swimming, if you want to go fishing, etc. So also great seafood. And the healthcare is relatively decent as well. And there’s a number of international schools.
Why invest in the Boquete real estate market?
So this city and this place, and Panama is known for being one of the top places in the world in terms of quality coffee, there are tons of restaurants here in Boquete. So from a lifestyle point of view, it has a lot to offer, and that’s why there’s constantly people coming in, which is very, very attractive. And it’s not just about Boquete itself, but also the main city an hour away from here, David, is seeing a lot of Chinese investment. The Chinese are investing a lot of money in Panama. And we’re seeing all this infrastructure development in the area. So there are a few good long-term trends for a place like Boquete.
Now, purely from a real estate point of view, so the thesis for Panama is clear, the thesis for Boquete is clear as well, but then from a real estate investment point of view, is this actually the sort of place where you want to invest your money.
Boquete is a relatively illiquid real estate market
So what’s important to know is that it’s a very illiquid market. So it’s very important to know where you’re going to invest here in the area. Essentially, I’m going to be a bit crude here, there’s Boquete, the city, and then the rest is very illiquid.
So as soon as you venture out of Boquete, apart from the beach areas an hour and a half away, where there’s some level of liquidity and capital preservation, and, potentially, Volcán, which is a little city, which is probably going to be the next Boquete, it’s about 30% cheaper and there’s definitely upside there, apart from those areas, if you kind of venture out into the rural areas, you’re going to suffer from an extreme lack of liquidity, and chances are you might not get the money that you put into it when you try to sell later on, taking into account transaction costs.
So personally, from an investment point of view, I would only touch Boquete core, Volcán, and the beach areas. But then again, they’re very, very illiquid markets. So it’s easy to buy, it’s hard to sell. So the advantage of always having these flows of people coming in and out is that there are always people making emotional decisions. So if I were to buy here in Boquete, I would come here for a few months, take my time and wait for someone desperate, who wants to leave, to then try to make a lowball offer and get in and get something cheap. This is pretty much the only way I would play this market.
Investing in Boquete real estate a long term hold
Now, is this the sort of market where I would want to buy something to hold long-term and try to manage from overseas? Again, if you bind these core areas, you’ll be fine in terms of property management. There’s a lot of property management talent, a lot of Americans and Canadians that do property management. So this is always comforting. But as soon, again, as you venture into the outer areas, property management will be a lot more complicated. So I would, again, if I were to invest and not live here, I would only invest in these core areas.
Do I think it’s the best investment to make when you are far away? Because of the low liquidity nature of this market, I’m not entirely sure that’s what I would want to get involved in. The typical net yields, after all deductions, etc., you might get 4%, 5%. You can get more, for sure, if you wait for the kill. But then you need to come here for quite a while and actually wait and talk to a lot of people and wait for the opportunity. So the opportunity cost in terms of just spending all your time here and not being able to do other things is relatively high.o
Who is Boquete real estate right for?
So the way I look at Boquete and this area is rather if you want a Plan B, right, or if you want to live here full-time. So if you want to move to Panama to reduce your taxes massively, you don’t want to stay in a large city like Panama City, but you want to stay in a beautiful little town, approximately 30,000 people, a lot of things to do, then this is a very good option. All you need to do is to put $200,000 if you’re from one of the countries that’s listed as friendly nations, according to the Panamanian government, $200,000 in property and/or a term deposit, so potentially a mix of the two, and you get your residency rights here in Panama, which is very attractive. So this makes sense.
If you’re doing this, and you want this visa, you just come here, you buy property, and then essentially get your ROI from all the taxes that you’re not paying back home in Canada, or in Europe, or wherever, or even in America, because you can use some allowances to reduce your overall tax rate. So from that point of view, it makes sense. It also makes sense if you want a Plan B, if you want some property overseas in a safe jurisdiction that you might want to use later on or that you want to use part-time, this is not a bad market to operate in. You could spend part of the year in it and then the rest of the year, you could rent it out. There are potentially Airbnb restrictions that are going to be enacted, but all it would really mean is additional paperwork and some additional costs taxes, but it’s doable.
So my conclusion on this market is that it’s a relatively stable economy in a crazy world. It offers good asset diversification. Boquete itself has a lot of long-term trends that are going for it in terms of its positioning, and all the future flow of retirees that we’re going to see coming down from North America, from Europe, and also generally digital nomads that just want to reduce their taxes. So the immigration flows are going to be coming. But because of the illiquid nature of the market, I’d be very careful when I buy here. I would really take my time before pulling the trigger. Personally, I see it more as asset diversification, Plan B residency, and for those who move here, saving a lot on their own personal income tax situation.
If you want to speak to a good realtor, I met a whole bunch of realtors here. A lot of them talk crap. One of them was really good. I liked him a lot. He gave me the true information as opposed to most of them that were showing me places in rural areas, telling me I could rent and make good money. He was telling me no, like, if you buy this, no one’s going to want to rent it. So the guy was honest. So if you’re interested in speaking to him, there is a link below, and there’s also his email.
