Insider's Guide to Panama Real Estate

May 22, 2007

Getting to Know Panama

There are several very important things to know about Panama before diving into real estate and/or business here. Among them are tips on Panama's history, geography, infrastructure, climate and weather patterns.

A re-occurring theme that is integral to understanding panama, is that Panama is a VERY young country.

In the books, Panama officially turned 100 years old in November of 2003, but if you examine Panama's history, you will notice that the United States has been a part of Panama since it's existence, up until the year 2000. The US helped Panama secede from Colombia, and is responsible for much of Panama's infrastructure including the Panama Canal, and railway, which FYI was the Worlds first transcontinental railroad. Also, Panama's currency has always been the dollar... really the list goes on and on, so depending on how you look at it, Panama is about to turn 8 years old this year.

One of the downfalls of Panama's age, or lack thereof, is that there is significant difference in infrastructure outside the principal cities. You can drive as little as 20 minutes from ultra modern, and luxurious Panama City, and feel like you have entered a land lost in time where ATM's and internet are completely foreign.

While Panama is growing at unprecedented leaps and bounds, and converting towns which used to be sleepy, rural weekend getaways such as Coronado, and turning them into retirement and expat communities, complete with golf courses, condo high-rises, supermarkets, equestrian clubs, private emergency clinics, restaurants, banks, and post offices and the list goes on...., Panama still a ways to go.

There are several pros to Panama’s age. One of the more notable pros is that as a result of Panama’s boom in population, construction, economy and even celeb appeal, there is an ever-growing need for more and new businesses, and services. Put simply, there are opportunities everywhere. These opportunities present themselves in many forms including creating business, real estate tax exonerations and government incentives for everything from retiring in Panama to exporting non-tradition items. Just imagine where you might be if you had started your trade in the United States when it was only 7 years old or for that matter, 106...

Something else that is quite important to know about Panama is how it’s geography and climates work. Climates can vary dramatically in as little as 2000 feet. There are significant temperature and climate changes in Panama once you reach altitudes of about 2000 feet. These altitudes bring much cooler temperatures which average in the mid 70´s vs. the high 80´s of the more coastal regions. The flora and fauna also change with and such flowers as impatients which create carpets of color with their bright pink, white and purple flowers become common sight. The jungles typically become a true rainforest vs. the tropical savannah of the coastal areas.

Another notable difference in climate is the Caribbean vs. the Pacific Coasts. The principal differences are the tide variances between the two. The Caribbean has very subtle tides that top out at roughly 18 inches, whereas the Pacific has huge tides of 18+ feet. The tide variance on the Pacific is so extreme, that a property seen during high tide can be unrecognizable to first time viewers at low tide.

Another very noticeable difference between the two coasts is amount of rainfall. Due mostly to the Trade Winds, the Caribbean Coast of Panama receives nearly twice as much rain as the Pacific.

Socially, the Pacific coast is much more developed than the Caribbean coast. In Panama City, one can find the country’s banking sector, transportation hub, finest healthcare facilities, latest technology, best dining, resorts and luxury. Colon, the largest city on the Caribbean has only a fraction of the amenities and infrastructure available on the Pacific.

English Speaking Schools in Panama

For those who are making the move to Panama with school-aged children, there are a few things that are helpful to know about schooling in Panama.

Typically those who have the means will send their children to private schools, and in most cases, parents will choose the schools at the very top of their budget. Although there are exceptions to the rule, you usually get what you pay for as far as schools are concerned. The most expensive schools tend to have bigger budgets for more well-decorated teachers, facilities, and programs.

Aside from the obvious reason or wanting the best for their child, one of the principal underlying reasons is to ensure that their children grow, develop and associate themselves with a certain social level. Panama is a small enough country that reputation and connections can make all the difference in the otherwise very competitive business world.

Panama offers a variety of english speaking schools, in virtually every price point, and in either American or British based curriculums.

Schools with US Based Curriculums include:

  • Balboa Academy: Located in Clayton of the reverted areas. Clayton is home to the City of Knowledge, US Embassy, and United Nations.
  • St. Marys: Located in Albrook of the reverted areas. Catholic School which is run on a US school calendar.
  • Cross Roads Christian Academy: Located in Corozal of the Reverted areas, Christian school which is based on a US school calendar.
  • International School of Panama: The international School of panama or ISP is located near the Panama golf club about 15-20 minutes from Tocumen International Airport. ISP, along with Balboa Academy are the more elite and pricey private, english speaking schools in Panama.
  • Oxford International School / The Oxford School: Both of these schools are based on British Curriculum and are located in Panama City. They are both moderately priced.
  • Isaac Rabin School: Located in Clayton of the reverted areas and is based on Jewish values.

Zoning in Panama

In virtue of Law 9 of the 25th of January of 1973, the Ministry of Housing elaborated the following zonification graph as the norms for urban development in Panama.

RR (Rural Residential Zoning)
Allows for only single family homes on lots of at least 1000 m2. The net density allowed is 50 people per Hectare.

R1-A (Low Density Residential Zoning)
Permits single family homes and duplexes on lots of at least 800 m2 and 600 m2 respectively. The net density allowed is 100 people per Hectare.

R1-B (Low Density Residential Zoning)
Permits single family homes and duplexes and row homes on lots of at least 600 m2, 300 m2 and 200 m2 respectively. The net density allowed is up to 200 people per hectare.

R2-A (Medium Density Residential Zoning)
Permits single family homes, duplexes and row homes on lots of at least 600m2, 300m2 and 200 m2 respectively. The net density allowed is up to 300 people per hectare.

R2-B (Medium Density Residential Zoning)
Permits single family homes, duplexes, row homes and apartments on lots of at least 600 m2, 300 m2, 200 m2 and 600 m2 respectively. The net density allowed is up to 300 people per hectare.

R3 (Medium Density Residential Zoning)
Permits single family homes, duplexes, row homes and apartments on lots of at least 600m2, 200m2 150m2, and 600 m2 respectively. The net density allowed is up to 400 people per hectare.

R-E (Special Residency Zoning)
Permits single family homes, duplexes, row homes, and apartments on lots of at least 160m2, 150m2, 120m2 and 400m2 respectively. The net density is up to 500 people per Hectare.

RM, RM-1, RM-2 AND RM-3 (High Density Residential Zoning)
Permits developments of multifamily homes, duplexes and row homes. Minimum lots sizes and maximum density for each zoning are:

  • RM: 600 M2 600 People per Hectare
  • RM-1: 600 M2 750 people per Hectare
  • RM-2: 800 M2 1000 people per Hectare
  • RM-3: 800 M2 1500 people per Hectare

R-C (Conjoined Residential Zoning)
Permits multifamily dwellings, duplexes, row homes, and apartments. Common recreation, social and green or garden areas for purpose of creating a nice living environment and conserving the natural surroundings are necessary.

C-2 (Urban Commercial Zoning)
This zoning is applied to commercial activities and its complimentary uses. Permits multifamily residential as long as it is concurrent with the predominant density.

C-3 (Neighborhood or Town Commercial Zoning)
Permits only the commercial locals that are necessary for the neighborhood or town. Can be combined with dwellings as long as it is concurrent with the prevailing density.

I (Industrial Zoning) The location of Industrial properties will be determined by the Ministry of Living and its functions analyzed by the Ministry of Health, INRENARE (National Institute of Natural Resources), the security office as well as the other necessary offices. The classification of Industrial Zones will be broken down as follows:

  • II (Light or Inoffensive Industries) Those which do not damage neighboring areas, and do not require special regulations.
  • LM (Annoying Industries) Those that without special regulations could cause damages to neighboring areas.
  • LP (Dangerous or Harmful Industries) Those which can produce damage, danger or inconvenience to neighboring areas and itself as well as those which are subject to special permissions.
Editor's Note: This article is intended to be an all around guide, covering the most important aspects of real estate in Panama. New sections will be added on a constant basis until every issue is covered.