Panama City Central by Pullman
from $319,504
Short-term rental in Panama City is no longer a legal grey zone: two bills are moving through the National Assembly, and one of them would let a building's owners' assembly ban Airbnb outright with a simple majority vote. Long-term rental carries none of that risk, but the upside is more modest too. Gross yield on condos holds around 5-6%, while rents in sought-after neighborhoods have climbed 8-15% over the past 6-12 months.
For an investor with a budget up to $400,000: if the unit sits in Costa del Este or Coco del Mar and targets corporate tenants, go long-term. If it's an apartment in Marbella or El Cangrejo, near the Cinta Costera and the banking district, short-term rental delivers higher gross revenue, but it answers to the building's PH regulation (regimen de propiedad horizontal) and a possible future tourist-accommodation tax.
The key point: before signing the purchase agreement, check the specific building's reglamento de copropiedad. That document, not your business plan, decides whether you can legally rent nightly.
Quick Answer
- Gross yield on Panama City condos sits around 5-6%, with net returns noticeably lower after PH fees, management and taxes1.
- Rental rates are up 8-15% over the last 6-12 months in top-demand districts; resale prices are rising roughly 3-5% a year1.
- Bill 301 defines tourist rental as stays of 1 to 90 days and keeps a 10% tax on tourist accommodation services3.
- Bill 713, from the government, introduces a 15% ITBMS tax on short-term rental and explicitly states that paying the tax does not grant the right to rent where the PH forbids it2.
- Each building (PH) would be able to vote at its owners' assembly on whether Airbnb is allowed; the voting threshold in the committee text is read differently by different parties2.
- Demand concentrates in Costa del Este, El Cangrejo, Marbella and Coco del Mar1; new-build sales in 2026 are projected to grow 38%, to 5,530 units.
Scenarios and Options
Scenario 1. Long-term rental to a corporate tenant (Costa del Este, Coco del Mar). A 12-month contract, deposit held through the Ministerio de Vivienda, tenant a bank employee, logistics worker or Zona Libre professional. Yield lands closer to the lower end of the 5-6% range, but vacancy is low, wear and tear is minimal, and Airbnb regulation simply does not apply to you. Trade-off: you miss peak seasonal rates and can only reindex rent once a year.
Scenario 2. Short-term rental in Marbella and El Cangrejo. These neighborhoods run on tourism, business travel and dining. Gross revenue on a well-run unit is higher, but 20-25% goes to the management company, utilities sit entirely with the owner, and the future tax burden could be 10% under Bill 301 or 15% ITBMS under Bill 71332. The main risk is not the tax, it is a building-level ban.
Scenario 3. Branded residences with built-in service. The south tower of Wanders & Yoo in Marbella, 165 apartments from 74 sqm, priced from $315,000 for a one-bedroom unit, sells under a Fully Assisted model, meaning rental management is baked into the product. You pay a premium per square meter for operational predictability and brand liquidity, with an entry price above the market average.
Scenario 4. Hybrid approach. A 9-10 month long-term lease with a seasonal window for short-term rental. This only works where the PH regulation explicitly permits tourist use, and it requires juggling two different tax regimes within the same year.
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Comparison Table
| Parameter | Long-term Rental | Short-term Rental | Branded Residences |
|---|---|---|---|
| Gross yield | around 5-6%1 | higher at full occupancy, volatile | depends on management program |
| Service tax | income tax on rental earnings | 10% under Bill 301 or 15% ITBMS under Bill 71332 | same as short-term if let nightly |
| Ban risk | none | subject to PH assembly vote2 | lower, format built into the project |
| Typical districts | Costa del Este, Coco del Mar | Marbella, El Cangrejo1 | Marbella |
| Operational load | low | high, daily | handed to the operator |
| Entry price | compact resale units | compact move-in-ready apartments | from $315,000 for a one-bedroom |
Main Risks and Mistakes
Buying for Airbnb without reading the PH regulation. The costliest mistake of 2026. Bill 713 explicitly separates tax compliance from the right to rent2. Mitigation: request the building administration's updated reglamento de copropiedad and recent assembly minutes before putting down a deposit.
Modeling returns on gross yield alone. A 5-6% gross figure is not cash in the bank; the cuota de mantenimiento in premium Costa del Este towers can eat a year's worth of rent in monthly fees. Mitigation: calculate net returns after PH fees, insurance, management and vacancy.
Treating rent growth as a constant. The 8-15% gain over 6-12 months reflects a shortage of quality move-in-ready supply1, and 2026 is set to bring a wave of new volume: roughly 5,530 new units are expected. Mitigation: model flat rent growth for years two and three.
Ignoring how selective the market has become. Price growth in Panama City is uneven, driven by location, building quality and rental yield1. Older stock without elevator upgrades or parking loses twice over, both in rental demand and at resale.
Tax-rate uncertainty. As of 2026, two competing figures are before the Assembly, 10% and 15%32. Mitigation: stress-test your model against the higher rate and consult a Panamanian lawyer before signing.
FAQ
Is short-term or long-term rental more profitable in Panama?
Short-term usually wins on gross revenue; long-term wins on risk and predictability. The benchmark gross yield for a Panama City condo is 5-6%1, and a long-term contract reaches that figure with almost no operational effort.
Is Airbnb banned in Panama?
No, but regulation is in flux. Bill 301 defines tourist rental as stays of 1 to 90 days that do not constitute permanent residence3, while Bill 713 hands the decision to individual buildings and adds a 15% ITBMS tax2.
What is the short-term rental tax in Panama in 2026?
Bill 301's current logic keeps a 10% tax on the tourist accommodation service3; the government's Bill 713 proposes 15% ITBMS2. The final rate had not been settled at the time of writing, so confirm it with a local lawyer before closing.
Can my building legally ban nightly rentals?
Yes. Bill 301 proposes that the decision rest with the PH owners' assembly by majority vote, and regulations would need to spell out permitted uses explicitly32.
Where is rental demand strongest in Panama City?
Demand supports rates most strongly in Costa del Este, El Cangrejo, Marbella and Coco del Mar1, where rents climbed 8-15% over 6-12 months.
How fast are resale prices rising in Panama?
Around 3-5% a year, faster near infrastructure hubs1. That lags rental growth, which means entry-point yields are gradually improving for buyers purchasing now.
What unit size rents best?
The market has shifted toward compact, move-in-ready units1. In new branded projects in Marbella, units start at 74 sqm.
Is a branded residence worth it for rental income?
If you live outside Panama and don't want to self-manage, yes. The Fully Assisted model removes the operational burden, but an entry price from $315,000 for a one-bedroom narrows the resale buyer pool.
Source: CIJ.World
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This material was prepared with the help of artificial intelligence and checked by a person. Editorial responsibility: Housebook Investment LLC.
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