Panama Real Estate Development
Since 2006 Panama has experienced non-stop real estate development in the form of condominium buildings, hotels, commercial space, resorts, shopping malls, and beachfront developments.
According to Panama’s Comptroller Office, government approved repairs additions, and building permits, was nearly US$293 million in the first two months of 2012. This was an increase of nearly 49% during the first two months of 2011.
There are over 200 buildings over 20 stories being constructed in Panama City in 2012. The capitol’s sky is surrounded by construction cranes.
A lot of foreigners from different parts of the world are coming to develop real estate in Panama. Whether these foreigners are constructing a building or hundreds of private homes, understanding Panama’s real estate development process is critical for their success.
Here is a list of factors necessary to develop Panama real estate:
The first hire should be a licensed topographer-engineer to survey the raw land.
An architect is then needed to design the Master Plan for large projects or a single building. A licensed engineer prepares the construction drawings. The large projects will require hiring an environmental engineer to create an Environment Impact Study.
Estimating the Costs
Budgeting for the project requires knowing the estimated costs in order to obtain
investors or financing to complete the project without any delays. It is estimated that a surveyor can cost US$200 per lot or hectare (2.4 acres) for a regular linear survey which will outline the property’s perimeter, size and borders. Estimate between US$150 up to $500 for a topographical survey per hectare.
Environmental Impact Studies (EIS)
An EIS can cost between US$750 up to $75,000 based on the project size, environmental impact, and the environmental engineer. Larger firms are needed for their human resources and organizational skills to get a large project’s approval while being subject to extreme scrutiny. Smaller projects with little environmental impact only require a sole environmental engineer. If Panama’s Environmental Enforcement Agency rejects the project, there will be a two year waiting period before the project can be re-submitted.
Panama Government Agencies
Plans and supporting documents must be submitted to various government agencies in order to obtain construction permits.
Here are the eight government agencies necessary to obtain approval for permits:
1. ANAM (“Autoridad Nacional del Ambiente”- Environmental Enforcement Agency): ANAM oversees enforcement of the environment. The Environmental Impact Study (EIS) is prepared by an environmental engineer and submitted to ANAM.
2. ATP (Panama Tourism Authority – “Autoridad de Turismo de Panama”): ATP is only involved with tourist related projects and not residential ones. ATP’s architect will review the studies and supporting plans and documents.
3. MIVI (Ministry of Housing – “Ministerio de Vivienda”): MIVI endorses the zoning for the project. Some rural areas do not have specific zoning regulations making zoning a non-issue.
4. MOP (Ministry of Public Works – “Ministerio de Obras Publicas”): MOP approves drainage, roads, sidewalks, etc. When MIVI authorizes the project, MOP usually follows suit. MOP requires specific road and drainage plans prepared by a qualified engineer.
5. MEF (Ministry of Economics & Finance – “Ministerio de Economia y Finanzas”): MEF oversees taxes such as income taxes and property taxes. A licensed economist will prepare a study of the estimated financial projections for the project (cost is around US$2,000) submitted to the MEF, which then grants a Resolution of Approval.
6. MICI (Ministry of Commerce & Industry – “Ministerio de Comercio y Industrias”): MICI oversees commercial permits. The developer needs to obtain a business license as a real estate developer.
7. Bomberos (Fire Chief): The area’s Fire Chief reviews the architect’s plans (primarily the electricity plans) and physically inspects the area. If there are no fire
hazards, the Bomberos will issue a Resolution of Approval for the project.
8. Municipio (Municipality): The Municipio oversees municipal matters of the city or town where the project is located. The Master Plan and all construction drawings are filed with the Municipio.
Conclusion: There are so many experts and government agencies are engaged with the permit process that a foreigner looking to develop Panama real estate needs to hire a knowledgeable Panama real estate lawyer to benefit from the current real estate boom.