'Law 41', recently ratified by Panama's National Assembly, made a stir throughout the region earlier right now period as savvy investors recognized its possible to give a further boost to the right now hot real estate region in the Republic of Panama.
The Law, designed to encourage the establishment of Multinational Companies in Panama, allows exemption to Multinationals from the payment of traffic tax in the Republic of Panama for all services provided to any entity domiciled outside Panama. In addition, it allows licensed Corporations to hire charged intercontinental members to fill management positions in the company authorizing them to work and reside in Panama which could spell an influx of international professionals moving to Panama.
In current years, Panama's central real estate growth has continued triggered by the country's favorable sector development, that in turn has been boosted by political stability, an increase in tourism and the recovery of activity in the Panama Canal. However, currently latest development serves to give an unprecedented a greater number of boost to Panama City's true estate market as multinational corporations relocate to Panama and the demand for residential and office space increases.
HP and Caterpillar are just two of the first to announce new offices in Panama City and provided Proctor and Gamble also rumored to be relocating a significant part of its Latin American business to Panama, the trend looks set to continue.
While residential transactions prices have been increasing, particularly in prime locations, another interesting inclination has been individuals related to Class A office space.
Vacancy rates for Class A office space are already down from 30% last year to 3% meaning that today there is virtually no available Class A space in Panama City. In addition, amongst Class A office space in such demand, lease rates have increased by approximately 20% over the past year.
"Average lease amounts for Class A are $16-$20 per m2 per month in on total occupancy costs at $22.74 per m2 per month (below those in the region including Costa Rica, Dominican Republic, Bahamas, Uruguay, Caracas, Bogota, Mexico City, Buenos Aires, Sao Paulo, and Rio de Janeiro) giving ample space for raise and also allowing for multinationals moving to Panama"
"In addition, fresh sells prices are favorable, with the average sale price at $2,200 per m2. With these prices and Law 41 providing the ultimate impetus for Multinational Corporations to relocate to Panama, the time is correctly for those looking to get an investment in true estate in Panama."