Panama: dollarised real estate reassures investors

Panama uses the US dollar as its currency in circulation. A budget or an investment denominated in dollars is therefore free of any currency risk there.

This is a considerable practical advantage, and it sets the country apart from most of its Central American neighbours, whose currencies are more volatile.

For a European investor, however, the exposure remains in full: it simply shifts from the local currency to the dollar, whose exchange rate against the euro fluctuates.

Price transparency is a second effect, less measurable but real: a dollarised market can be analysed with the same benchmarks as a North American market, which reduces the cost of information for an international buyer.

One clarification is needed: Panama has no central bank issuing currency and therefore has no monetary lever. Its monetary stability is not the result of a policy but of a renunciation, which makes it very robust and leaves the country without any instrument in the event of a shock.

Foreigners may acquire property freely, without prior authorisation, except for land located near the borders. The Panamanian public registry is well structured and titles are clear.

One technical distinction nevertheless deserves attention: properties held under a registered title coexist with properties held under so-called possessory rights, which are untitled.

The latter sell for less and expose the buyer to financing and resale difficulties. Some cannot be mortgaged, and regularising them is a long and uncertain process.

Checking the status of the property therefore comes before any negotiation, and it is done on the registry with an adviser independent of the seller.

This is the costliest mistake on the Panamanian market, and it concerns a distinction that does not exist in French law — which explains why it escapes buyers who are otherwise well informed.

We do not publish Panamanian transfer duties, property tax or the temporary exemptions applicable to new buildings: they do not appear in the official sources we have been able to verify.

Buying a property worth at least about $200,000¹ opens a route to residence.

Part of the supply is therefore priced just above this threshold, and you should make sure that the value used by the authorities matches the value in the deed.

The retiree residence permit is a separate route, open to people who can show a monthly pension of at least from $1,000² — one of the lowest thresholds in the world — and it comes with statutory discounts on many services.

The market is dominated by Panama City, whose stock of residential towers is large and whose liquidity depends largely on regional demand. Mountain areas and the coasts attract foreign retirees, on narrower markets.

• Dollarisation removes currency risk in dollars, not the euro-dollar exposure.
• The nature of the right — registered title or possessory rights — must be checked before any negotiation.
• Part of the supply is priced around the residence threshold: the value used must match the deed.
• Opening a local bank account is a long and document-heavy process, contrary to the country’s reputation.
• Territorial taxation protects the foreign source of the income, not the person who receives it.

Panama has been under sustained international monitoring on transparency, and the compliance obligations on its banks have been considerably tightened as a result. A Panamanian plan is therefore built today on documentation and verification — which remains compatible with a real tax advantage, but rules out reasoning as one might have twenty years ago.