As the cost of living in Costa Rica continues its steady and relentless climb, the real estate market is responding in sync. In 2012, the Inter-American Development Bank labeled San Jose as the city with the most expensive real estate in Latin America, and luxury housing construction in Guanacaste shows no signs of slowing down. As a result, Panama real estate is beginning to attract many North American and European expats who are being financially squeezed out in Costa Rica.

Since the early days of the 21^st century, jaded and disillusioned expats have been looking for the seemingly elusive “next Costa Rica.” To this effect, Nicaragua is often mentioned as being an incredibly cheap alternative for those who don’t mind political instability and uncertainty when it comes to holding legal title to property. Over the last few years, Panama has solidly emerged as the clear contender for the “next Costa Rica” title, particularly with regard to real estate.

Panama has a long history of welcoming foreigners looking for an inexpensive and tranquil retirement. For citizens of Group One nations (mostly European and North American countries), getting a tourist or retiree visa in Panama is a cinch. Retirees also enjoy certain tax breaks on income, properties and vehicles. International Living, a respected magazine that reports on matters pertaining to retiring abroad, puts Panama at the top of their 2014 list of retirement destinations for the following reasons:

• Modern, well-kept infrastructure and impressive urban architecture.
• The U.S. dollar as the local currency.
• A sophisticated financial industry.
• Gorgeous islands, beaches, forests, and even a (small) mountainous region.
• Exciting Las Vegas-style casinos.
• Upscale shopping options.
• Warm, friendly people.
• Affordable health care options.
• A lot more.

When comparing the cost of living between Panama and Costa Rica, it can be safely said that virtually all consumer goods -including food – are less expensive in Panama. Taxation tends to be more gentle in Panama. The costs of utilities and private health care are similar, but entertainment options are definitely more affordable in Panama.

The housing markets of Costa Rica and Panama are somewhat similar in the sense that foreigners will certainly need a real estate professional to assist them. The market is a bit more organized in Panama, but it is still all over the place in terms of pricing. This, however, creates great buying opportunities.

Great Deals, But Not for Long

To get an idea of the current real estate situation in Panama, the Costa Rica Star consulted with Don Womack of Panama Tropics Real Estate, a firm that has listings in the West Beaches, the Highlands, the Mountain areas, and Panama City. Mr. Womack is also known as Don Panama, and he is seeing an influx of anxious foreign house hunters. Prices are pretty much at levels seen in Costa Rica a few years ago, but they are rising fast. Not all foreign home shoppers in Panama are planning to retire; some are individual investors looking to cash in on this booming market.

Due to Panama’s unique geography, house hunters can find properties such as this three-bedroom and three-bathroom luxury Sora mountain estate with views of the Pacific Ocean.

This home was built in 2007 and has 3,839 square feet of living space on a 29,063 square feet lot with plenty of fruit trees and vegetable crops. A similar home in Costa Rica could easily be listed at around $600K, but Mr. Womack has it listed at $390K.

Other great deals can still be found in Panama, however, prospective buyers should keep in mind that this is a market on the move that could catch up to Costa Rica in a couple of years.