How much does it cost to build a house in Panama?

Building a new home is one of the most exciting and fulfilling things to do.  Being able to take your dreams, your preferences and your ideas and create the perfect living space is both immensely rewarding while at the same time challenging.   At the end of the process you’ll have a home that is perfectly suited for your needs and finished to your exact specifications.

But, like most things in life, successfully building your new home takes research, planning, determination and effort.

In Panama, most homes are built using concrete block or a material called M2.  M2 is a Styrofoam core product covered with a galvanized steel mesh that is used primarily for interior and exterior walls and sometimes flooring.  It takes the place of concrete block but still needs to be finished with a concrete coating or stucco.  Steel is used to reinforce the blocks or the M2 material.  The cost of using either material is about the same.

There are some builders using new materials (like bamboo, plycem and treated lumber).  However, in Panama I’ve found that the KIS rule (keep it simple) is one of the fundamental guiding principles.

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New materials may be fine but who’s going to install them, who’s going to repair them and where do you go to get replacements?  When looking to build a house, it’s often best to go with the tried and tested building methods in order to save you time and trouble down the road.


One of the questions I get asked the most is “What does it cost to build a house in Panama”.  My answer is always the same – it depends on what you’re building.

As a general rule of thumb, a good quality home can be built for around $80 to $90 per square foot (or $850 per square meter).  That will include finishings like porcelain tiles, granite counter tops in the kitchen and baths, good quality wood cabinets and doors and the standard aluminum windows.  This price does not include the cost of the land, civil engineering (lot preparation), architectural drawings and the construction permit.   Land costs vary based on size and location, drawings and plans are priced depending on the type of home you’re considering, civil engineering is a function of the slope, composition and layout of the property and the building permit is 2% of the declared value of the construction.

This basic price can be made higher or lower depending on a variety of factors:

  • Flooring – tile is the preferred flooring material in Panama and can run anywhere from $1.20.ft2 ($12.95/m2) to $60 to $70/ft2 or more.  Obviously, this has a big impact on the total cost of the home.
  • Windows – If you opt for a high quality European style window you can increase the total cost of the home by $20,000 to $30,000
  • Cabinets, doors and closets – the more cabinets you want, the higher quality of wood and the more detailed craftsmanship you require can add substantially to the final cost.
  • Light fixtures – Light fixtures can be simple (inexpensive) or complex (more expensive)
  • Plumbing fixtures – expensive sinks, toilets and faucets add to the final cost of the home
  • Construction changes – this is probably one of the biggest factors that I’ve seen that causes cost overruns in home construction.  Asking your contractor to change the plans (add an electrical outlet, move plumbing, change walls) increases the cost of the house substantially.


The more involved you are in the construction of the home the lower the cost can be.  For example, if you negotiate a contract where you are responsible for purchasing your materials you can reduce the overall cost of the home.  However, keep in mind that in Panama we don’t have Home Depot or Lowes to run to when we are short on materials.  You can negotiate prices with suppliers and reduce your cost but you have to carefully coordinate the delivery to your building site.  There’s nothing more frustrating that having a building crew sitting around waiting for materials to show up at the site.  This means that you can plan on making lots of calls and doing a lot of running around to make sure that your material show up on time.

Work with your architect at the beginning of the process to make sure that the home suits your needs.  As I mentioned above, nothing increases the cost of construction more than making changes while the home is being built.


Choosing a reliable and professional building contractor is THE most important decision you will make when building a home in Panama.  Remember, the cheapest bid isn’t necessarily the lowest final cost and I’ve seen many expats run into trouble by trying to shave a few dollars off the contractor’s bid.  To find a good contractor do some research, ask around and find referrals before making a commitment.  Look at the jobs the contractor has done recently and find out if the contractor is licensed and pays the required benefits (like social security, sick pay and vacation pay) to his crews.

With time, effort and a little patience, building a new home can be a rewarding and fulfilling experience.

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