Panama Investor Blog

Boquete sees real estate sales slow

Developers in Panama and the rest of the world are fooling themselves if they believe that the world economy  will get back to "normal" anytime soon. The days of easy credit and second home buying by the marginally rich are over for many years to come. Panama projects can continue to sell properties if they are marketed as safe haven or primary homes as more and more people are wanting to move away from the predatory actions of the U.S. and other governments around the world.

The challenge for projects that have lost momentum is convincing prospective clients that their infrastructure and amenities will be completed and that they will keep the promises they have made on their websites and brochures. In this market developers will have to be more innovative in order to make sales. I disagree with the article that prices have not dropped. We have seen significant price decreases on land and homes in the area as developers and individual home sellers have come to see the reality of fewer prospects.

The town had geared up for continued prosperity by hiring additional engineers according to a recent article and now like municipalities all over the world they too are getting a dose of reality. Fortunately Boquete was never delivering expensive services that they will now have to cut back on, which makes one wonder what was happening with all the revenues that were pouring in during the boom times.

La Prensa:

Boquete and other areas of Panama's highlands have seen real estate sales slow to a trickle this year, after several years of growth.

Residential permits have decreased 67.9 percent so far this year compared to 2008, according to the Boquete Office of Municipal Engineering.

The global economic crisis is largely blamed for the slowdown, as the number of retirees from Europe and the U.S. who are relocating to Panama has fallen. Several projects in the region have come to a standstill as promoters scramble to find new customers.

Observers say that land and home prices have not dropped, however, even as sales have slowed. And once the international crisis has passed, developers say the market should pick back up.

Joerg Senne, director of marketing for Cielo Paraíso, one of the projects that has seen sales slow to a standstill, said the region still has advantages that should help it lure customers from the U.S., such as a lower cost of living and discounts for retirees.

Theater in Boquete

One of the bench marks that a expat community has matured is through the foundation of a community bilingual newspaper and a theater group. Boquete has had both now for a few years. There have been a number of plays acted out for the entertainment and amusement of the both foreigners and local Panamanians in Boquete.  A new building has been donated for this purpose by Anayansi Menendez, and the Boquete Community Players are starting to get more people involved, even supporting plays put on by other groups. They typically do two or three performances of a play and they are usually sold out. Here is an article about their latest play in the Tampa Examiner.

More young people moving to Panama

Here is a nice short story about immigrating to Boquete from the Tampa Bay Examiner.

As the article points out, we are seeing more young people move here. What started out as a retirement haven is turning into much more.

August 11, 1:00 PMMiami Panama Travel ExaminerLee Zeltzer

I am a lucky man. Three of my four children are visiting Boquete this year.  The fourth would come also if he was not embroiled in a job search. The trip to Panama is long and expensive, but they enjoy being here.

Occasionally I wonder if they come to see me or just to enjoy Boquete. Each year there is more for young people to do in Boquete. Instead of being a hideaway for a few hundred retirees in a sea of locals, Boquete Panama is becoming a haven for people of all ages. Each time they visit, my children ponder finding a way to stay. There are increasing numbers of thirty something ex-pats moving here, building futures and raising families. They earn far less than they would in the US, but they appear to be willing to sacrifice the income for the lifestyle.

Today Sebastian jumped on a horse for the first time in ten years. My younger son is Biology graduate, like his father and like his father needed to find a different career path for survival. Survival in the US for people entering the job market is not easy. Survival for many people who planned to retire on the appreciation of their homes is not even a dream any more.

There is a change coming in the world, driven by economic realities and the inability to sustain the “American Dream” patterns of immigration are changing. As thousands of people enter the US looking for opportunity, an expanding trickle of US citizens are leaving for the same reason. I wonder if the fence on the US Mexican border will soon need revolving doors?

Panama is ripe with opportunity for entrepreneurial people. There are hurdles but there is also opportunity. In my three years here I have seen many of my peers start new careers. What is now exciting is watching their children arrive to do the same thing.

Bocas-Chiriquí highway in the works-Say it ain't so!

This came out in the paper today and based upon my knowledge of this area they are barking up the wrong tree. First of all there is a road that goes from the inter American highway to Almarante and Bocas. Yes, it is constantly being washed out, but it is functional and an investment in making it better and safer makes a lot more sense than trying to build another one that goes through Boquete. I have hiked up to the top of the range and looked over at Bocas and I can tell you a road through there would be impossible. It would also be an environmental disaster. This is all pristine forest and should be left alone. I don't believe it will ever happen.

Excerpt:

A proposed highway linking the provinces of Chiriquí and Bocas del Toro would have a dramatic impact on the shipping of goods throughout the country, according to a report by the Ministry of Public Works.

The highway would be like a "dry canal," ministry officials said, because it would link several important port facilities.

The highway would start in Puerto Armuelles on the Pacific Coast, and then wind through David and Boquete before crossing the province and connecting to a port in Bocas.

Read the rest of the story

Boquete town budget dependent on foreign direct investment

When I first came to Boquete in 1997 the entire community was dependent upon agriculture. The town budget was made up of a hodgepodge of incomes, from water rights to road signage and of course liquor sales at the local bars. An article in La Prensa this week brings to light with numbers just how important foreigners are to the local community in just the town budget, not considering the employment that goes along with all this foreign direct investment. I must say that I was surprised to see that construction, which is 99% directly related to FDI, brought in over $661,000 dollars with liquor a distant second at $26,000 in 2008. Unfortunately, construction is dropping significantly and this year it is on track to be about 30% lower.

What is important to understand is the significant economic impact FDI has had on this small community. When you consider that the construction income represents about 2% of the construction costs it becomes clear that foreign dollars were and are pouring into the area to the tune of hundreds of millions of dollars a year.

I have written a number of posts about the changes that we have seen in this small town over the last 5 years. Hundreds of new businesses opened by locals. New private schools and medical centers. Shopping centers, hotels and restaurants. And of course, thousands of jobs. Boquete is a perfect example of what can happen with residential tourism when done in a responsible manner. Not that there have not been mistakes along the way, but overall there is a good balance of construction and care for the environment. Almost all of the developing has been done on cow pastures or agricultural land and the amount of land is relatively small compared to the amount of land in the area. It has recently been reported that about 500 foreign families live in the Boquete area which in the scheme of things is pretty small in a population of 15000. These 500 or so families have had a significant positive impact on the local community and not just in money. Forging friendships and even marriages, business relationships and the exchange of ideas and philanthropic pursuits.

I know many will say that I paint and idealized picture of things, but when you consider where we have come from, it is truly a huge advancement, and it has come at very little cost to the community. If you were to really look at things in a fair and balanced light I think you would have a difficult time coming up with any type of business model that would be as self sustaining and with the least negative impact on the community.

Read a machine translation of the article below.

Sales slow in Boquete-Buyers market!

According to this story in La Prensa Tuesday, homes sales has slowed dramatically in Boquete since the economic tsunami made landfall. Real estate agents say it is only down 50%  and the mayor says more like 90%. They both may be right because the mayor's office issues building permits and real estate agents sell finished products. A number of people have had to sell their second homes in order to take care of other bills back home. I know that our market of $200-400K homes has virtually dried up. Now we see over a million dollar homes moving. This is not surprising as we market to those with money who are wanting to protect it.

We have seen a significant slow down in new home construction and those developers I know are operating at a snails pace trying to conserve cash until things turn around. What does this mean for prospective buyers? The time is ripe to buy as you can take your pick and negotiate great prices and terms. I would bet that within a year, Boquete will be back to being a bargain that it was when I began building Valle Escondido and marketing Boquete as "twice the lifestyle, half the price".

I find it rather amusing that the town has hired additional engineers to help with the expected flow of building permits and now they have nothing to do. Welcome to the world of capitalism. You never really know what the market will do in the future.

Home sales slow in Boquete

Driving through Boquete, it is hard not to notice the "for sale" signs on a large number of houses.

The fact that these signs are in English, and not Spanish, is a testament to the real estate boom that has taken place here in recent years. The fact that these signs are in English, and not Spanish, is a testament to the real estate boom that has taken place here in recent years.

But now, the global financial crisis has started to take its toll. But now, the global financial crisis has started to take its toll. José Branca, president of the newly created Chiriquí Association of Real Estate Brokers, said that sales to foreign residents has fallen “dramatically” in the last six months and, in comparison with the past seven years, activity has declined 50 percent, he estimated. Joseph Branca, president of the newly created Chiriquí Association of Real Estate Brokers, said that sales to foreign residents has fallen "dramatically" in the last six months and, in comparison with the past seven years, activity has declined 50 percent, he estimated.

At least three residential projects have stopped work altogether, and many others are moving at a very slow pace. At least three residential projects have stopped work altogether, and many others are moving at a very slow pace. Mayor Manuel Ruiz has an even more pessimistic view, saying that “90 percent of the projects have been affected.” Mayor Manuel Ruiz has an even more pessimistic view, saying that "90 percent of the projects have been affected."

Boquete coffee fortunes down this year

 Due mostly to bad weather, Panama's tiny but important specialty coffee business is down significantly. But will be back!
 Here are some excerpts from Reuters:

Coffee buyers and analysts said demand for Panama's gourmet, expensive beans will remain strong despite the economic downturn since most consumers who seek out the country's crop are connoisseurs like followers of fine wine.

"Once you drive an expensive car and appreciate the fine differences, it's hard to go back to an old clunker. And it's the same thing in terms of coffee," Judy Ganes, a New York-based coffee consultant, said.

Panama has found a niche with these high-end buyers who are still willing to shell out cash for the best lots, but larger coffee chains like Starbucks (SBUX.O) are trying to lower prices and cut costs.

Read the rest of the story here at Reuters

Boquete has the world's best coffee, but it is worth it?

Posted by Paul McBride

I came across a fascinating article on the web site of the Guardian newspaper from the U.K. describing a recent coffee auction in Boquete.  It seems that the most expensive coffee in the world comes from Boquete and topped out at $117.50 a pound this year (that's wholesale folks!).

The point of the article is to question whether any coffee is worth this amount of money.  Keep in mind, the record price for Boquete coffee was $130 a pound set in 2007 (back in the good old economic days).

What I found most interesting is how coffee in Boquete is now taking on features that have been established in the wine industry for years.  For example, the concept of "appellation", where very small and distinct areas produce specific coffee lots and "varietals"consisting of specific types of coffee beans are being used to differentiate one auction lot of coffee from another.  Having spent over 15 years living in the Napa Valley in California, I can see how the coffee farmers in Boquete are using these techniques to add value to their product.

This is not only good for the farmers of Boquete and the Chiriqui highlands but is potential boom to all tourism companies in the area.  The Napa Valley has become one of the top tourist destinations in California and, if properly developed, Boquete and the surrounding area could become a mecca for coffee lovers from around the world.

Excerpt from the Guardian article:

This year's crop of Esmeralda Special fetched $117.50 a pound at auction yesterday. Is any gourmet taste experience really worth paying 100 times more for than usual?

Is the 'world's best' coffee worth it?

Boquete coffee crop halved

The inclement weather over the harvest season has seriously damaged the coffee crop in the highlands. Coffee is our most important agricultural product and a decline of this magnitude will have resounding effects on the local economy at a time when we are also seeing a slowdown in construction, our other most important economic activity. Whether it be a man made economic disaster or an act of God, this is going to be a tough year, even in the highlands.

La Prensa:

The constant rain and strong winds that occurred during recent months in the district of Boquete caused a 40 percent loss in the coffee crop. While 80,000 quintals of coffee beans were harvested last season, that number has fallen to 40,000 quintals this season, according to Ricardo Koyner, president of Kotowa Estate Coffee.

“The weather has done a lot of damage this year,” said Koyner, who also chairs the Association of Specialty Coffees of Panama. The heavy rain caused many of the coffee beans to either fall of the plants or to suffer from diseases, which also made the plants themselves unhealthy. In addition to the effects of the weather, the industry has also seen prices for coffee beans plummet because of the global economic crisis. The price of a quintal of beans has gone from $150 to $110 recently.

An outsiders critique of Boquete

Whenever anyone writes a story about our little town I'm usually disappointing as they usually come here with preconceived notions of how things should be and proceed to confirm them with slashing commentary. I was pleasantly surprised to read this report on Boquete from Matt Landau and I believe he has given the most fair and balanced view I have yet to read or write.

The Boquete report by Matt Landau

I've been around Panama now for something like four years, a time in which I've traveled like a mischievous sprite to the nation's rural valleys and the barren beaches. I've met and lived with its indigenous tribes, I've explored its jagged coastline by air, land and sea, and I've hiked its most wild and isolated peaks. In a way, I've turned the glove of Panama inside out, enjoying both its well-known attractions and largely nameless hidden gems. I've spelunked in Darien, I've suntanned in Cambutal, and I've driven the treacherous Carretera Llano Carti all the way to San Blas. I've visited pre-Columbian gravesites amidst the jungles of Veraguas, I've hunted iguanas in Chiriqui, and I've bet on cockfights in the heart of Chorillo. But I can't say my relationship with Panama has ever been that in-depth.

It's one of those things that's almost as embarrassing as it is curious, visiting the famous town of Boquete for the first time. It's like living in France for four years and procrastinating a visit to the Eiffel Tower. I arrived in Boquete blindly to write a freelance article for a major US news publication and hoped to gather enough information in three days to put together a cohesive and accurate piece. This objective, I soon realized, was paramount to ignoring new neighbors for several years, then showing up unannounced and asking if they have happen to have all the ingredients for a traditional Valencia paella.

You can read the whole story at Matts website here...