30 | MARKET SNAPSHOT Panama WORDS | Geoff Hadwick
INDUSTRY
www.opp.org.uk | AUGUST 2010
Any list of where’s hot and where’s not in the Americas right now would put Panama in the interesting column. Geoff Hadwick reports on a destination with real potential.
international property agents and developers a heady mix of sunshine, warmth, welcoming authorities, plentiful retirement incentives, a generous tax regime and reasonably quick travel times. The drawbacks include too much development in places, a weak and fractured planning system and local banks that suddenly withdraw funding with no explanation whatsoever. And yet, despite all of this, Panama City
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is sprouting hotels and large residential tower blocks at a bewildering rate. OPP reported in June that Panama
City currently has 191 skyscrapers under construction targeting wealthy overseas buyers, each with an average of 30 fl oors. Up to 30,000 condos are on the market right now in Panama City and the competition for buyers is fi erce. The trick – as always - seems to be
to choose the right place to sell. Offer properties close to the ocean with a sea view in areas like Balboa, Paitilla and Punta Pacifi ca and make sure your client has got fi nance in place early. And, if you are in the fractional
market, look for an exotic luxury resort that gives an “away from it all” feel. A typical project would be The Resort at Isla Palenque: a planned resort featuring a boutique hotel and residence community on a private island in the Gulf of Chiriqui managed by the West Paces Hotel Group. Former Ritz-Carlton CEO Horst
Schulze is running the development and construction is underway. Phase
t might be a small country but Panama’s central position and growing economy offer
One hotel and homes will be completed in 2012 with a model villa ready for inspection next year. Schulze sees Panama as “an
emerging tourism market, poised to be a mainstream any minute. With everything Costa Rica and Mexico have to offer and more, Panama is exploding as a travel destination’ he says. Panama’s infrastructure is certainly
one of the best in Central America with lower violent crime rates than Costa Rica, Mexico and the U.S.A. It uses the U.S. dollar as its currency and because of its long history with the United States, many residents speak English. According to Schulze “Panama has
a stable, pro-business, democratically elected government and a low cost of living offering a variety of tax and retirement benefi ts: its unique pensioners program gives retirees steep discounts on everything from health care to travel expenses, there is no tax on foreign earned income, and many property owners have their property taxes waived for up to 20 years. Panama also offers some of the best medical care in the region, making medical tourism a quickly growing market segment.” Resorts like Isla Palenque want to tap
into a desire for a more sophisticated buyer … someone seeking a sustainable, low-density fractional scheme that works hard to keep things green and calm. It believes it has the space and beachfront to do this better than any other country in the region. It all seems to be working and in
the past six years, Panama’s tourism arrivals have more than doubled, while tourism-based revenue has more than tripled.
Retirement: the benefi ts
Panama wants wealthy retirees to move in. Provided your client meets their criteria they will issue him with a “pensionado” visa that off ers: • 50% off entertainment anywhere in the country (movies, theatres, concerts, sporting events, etc.) • 30% off bus, boat, and train fares • 25% off airline tickets • 50% off hotel accommodations (Monday to Thursday) • 30% off hotels from Friday through Saturday • 25% off restaurants • 15% off fast food restaurants • 15% off hospital bills (if no insurance applies) • 20% off prescription medications • 20% off doctor’s consultations • 15% off dental and eye exams • 20% off professional and technical services • 50% off closing costs for home loans • 25% off electric bills up to 600KW h • 25% off water bills up to $30 per month • 25% off phone bills on fi rst residential line
Despite such enticements, property consultant Margaret Summerfi eld urges a cautious approach to Panama. “I’ve lived in Panama City for the last three and a half years,” she says. “I started studying the real estate market here four and a half years ago and I love living in Panama City … but I still haven’t bought a property here.” Why? “Sure, you’ll see those headlines about Panama’s strong economy” (forecast growth this year: 5%) says Summerfi eld. “And you’ll hear the talk about all those multinational companies relocating their regional headquarters here (Caterpillar, Proctor & Gamble), and the properties their workers will need.” But all is not so rosy. “Back in late 2004 and early 2005, prime city waterfront condos in Panama were selling for £668 a square metre pre-construction.” By 2008, the completed condos had price tags of £1,671 a square metre and projects next door on Avenida Balboa reached £2,340 a square metre … built by the same developer, with the same amenities, fi nish quality, and views. “Why would anyone pay £2340 a metre...taking a calculated risk and waiting three years for delivery...when they could buy the same unit, fi nished, for £669 a meter less?’ asks Summerfi eld. “The answer is, they didn’t. The city condo market was saturated...over-supplied.” Buy for long-term growth she says. (Margaret Summerfi eld works for location consultants Pathfi nder.)
Market Snapshot Panama
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