Panama Investor Blog

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....

Hoteliers complain of unfair compititon.

As more buildings are completed without people who plan on living in them, the owners turn to the potential revenue source of operating as a hotel. This is all well and good when the demand for rooms is greater than the supply, but this year thousands of more hotel rooms will be coming available precisely at a time when many high rise building will be finishing too. Developers have a legitimate complaint regarding the 10% tourist tax that should be collected if you act as a hotel. Of course the hotels could just lower rate in order to be more competitive, but occupancy rates are already way down and all areas of competitiveness must be looked into. I find it difficult to believe that some nightly rental apartments  are experiencing occupancy rates of 70-80%.

From Financiero
RONI MARION LAWSON
rlawson@prensa.com rlawson@prensa.com

ATRACTIVO. Cute. Alquiler a corto plazo de apartamentos.  LA PRENSA/David Mesa Short-term rental of apartments. LA PRENSA / David Mesa

El sector hotelero está  inconforme con las actividades comerciales que realizan los propietarios de apartamentos que lucran con alquileres de corto plazo. The hotel industry is unhappy with the commercial activities performed by apartment owners who profit from short-term rentals.

Estos alquileres son promocionados con tarifas diarias, semanales y mensuales,  compitiendo de esta forma con los hoteles y centros de hospedaje autorizados por la Autoridad de Turismo de Panamá (ATP), sin pagar el impuesto de 10% diario por cada cliente recibido. These rentals are advertised rates daily, weekly and monthly, thus competing with the hotels and accommodation centers authorized by the Tourism Authority of Panama (ATP), without paying the tax of 10% per day for each client received.

Este es el argumento que utilizan los  representantes del sector de turismo para considerar la actividad, como una “competencia desleal”. This is the argument used by representatives of the tourism sector to consider the activity as an "unfair competition".
Jaime Campuzano, presidente de la Cámara de Turismo de Panamá  (Camtur) explica que “están compitiendo de manera ventajosa, ya que no pagan impuestos”. Jaime Campuzano, President of the Chamber of Tourism of Panama (Camtur) explains that "are competing so advantageous because they do not pay taxes."

Por esta razón,  el sector turístico a través de Camtur está solicitando a la ATP  auditorías en los establecimientos en cuestión y que  se aplique la regulación competente. For this reason, the tourism sector through Camtur ATP is requesting the audit on the premises in question and apply the regulation authority.

A petición de Camtur, la entidad realizará las investigaciones y luego expondrá los detalles frente a una comisión, formada por representantes de los operadores de turismo y  hoteles. At the request of Camtur, the entity will carry out research and then explain the details in front of a committee formed by representatives of tour operators and hotels.

Algunas de las empresas que se dedican a promocionar el alquiler de apartamentos a corto plazo, con autorización de los propietarios  son Panama Rental Solutions y Panama Corporate Living. Some of the companies engaged in promoting the rental of apartments in the short term, with the permission of the owners are Panama Panama Rental Solutions and Corporate Living.

Los apartamentos que administran estas empresas  tienen una ocupación del 80% y 70%. The apartments they manage these companies have an occupancy of 80% and 70%.

info panamacorporateliving.com info panamacorporateliving.com

Update on apartment rental rates in Panama City

A little over a 6 weeks ago, I posted a spam email I receive on apartment rentals available in Panama City.  This is only one company and I don't know anything more about them than what they put on their email and website.

I received another email today which I assume are apartment still available and it is interesting to look at the change over the past six weeks. This should give us an idea of volume that is moved by at least this one company. keep in mind that I gave them a major boost to over 7000 readers of my blog, most subscribe as investors or potential investors in Panama. Many would be potential renters.

In comparing the two available sheets I find only one that is not there and one new one in its place. Based on this, we can assume that one unit may have been rented and with that average it will take 2 years to get through all 20 or so listings.

Here is the email list I recieved on the 18th of May. You cn compare it to the one posted here about 6 weeks ago.

Aqui le mando un listado de Apartamentos FULL AMOBLADOS para Alquiler para le mes de Mayo 2009.

 **LISTOS PARA OCUPAR, PERFECTO PARA EJECUTIVOS.**

Si desean hacer cita para visitar, porfavor llamar a:
ROGELIO CUCALON
Tel: 6678-1311   ó enviar e-mail a: rcucalon27@gmail.com

--Oferta del MES: Local en San Francisco, PLANTA BAJA, excelente para showroom, 110m2, excelente ubicacion.  P/Alquiler: $1,800.

1. Punta Pacifica, Edif. Pacific Wind, 2 rec, 2 baños, compleamente amoblado, linda vista. P/Alquiler: $1,400.

2. Area Bancaria, Torre Cosmos, 98m2, 2 rec, 2 baños, Amoblado. P/Alquiler:$1,500.

3. El Cangrejo, Edif. Mont Royale, 2 rec, 2 baños, Amoblado. P/Alquiler: $1,600.

4. Paitilla, Edif. Marisol, 110m2 2 rec, 2 baños, 1 est, Amoblado. P/Alquiler: $1,650.

5. Cangrejo, Edif. Mont Royale, 125m2, 3 rec, 2 baños, balcon, Amoblado. P/Alquiler: $1,700.

6. Punta Pacifica, Pacific Blue, 94m2, 2 rec, 2 baños, balcon, 1est, Amoblado. P/Alquiler: $2,000.

7. Costa del Este, Imperial Tower, 127m2, 2 rec, Den, 2 baños, 2est, Amoblado. P/Alquiler: $2,000.

8.El Cangrejo, Edif. Mont Royale, 125m2 , 3 rec, 3 baños, piso alto, balcon, Amoblado. P/Alquiler: $2,200.

9. Calle 50, Vista Obarrio, 215m2, 3 rec, 3.5 baños, balcon, buena area social completa. P/Alquiler: $2,300.

Apartment rental rates in Panama City

About once a month I receive a list of apartments for rent in the "executive areas" of Panama City. This can give you a good idea of the rental market rates and how many properties of this kind are on the market, at least with this broker. Not to say this is all of them, but a good sampling. I have included the name and email of the broker should someone have an interest. I don't know nor endorse them, but as I am posting their email, I think it fair to put their contact information.

Aqui le mando un listado de Apartamentos
FULL AMOBLADOS para Alquiler para le mes de Mayo 2009.

 **LISTOS PARA OCUPAR, PERFECTO PARA EJECUTIVOS.**

Si desean hacer cita para visitar, porfavor llamar a:
ROGELIO CUCALON
Tel: 6678-1311   ó enviar e-mail a: rcucalon27@gmail.com

1. Punta Pacifica, Edif. Pacific Wind, 2 rec, 2 baños, compleamente amoblado, linda vista. P/Alquiler: $1,400.

2. Area Bancaria, Torre Cosmos, 98m2, 2 rec, 2 baños, Amoblado. P/Alquiler:$1,500.

3. El Cangrejo, Edif. Mont Royale, 2 rec, 2 baños, Amoblado. P/Alquiler: $1,600.

4. Paitilla, Edif. Marisol, 110m2 2 rec, 2 baños, 1 est, Amoblado. P/Alquiler: $1,650.

5. Cangrejo, Edif. Mont Royale, 125m2, 3 rec, 2 baños, balcon, Amoblado. P/Alquiler: $1,700.

6. Punta Pacifica, Pacific Blue, 94m2, 2 rec, 2 baños, balcon, 1est, Amoblado. P/Alquiler: $2,000.

7. Costa del Este, Imperial Tower, 127m2, 2 rec, Den, 2 baños, 2est, Amoblado. P/Alquiler: $2,000.

8.El Cangrejo, Edif. Mont Royale, 125m2 , 3 rec, 3 baños, piso alto, balcon, Amoblado. P/Alquiler: $2,200.

9. Calle 50, Vista Obarrio, 215m2, 3 rec, 3.5 baños, balcon, buena area social completa. P/Alquiler: $2,300.

Sam speaks to the New York Times

Posted by Paul McBride - paul@primapanama.com

Sam has asked me to update his blog while he takes some well deserved time off.  Although he's gone, that doesn't mean he hasn't been busy.  Here's an article that came out this week in the New York Times with Sam sharing his thoughts about the current state of  Panama's real estate market.

Excerpt:  In an interview, Mr. Taliaferro discusses the latest trends in Panama and a new type of buyer bolstering the market.
Read the interview here

Dubai goes back to the desert

This video is striking in what you don't see. No people, just empty buildings. The bigger they are, the harder they fall. Maybe Panama won't fall so hard or ........ maybe the jungle will take it back too.

Panama Real Estate update-LBC

The Latin Business Chronicle has come out with its Country Outlook for Latin America and Panama features prominently.

You would need a subscription to access the article so here are some important excerpts:

The banks in Panama are extremely liquid. Nevertheless, the Panamanian and foreign banks have assumed a defensive posture as the foreign correspondent banks have cut the lines of credit to all the local banks. This has resulted in the continuation of real estate projects that had already started, but with more stringent credit policies. The developers have to come up with their part of their investments upfront, and any cost overruns have to be met by the developer. Some projects in very early stages have been put on hold. On the other hand, all new projects, since September/October, have been put on hold until further notice. The exception to that rule are projects geared to the lower brackets local market, say from units that sell from $100,000 or less. Panama's economy has had GDP growth of over 11 percent in 2007 and over 9 percent in 2008. The expected growth for 2009 is around 5 percent. Retail sales in 2008 were at an all-time high. If you walk in the streets of Panama, you could never tell the world is in recession. The boom is still strong in Panama. We find that there is no inventory of unsold finished residential units so far, but there is definitely some pressure on the pricing, especially on larger luxury units, as some foreign clients have difficulty in closing now that their home economies have grown sour. The effect on pricing is positive, as now new projects, once they get started, will be able to be built at cheaper construction costs (remember that drop in commodity prices?). Also, there will be an opportunity for additional buyers to once again return to Panama to purchase units at reasonable prices per square meter. Later in the year, there may begin to be a larger inventory of unsold luxury apartments. It is difficult to tell at this stage, if the demand for those units at lower prices will keep up with the supply, as there are still many Latin American and North Americans that seem to come to Panama looking for a relatively safer place politically and economically to establish themselves. But, we are in “wait and see” mode.

7CI moves from cooling Dubai to warm Panama RE market

Ok, so the grass is always greener on the other side of the world, or maybe less brown. In this sign of the times, the "softening" Dubai real estate market is driving companies like Seven Continent Investments to move to what they perceive as a better market. Seems to me like they may be jumping from the frying pan into the fire! I have never heard Avenida Balboa being compared to 'Champs Élysées' .

Excerpt: UAE. 7CI (Seven Continent Investment), the global investment specialist, is moving it's Middle Eastern operations to Avenida Balboa, Panama City in response to unprecedented growth in enquiries and opportunities in the Central and South American region.

7CI said it has received over 1,500 unique enquiries for Central and South American opportunities in the last six months alone.

The move of our Middle Eastern operations to the new offices on the 'Champs Élysées' of Panama City, signals a significant shift in global market trends and our rapid ability to adapt and keep abreast of continued developments."

Read the story here...

Trump Files Suit Against Lenders

Here is an ugly tale we hope won't be repeated at other Trump projects. The recent financial turmoil has caused same major problems with the Trump project in Chicago where he seeks to get an extension of the $640 million dollar loan.
Excerpt: The lawsuit, filed in New York State supreme court in Queens, is a further indication of the dysfunction in the real-estate lending markets as borrowers and lenders struggle to resolve troubled projects. People familiar with the matter say the lender group, which is made up of more than a dozen institutions, was unable to agree on the extension.
 Go here to view this story.

ROP land continues to generate concern

The ongoing and long suffering saga of ROP properties in Panama continues with no end in sight. The government is reluctant to tackle this prickly problem because in many cases it will set the rich against the poor and also involves foreign investment. A story from El Siglo explains the problems pretty well.

Excerpts: The occupation of the land for many Panamanians has become a challenge, to not have the guarantees to legalize their status by the possession of the property and that after decades appears at the door of his residence a new owner who argues that owns titles before and since the beginning of last century.

According to the source, there is a problem of social character which the Staten should intervene if there is political will and everything can be resolved without break the law and without impositions, because there are many cases detected in the tours where entire communities with public and private buildings are now claimed the title with a time of Colombia and who were registered in Panama after 1903.

The problem of land tenure in the country turns out to be a very big and serious problem that has been unleashed by the real estate boom that is lived and high prices, said the businessman. We call upon the Government as a State policy, the land owner to pay the costs, islands and all that, defining protected areas and agricultural frontiers, but we have to give the weapon to the community to invigorate the economy, because the state is will benefit from the collection of taxes and tourism activity that will be generated, "said Castro.

Read the translated article here