Construction in Panama: Better Expectations

President Cortizo announced the implementation of a plan that contemplates expanding the preferential interest rate for homes with prices of up to $180,000.

Tuesday, July 9, 2019

During his inauguration, Laurentino Cortizo announced that he will implement a plan to reactivate the construction industry, which includes the extension of the preferential interest in different ranges for housing up to $180,000, the presentation of a real estate leasing bill and exemption from transfer tax for the current inventory of housing, among other actions.

See "Construction Rebound: A Challenge for the New Government

The announcement was well received by the builders' guild. In this regard, Hector Ortega, president of the Panamanian Chamber of Construction (Capac), explained to Elcapitalfinanciero.com that "... the proposal to raise the benefits of the Preferential Interest Law for homes whose sale price rises to $180,000 'will allow serving an important segment of the population made up of professionals and middle class, who regularly do not receive any type of stimulus or facilities for the purchase of residences'."

For Miguel De Janón, president of the National Council of Housing Promoters (Convivienda), "... the measures announced by President Cortizo to reactivate the construction sector can have a positive impact on the placement of the high volume of houses that are built and have not been able to be placed in the market, however, he clarified that in the case of the extension of the benefits of the Preferential Interest Law to homes with a market value of up to $180,000, it is necessary to wait to know exactly the scope of the proposed reform to the Law to be able to measure its possible benefits."

Construction in Panama is not passing its best moment, since at the close of the first quarter of 2019 the cost of new construction, additions and repairs fell 28% compared to the same period in 2018.

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More on this topic

New Government: Optimism in the First 100 Days

October 2019

The gradual abolition of price control, the creation of the PPP regulatory framework and greater flexibility in preferential interests in the housing market are the advances recognized by Panamanian businessmen in the first 100 days of the Cortizo era.

Laurentino Cortizo of the Democratic Revolutionary Party (PRD) won by a narrow margin, concentrating 33.2% of the vote, with a promise to create more favorable conditions that would allow the economy to reactivate at the beginning of May. He was followed by Romulo Roux of Democratic Change with 31%, independent candidate Ricardo Lombana with 19.1% and in fourth place official José Isabel Blandón only managed to capture 10.6%.

Panama: Preferential Interest Law Sanctioned

September 2019

Laurentino Cortizo approved the law that had previously been voted by the Assembly, which contemplates interest rate benefits for home purchases of up to $180,000.

The law sanctioned by the Executive establishes that for the purchase of homes with a value between $120,000 and $150,000, the government will assume 2% of the bank interest, and in the case of real estate between $150,000 and $180,000, the exoneration will be 1.5%.

Panama: Incentive to the Housing Market

September 2019

The Cortizo administration approved a proposal that establishes that the government will assume 2% of the bank interest for the purchase of homes valued between $120,000 and $150,000, and in the case of real estate between $150,000 and $180,000, the exoneration will be 1.5%.

The Cabinet Council approved on September 3 the bill No.

Boost to Middle Class Housing in Panama

January 2012

President Martinelli announced that the maximum value for a property to be considered for the preferential interest rate will be increased to $120,000.

The measure must be passed in the National Assembly by amending the act, which is expected to happened very quickly.

A current limit of $80,000 has been established as the maximum value of homes that can be financed under the law, which allegedly has led to low-quality housing solutions being built to keep costs within that range.

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