。
Pandas live in bamboo forests.
Literal
Panda [topic-は] bamboo-forest [in-に] are-living [polite-ます].
Textbook habitat sentence. 住む 'to live / reside' takes に (not で) because the verb marks location-as-endpoint ('to be settled at a location'), not action-locus. ~ている on 住む marks the ongoing state of residing — a classic stative ~ている use. 竹林 is a compact sinitic compound for 'bamboo forest / grove.'