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Mailbag: Turning Residential Lots into Commercial Properties

Every two weeks we take your questions and publish the answers we think beneficial to those looking at Panama.  Send in your questions today, and we guarantee a response within 24 hours.

I am looking to start a restaurant in the beach area, and I have found the perfect spot. Currently the building I wish to use is a residential property. How hard would it be to make it a commercial property?

We had several clients this past month ask about turning a residential property into a commercial one.  Some wanted to start restaurants, and others wanted to open small stores.   We always recommend consulting a lawyer for any issues such as these.  One of our favorites, Tanya  from PTY Lawyers, took the questions and gave us this response:

For many years, the beach areas have been considered largely residential property; however, the constant growth the area has seen a need for businesses that will save anyone a trip to the city.  We field inquiries like this frequently: it is very common to find people looking for business opportunities like restaurants and stores but who are confused by land use regulations.

To be very honest, changing residential property to commercial property in the area is not as difficult as it could be in the city.  This is the case especially because the beach area is growing so quickly, and local authorities are looking for more ways to promote their towns. The city has many businesses already, and the locals are against any new ones spreading out the potential income even thinner.  When the community consultation happens, the government often finds in the city that another store would not be tolerated, and so denies the application.

There are differents types of land use, even mixes of residential and commercial property together, but the key of any approval is the substance of the application. You have to be very precise, providing exactly what the property will be used for and how the area will benefit from the new use.  You will also need the green light from the Municipal authorities from the local government.  Do not worry: the whole process become less painful that what it sounds.  Yes, it is not an immediate thing, and it does require time to be approved, but by doing it correctly from the beginning, you are protecting your investment from future complications. Of course, every case is different, but by working with your attorney from day one and giving them every detail of your proposal, you will find your best chance of a successful proposal.

Tanya Coronado is a lawyer with PTY Lawyers based in Panama City.  She can be reached by e-mail at, or by phone at 6616-5955.  She can also be found every Monday by appointment at the Playacommunity office, near Rincon del Chef in Coronado.

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