Panama Investor Blog

A dose of reality for Panama developers

When I began developing in Panama back in 2000 we marketed  Valle Escondido as "Twice the lifestyle for half the price". We successfully built and sold 175 homes because we focused on value. Although home prices have gone up since then, you can still buy a house with land for under $100 a square foot and have the many amenities of a resort lifestyle.

As Casey Hallaron points out in the blog post below, value branding works and is more important than ever. Panama developers would do well to heed this advice.

Excerpt:

Panama needs to first figure out WHAT it is and where it wants to (and is able) to compete before it can really hope to have any chance at sustainable success.  If I were granted absolute marketing power over Panama, I’d say that it needs to pursue a strategy that isn’t as trendy as selling $6 café lattes: BE A VALUE BRAND!

Value never goes out of style.  Value is instantly understood by consumers, sometimes subconsciously.  Value isn’t easy to deliver.  But ask Wal-Mart or McDonalds how they’re faring in this crisis.   Value SELLS.  Back in 2005, when I first heard Panama had $80k pre-construction condos for sale, I didn’t need to hear anything else.  I understood the inherent value of a roof over my head for under $500 a month.  I didn’t ask about price per meter, didn’t over analyze the neighborhood or materials…I just signed the contract.  Value is not a complicated, glossy or overly complex pitch, but it does require some hard work and HUMILITY.

Unfortunately, faster than a French surrender, Panama went from being a value player with low cost of living, retirement benefits and tax breaks….to a marketplace focused on luxury condos and high flying lifestyles.

Read the post here

Panama make Forbes top 10 retirement haven hit list

Although much of what I post deals with economic issues and their affect on business, the fact is for those looking for quality of life and low cost of living, no place can beat Panama for retirement IMO. Forbes came out last month with it's top 10 retirement destinations and Panama was listed forth on their list with the only negative mentioned as "pockets of corruption".

Positives: Panama has almost everything: year-round sun, low taxes, massive discounts for seniors, first-world amenities, quality private hospitals, bird-filled rainforests, a dollar economy and easy flights from the U.S. Panama City is considered safest of all Central American cities, with worldly buzz because of the canal, and a World Heritage Site.

Excerpt and link to story;

Forbes cannot promise retirees "paradise on $30 a day." Quite the opposite. We promise seniors wishing to move out of the U.S. that they will not find paradise anywhere. Each country is unique--with assets and liabilities--and the key to successful retirement as an ex-pat is carefully matching your own personal priorities and finances to the country that has caught your eye.

To help matters along, Forbes has compiled its own list of the 10 best retirement havens, based on a wide variety of criteria ranging from safety to retiree-friendly visa requirements to decent medical care. The countries on our hit list: Austria, Thailand, Italy, Panama, Ireland, Australia, France, Malaysia, Spain and Canada.

read the rest at Forbes.com

U.S Fed employees may consider living offshore

An article appeared in last months Fedsmith.com website suggesting that  U.S. Federal employees might consider living outside the U.S.. FedSmith.com is an information portal for sources of information impacting the U.S. federal community. They sight a number of reasons and even mention Panama as a country who welcomes retirees with special benefits. I have met many government employees who have retired in Panama and other Latin countires. Many who have experience working abroad feel very comfortable living outside the U.S..

When you consider the size of the U.S. federal government and the number of retirees they have,  makes it a ripe target to market to.

Excerpts;

You may conclude you cannot live the lifestyle you want. If so, here is an option you may not have considered for your retirement: Living outside of the United States.

There can be a number of reasons to consider living abroad in your retirement years. Typical reasons for living outside of our own country:

• a mild climate
• lower taxes
• lower cost of living
• lower medical costs
• culture change
• new challenges and experiences
• education and new perspective.

It is possible to live abroad with standards of living comparable to those in the United States. If you choose a country where the local currency is based on American dollars and the average wages are lower than in the U.S., you stand to benefit.

Read the whole story here...

Tax havens buck European property slump

This is a short but, very important article that Panama should take advantage of. It tells us how countries who maintain their sovereignty and low tax codes fare much better than those that don't. We are seeing a similar trend here in Valle Escondido. Clients are looking for a safe Haven from what they see as a future of ever increasing taxes and a government that will be looking to those that have anything to pay for the mistakes of a whole generation. Right now the U.S. government is only looking at taxation, but many believe there will come a time in the not to distant future when anyone wanting to leave the U.S. will pay an exit fee for any money they want to take with them. While Europeans enjoy the fact that they are taxed only on monies generated in their home countries, U.S. citizens are taxed on their worldwide income, making moving their business offshore of little tax advantage. But living offshore does allow them an exemption of over $80,000 of income per year which is certainly better than what they experience in the U.S.. Small business owners may find other advantages if their business can be done from a foreign location.

Excerpts;

Most offshore tax jurisdictions within easy reach of Britain are bucking the European property market slump as wealthy Britons prepare to avoid UK tax rises, according to a survey released on Monday.

A report from Sovereign Group, the advisory firm, said property prices in Monaco and and Gibraltar were holding firm or increasing, while prices around them on the Côte d’Azur and the Costa del Sol have plunged up to 50 per cent.

“For many months now, 20 per cent of all new business at our London office has been from wealthy individuals looking to move offshore to escape what they expect to be increasingly harsh tax rises,” he said. “Very often, these clients are looking to take their businesses with them.”

Read the article here at Financial Times....

Future looks bright for Panama-UK Telegraph

This upbeat article from the Telegraph should help spur more interest in Panama as the rest of the world sinks further into economic morass. Pretty well done.

Excerpts:

Panama is booming, in fact it has been booming for some time now. Those who missed the boat in Miami and found Costa Rica inadequate and too costly, set their sights on this sliver of a country that since the strongman Manuel Noriega was deposed in 1989 has been a model of stability.

Many expat retired people have also been enticed into investing in property here because of Panama's easy access to both oceans, abundance of flora and fauna, by a favourable climate – which conveniently lies south of the hurricane belt – and most importantly the infrastructure.

Is property outside Panama City still selling?

An article in this morning's La Estralla puts forth the idea that although the city speculative market has dried up, the projects scattered around the country are still doing well. I would have to argue this assumption because I hear from many developers and buyers on a daily basis.

There are few second home buyers or speculators looking around Panama. We still see a flow of people looking for a safe haven for a primary home, but they want bargain prices. Many still have to unload unsalable properties back home. Just because projects are continuing construction does not mean the sales momentum has continued. Many projects have the initial sales and bank commitments to complete, but unless there is a lot of interest from new buyers this will soon end.

The case in point is the project sighted in the article, Isla Saboga which is next to Contadora. I am familiar with the project because I worked with the land owner to locate and contract the current developer over three years ago. The project had all the right ingredients for success. A beautiful island with a power generation plant, fresh water, close to an airport with scheduled flights, small village where labor is available etc.. The main challenge the developer has encountered is one of timing. It has taken so long to get the project underway that the market conditions are no longer viable. Now instead of developing the property, they are looking to get some other party to come in and take the risk even offering to finance the property as well. How successful they will be in this tumultuous market remains to be seen. Few developers are interested in new projects in this economic environment and fewer still will be in a position to get financing for speculative development.

There are literally dozens of projects scattered around the country in a similar situation where they waited to long to get underway and now there are few buyers and no funding available for construction even if they had buyers. Projects that are well underway with infrastructure and amenities already in place have a much higher chance of continued success, but they will find market pressure on pricing as buyers know that cash is king. Few buyers are now willing to risk buying a home to be built in the future along with the many amenities shown in the brochures and on-line computer generated graphics. I don't expect things to change much in the near future. All developments must have sales and construction momentum to succeed. Projects that take forever to get out of the gate and then just drag on are doomed for failure.

Grooming island for investors

01-26-2009 | MARIJULIA PUJOL LLOYD

mpujolstar@laestrella.com.pa

In the middle of a crisis, a company is setting up the necessary infrastructure in Saboga in hopes of attracting property developers

Panama Star The representative of the Isla Saboga project, Armel Gonzalez Muhs said that in the long term his company is planning to invest $1.5 billion to create an island paradise that will have hotels, restaurants, houses, condominiums, spas, a marina, a yacht club, a country club, and a beach club within ten years.

Gonzalez explained that his company is not planning to build anything per se, but is putting in place all the permits and regulations and establishing relations with the islanders, in order to sell it to investors and property developers, who can then carry out different projects.

Isla Saboga company is going to give financing to those people who want to invest in this project, but investors will have to follow the rules of the organization.

Currently Saboga has over 100 inhabitants that earn their living fishing, transporting tourists who are island hopping, extracting sand which they sell to developers and working on construction on the bigger island of Contadora.

The island lacks water, roads and the sewer system is non existent, but the organization said that it will invest $20 million creating the necessary infrastructure, that will not only benefit the inhabitants, but also possible future developments. The project contemplates job creation in hotels, restaurants and other similar facilities, as well as the creation of training centers to give trade to the islanders.

The concept of Isla Saboga will be completely environmentally friendly, with spas with a holistic approach and integrating the community into the project.

Gonzalez did not reveal how much his company paid for the island, but claimed that it has already managed to sell 20 percent of the project.

Las Perlas Islands have gone through an unprecedented development over the last five years, but only time will tell if there is space for new ones at a time when the financial crisis has meant the cancellation of some projects before they start.

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DEVELOPMENT IN PANAMA

Every single beach, mountain and jungle in Panama appears to have some sort of development going on. While in the capital city projects are being suspended for lack of buyers, in the interior they seem to be progressing well.

On the negative side, some investors are staying away, wary about the current financial crisis and the repercussions it may have in the future, especially when it is obvious that the real estate boom appears to be coming to an end in Panama.
However, the new projects that are sprouting up on beaches and islands are showing that foreign property developers believe in Panama and its potential as a tourist destination, but tourists will only come if they have enough money to invest on a holiday.
MARIJULIA PUJOL LLOYD

Motley Fools say, maybe time to move to a low cost country!

I stumbled upon this Motley fool story about how many people are finding their retirement portfolios in such disarray that moving to another more affordable country has become a viable option. When you couple that reality with better weather and a less consumerism lifestyle, it becomes a no brainer for some.

Excerpts from the Motley Fool: Moving to more affordable countries such as Mexico, Panama, Ecuador, The Philippines, Costa Rica, or Thailand will also become more attractive to those whose portfolios were compromised in this last financial meltdown. One can live a reasonably comfortable lifestyle in these countries for far less than in the United States or Canada. Review the options of relocating. Moving to a tax-friendly state or to a state or country where the cost of living is less than where you are living now is worth your consideration. Taxes and the daily cost of living play a huge part in the amount of money one will need for retirement.

Autrailia reports on Panama

This article from the Sydney Morning Herald points out many great places to visit in Panama and includes some good links as well.

Excerpt: Many people see the scenery of Panama only in passing, from the deck of a cruise ship passing through the Panama Canal. But if you take the time to visit, you'll find even more scenic countryside, tropical birds and plants, and reefs for diving.

read the whole article here....

This is how you market Panama

Back in early 2006 I began extolling the advantages of marketing Panama to the UK market. I cannot take any credit for the success of the effort, but over the last few years a number of British papers and websites have started promoting Panama as an alternative to Spain. Although the distance is considerably greater, the advantages are many. The shear number of Brits looking to relocate to warmer and less costly climates are enormous.  This article which appeared the the UK Telegraph is a perfect example of how a small effort with little dollars applied can have a huge impact on Panama tourism.

It is exactly the way I began marketing Panama to North Americans as a retirement destination back in 2002. Not buy buying big ad space in magazines and spending millions of dollars for television spots, but by getting the message to the right people in the industry and getting them to write about it in major publications like this. Ordinary people sharing their experiences and emotions are a thousand times more effective than expansive campaigns like "The path less traveled" and "Panama, it will never leave you."

Excerpts:

Mick Jagger, Donald Trump and Brad Pitt - not to mention 007 - have a soft spot for Panama, says Teresa Machan, so the rest of us may be surprised to find that its charms are remarkably affordable

As property specs go it isn't often there's the opportunity to park a yacht out front. "I thought I'd woken up in paradise," says Philippe James, recalling his first morning in Panama.

	Sea change: Panama's Caribbean islands offer an alternative to the capital city's sleek Punta Paitilla and Avenida Balboa

James, a 59-year-old property developer from Devon, discovered Panama by accident in 2001. Caught in a storm in the Caribbean island of Aruba, he was invited by a fellow yachtsman to sail to Panama's mysterious San Blas islands. Arriving late, they moored in a small lagoon near the Spanish fortress town of Portobelo, where they woke to palm trees and smooth waters.

Read the rest of this article here.

Hats off to Panama

Last year I wrote a number of posts about the British travel and expat market with the theme of lets get them to come to Panama. Well, thanks to the crazy Darwin story, the Brits are taking a lot of notice of Panama recently. Just goes to show, sometimes no planning can pay off if you are in the right place at the right time.

This great travel story from the UK Guardian highlight the music scene in the old city and moves on to Isla Grande.

As the article starts out, Panama City used to be somewhere people traveled through, not to.