Panama Investor Blog

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...

And the good news is....

I have been trying to get back into the writing  groove, but after being away from my various business operations for almost two weeks, there is just a lot to catch up on.  I want to start off with some good news and that would be that the Boquete fair is back on track and there are lots of visitors. The local business owners came together with the mayors office to rebuild and clean up the entire fairgrounds within two weeks. Many of the business owners took a section of the fair and cleaned it up and replanted flowers and painted buildings at their own expense. If you had seen it right after the flood you would not believe it possible. The mud was two feet think in the buildings and all of the flowers were destroyed. I was at the fair the other night and it looks even better than past years with the new paint on the buildings. The President of Panama, governor of Chiriqui and mayor of Boquete were all on hand last Thursday for the Fair inauguration and several thousand people showed up for the various speeches and ribbon cutting ceremony over the new bridge.

I want to thank all the folks in Boquete for their heroic effort to save the fair. A call to action by the tourism business owners of Boquete made an obvious difference in the number of people coming for the event. They came together and put both financial resources and individual efforts to market the town on the radio, TV and news papers. Although December was a rather slow month for tourism due to all the negative press about the flood, January appears to be on track and may exceed last years numbers. It goes to show that disasters can sometimes bring out the best in a community and in this case, the Boquetenos and business owners stepped rapidly up to the plate to make it happen.

Boquete businesses get together to save the community

The newly formed Boquete Business Association met this Friday to discuss the flood and to implement some much needed damage control of a different kind. All of the negative press about the floods in the  Panama highlands have begun to affect all of our businesses. Most people who do not live in Boquete believe wrongly that we have been "wiped off the map" by the recent flooding. Airlines and travel agencies have been advising travelers not to come here and we are starting to receive cancellations for hotel rooms in an otherwise busy season.  We tourism business owners directly employ over 500 local Panamanians  who depend on tourism to pay their bills and feed their families. We thought it a good idea to get some factual information out that more accurately describes the situation and its real affect on the community. Here is a press release we have developed. Please feel free to send this to others who may have an interest. A Spanish version follows.

What’s Up in Boquete?
It’s business as usual in Boquete as the town puts the spotlight
where it belongs: on its beauty and its people

BOQUETE, PANAMA: Boquete was in the spotlight this past week, not for its natural beauty, award-winning coffee and friendly people, but because of the damage caused by the Caldera River. The dramatic footage and photos don’t tell the whole story: Bouquet didn’t experience long-term flooding. The river grew quickly during a short period of time and affected some structures in its immediate vicinity. The fact is, the majority of Boquete, including the downtown, roads, tours and activity businesses and most restaurants and hotels, were untouched.  The people of Boquete and the business community have come together to invite the public to experience Boquete today.  

“It is business as usual in Boquete,” says Charlie Collins, Owner and Executive Chef, Panamonte Inn and Spa. “Of course, it has been a difficult week for the people of Boquete and our hearts go out to the families affected. My family has been in Boquete for three generations and some things never change: the things that Boquete has always been known for—its natural beauty, relaxing environment, fresh air, friendly people and welcoming spirit—were 100% unaffected.”

Earlier in the week, media, websites and blogs were reporting on the situation in Boquete. But the photos and footage was limited to a very small section of Boquete, the rest of the town was untouched. 

“Everybody saw the photos and footage, but it’s important to remember: the story didn’t stop there,” continues Chef Collins. “The Boquete community rallied together to help the people in the areas affected by the river. The speed at which those vulnerable points were fixed was truly amazing. It speaks volumes about the character and spirit of the people in Boquete.” 

‘What’s up in Boquete?’

o    Airport service to David and the main road connecting David to Boquete was unaffected
o    All the main roads and the downtown were untouched
o    Traditional Boquete activities Panamanians have always enjoyed—visiting gardens like Mi Jardin es Su Jardin and El Explorador, stopping for strawberry drinks, enjoying coffee, sharing the beauty with family and loved ones—never stopped
o    Great restaurants and hotels are open for business
o    All the exciting outdoor activities Boquete is known for are still available: hiking, rafting, ziplining, rock-climbing, horseback riding, bird-watching, hot springs and coffee tours

“All of the traditional activities that Panamanian families have enjoyed over the years never stopped,” says Lissette Ameglio, Fresas Café. “The gardens of Mi Jardin es Su Jardin and El Explorador. Stopping for a delicious strawberry batido. Enjoying a fresh brewed cup of coffee. Relaxing with your family. Boquete is the perfect place to do this. Now the sun is out and we want people to experience the beauty of our special town today.”

For more information about what is happening in Boquete, please visit www.boqueteweather.com/flood.htm and Experience Boquete Today! 
For more information, please call: Jessica Real, 6-615-2965

Boquete flood update with photos

Wednesday we saw the sun for the first time in about a week. Some brave golfers were out on the course trying to get in some much overdue practice. The schools open again tomorrow and we will once again be getting up at 5:30am to get the boys off for their last week of school before summer vacation. Although things appear to be getting back to normal in Boquete, what we hear about Bocas Del Toro to Colon on the Caribbean side of the mountain range is not good. The only road across the mountain range has been shut down now for days and the bridge at Sixola to Costa Rica is out. The only access is by air or sea and the storm is making it extremely difficult for either of these options. They are apparently without full electric and what they do have is dependent on diesel which is in short supply. Food must be running low without the regular trucks from David that deliver to the hundreds of small supers scattered around the area. The storm seems to be hitting them especially hard with high tides and flooding on several islands as well as the flat lands along the coast. The area just on the Caribbean side of the mountain range from Boquete has been getting most of the rain and flooding has displaced many people there. As usual it is the indigenous people who suffer the most. Our hearts and help go out to all who are still suffering this disaster.

I have read several articles about our area of Boquete that have greatly exaggerated the damage and number of those left homeless. The many calls and emails I receive are from concerned folks who believe that Boquete must be washed away to the sea. I was at the school shelter last night and there were 114 people not the thousands I have seen reported. The number of homes washed away are in the several dozen and not hundreds and they were all right next to the river. The head of the Ministry of public works (Ben Colamarco) was here today and was assessing the damage and directing the heavy equipment that had already begun work in the river to get it back into its regular channel. The town of Boquete was spared except for a few homes that were right along the river edge to the north of the new bridge. That bridge is in fine condition and I crossed it today.

 The real damage was on the east side of the river where it ran through the fair grounds.  I was surprised to see homes on that side still standing and people living in them. A few small fair building's were taken by the river, but most were still standing. The mayor says there will still be a fair in January as is customary for Boquete.

The new Ladera hotel is on that east side and is severely damaged around the foundation. I don't know if it can be saved or not. There is about 300 meters of road that was destroyed in front of the hotel that needs to be rebuilt quickly in order to access three small hotels and the many residents on that side of the river (Jaramillo). Further down the road the Palo Alto restaurant was pretty much destroyed and the 6 room B&B owned by the Collins was also damaged. There was no damage to the Paradise garden inn, the Boquete garden inn, Oasis near the fair grounds and Hotel Los Establos. I visited all of them today and they are just needing easy access. The bridge in Los Naranjos is now open so everyone is able to get to town easily.

 I would imagine that within a week or so things will quickly get back to normal and most signs of the flood will be confined to the bridges and roads in some areas. Lets pray for those in Bocas del Toro, Cera Punta, Colon  and other affected areas that have not been nearly so lucky.

You can see the latest photos by clicking here.

Boquete's 30 year flood

It has been drizzling in Valle Escondido for 5 solid days and raining hard above us on the continental divide for almost a week. Today we received a call from the civil protection agnecy (Sinaproc) asking for help with food and blankets for the many people who have been displaced by flooding. I grabbed my camera and my youngest son  and we headed out of the valley to see just how bad things have gotten. The Que Brada Grande that runs through our valley was only about 6 inches above normal, but 2 minutes latter as I reached the Caldera river that runs right through the center of Boquete, it was a roaring brown mass of water, mud and boulders. I headed up to the Panamonte Hotel to see if the river had reached the road way of the bridge and found there was no bridge. We went to the Church in town where my son goes to school and looked out the back to see the fair grounds on the other side of the river under water and the many buildings being swept down the river. We headed further into town to find the civil patrol office near the bridge that crosses to the fairgrounds with a large crowd gathered in the rain, looking toward the bridge. The bridge was blocked by trucks and police to keep people from getting on it. We drove further down the road through town to find the river was now above the road. Cars had stopped and an American told me his apartment was on the other side and under water.
Next stop was the visitors center above town. There must have been a hundred cars there as everyone wanted to see the river and the town from there. The river had swollen to two or three times it normal size and was inundating the entire area.
It was already dark so we headed back home and we went to bed wondering just how bad this was going to get. When I awoke about 6 am I headed right out with my camera to get an assessment of the damage. Rather than more written details I will let these photos speak for themselves. A number of people have lost their homes or businesses from this disaster. We are thankful that there has been no reports of deaths or injuries in Boquete.
You can go here to see the satellite weather map on Lloyd Cripe's Weather website which shows a stalled low pressure area directly over Panama and most of Central America along with some photos people have sent in to him of the flood damage. You can go here to see the photo album to see my photos of the damage to the Boquete area.