Panama Investor Blog

Panama farms open sea Cobia

This press release came across my desk and I found it very interesting. I had heard about a tuna farm being experimented of the coast of Chiriqui, but had not heard about this operation. I am all for sustainable fish farming and this open sea farm sounds great.

New York, NY and Panama City, Panama (August 31, 2009) - Open Blue Sea Farms, the leading practitioner of sustainable open ocean aquaculture, announced today an agreement to acquire the major assets of Pristine Oceans, forming the world's largest open ocean aquaculture operation by year-end.

Free-Range Fish Farmer: Brian O’Hanlon, Open Blue Sea Farms CEO, observing his stock of cobia swimming in a submerged containment dome, which can reach heights of 15 stories or more, beneath the Caribbean off the coast of Panama.  Open Blue’s “free-range” aquaculture methods hold sea life in its natural environment while decreasing risk of disease, greatly reducing ecological impact and cultivating a superior dining product.

Since August 1, 2009, Open Blue has managed Pristine. It will consolidate assets into its own ocean sites. Both firms farm cobia in Panama because of the fish's rapid growth rate, nutrition, rare taste and texture. Of the 43,000 stocked cobia, 10,000 are destined for the gourmet seafood market between December and April. Open Blue seeks an investment of $7M for further growth.

Read the rest of the story at their website

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.

New study on the current status of Panama Real Estate

Encuentra24.com, the portal for real estate listing in Latin America has come out with a report based on a series of interviews with "professional" real estate brokers in Panama. I guess there are forced to go to this rather biased source as there is no MLS in which to review data and come out with the real facts. I find the answers from the agents both disingenuous and misleading.

Encuentra24.com Performed An Economic Poll About Panama's Real Estate Market 2009

Encuentra24.com Panama Classifieds performed a economic poll where Panamanian Real Estate Professional real estate brokers where interviewed on their experiences, the current economical crisis, property sales and market behavior.

Panama, Rep of Panama. (PRWEB) August 27, 2009 -- Encuentra24.com Real Estate and Classifieds listings Portal announced yesterday the result of its most recent economic poll, this time about the property purchase, sales and rental market in Panama.

panama-real-estate-poll

This poll was conducted by the marketing team of encuentra24.com who performed a phone interviewed to 50 professional real estate broker in Panama. The interviewed are actively dedicated real estate professionals in the Panama territory. Each had the opportunity to contribute their personal and commercial experiences in the subject of real estate.

Encuentra24.com informed them that a complete copy of the poll would be posted in online soon Encuentra24.com/panama. Boris Metraux CEO of Encuentra24.com added that other results of this property trend poll is a valuable reflection of the economy and current real estate market. The insight on exactly were do top 5 real estate buyer's originate, or sectors the experienced a drop in prices or what have been the repercussions of the economic crisis in Panama. They offer a market study in order to determine any future business decision.

1. The interviewed were asked they impression on current sales prices versus past sales prices in Panama. 46 percent said prices have remained the same, 34 percent believed they have dropped ten percent, 14 percent believed that prices have dropped 20 percent and 6 percent believe they have dropped a 30 percent.

2. When inquired about the zone or area that has experienced a reduction in prices, 31 percent respond San Francisco, 23 percent responded the Avenida Balboa area, 21 percent responded el Dorado and 18 percent believe Costa del Este and 8 percent responded Punta Pacifica.

3. They were also asked, what type of property has experienced the highest decrease in rental and/or sales prices? 31 percent said apartments, and condos, 13 percent said homes, 2 percent said vacation houses, 2 percent said offices and commercial spaces.

4. On the banking subject, real estate broker were questioned if they believe to have support from national and international banks towards expatiate processing of mortgages and loans? Only 16 percent responded yes, 12 percent responded no, while 72 percent said that only some entities helped in the loan subject.

5. As to what was the nationality of buyers interested in Panama real estate? 39 percent said Panama, 35 percent said Venezuela, 20 percent said the U.S. and only 6 percent from Europe.

6. In order to determine if property owners were ready to make a correction in prices according to the market demands? A 45 percent selected maybe, 17 percent selected no and 38 percent selected yes.

7. As to the purpose for buying a property, 52 percent real estate brokers agreed that purchases were for investment, 29 percent agreed they purchased as a permanent residence and 19 percent agree as a temporary residence.

8. On the rental subject, everyone was asked about inventory vs demand. To this 39 percent said their were more property than demand.

9. Towards determining the type of property with the most demand, a 55 percent of real estate brokers agreed that apartments, 19 percent agreed that houses, while 12 percent said vacation property and another 3 percent said office space.

10. Their opinion in sensing if the global economical crisis of 2009 was already showing negative effects in Panama, 66 percent responded barely, 22 percent said yes, and 12 percent said no.

Conclusion:
The encuentra24.com Marketing team concluded informing the website has experience a surge in properties for sale, on foreclosure, while the type of property mostly posted online by publishes including real estate broker and owners are were properties with elevated prices. This poll was made to also increase the listings according to popular demand. Encuentra24.com® has reached over one-million monthly visits and over 30,000 properties listed.

Faster more efficient immigration promised

A very short article in La Prensa today has the head of Immigration promising to smooth out the rough spots and delays in getting visas and other immigration issues. This has been a very troubling situation for just about everyone trying to work or live in Panama and one I know the current administrations aims to rectify. Lets hope this is accomplished in the two month time period promised by Mary C. González, director of the entity.

More beer for Panama!

One of Panama's favorite pass times will soon have more to cheer about with Heineken  putting its regional headquarters in Panama. Of course we already have Heineken beer in the country, but we can cheer the fact that another company has chosen Panama for its business operations.

From Hora Cero

The company Heineken America Regional Services, LTD., A subsidiary of Heineken International BV Amsterdam, Netherlands, decided to establish its regional office in Panama to manage the group's operations in the region, announced the Minister of Trade and Industry Minister Roberto Henriquez.

Henriquez, said Regional Heineken generate new jobs for Panamanians.

 "The Heineken Group is one of the largest brewing groups in the world, and if you chose to invoke the Law of multinational companies, not just by the benefits of incentives, but by the geographical and logistical advantages offered by Panama to coordinate their operations from the headquarters located in Holland, "he said.

 With assets of more than 28 billion dollars, Heineken has five operating regions: Western Europe, Central and Eastern Europe, the Americas, Africa and the Middle East and Asia and the Pacific. Each region is headed by a Regional President.

Heineken America Regional Services, will offer from Panama, Financial Management Services for business and economic group Heineken, global operations management and regional economic groups and corporate services, including control of operations, logistics and personnel training, among other .

Panama's Tax Burden % of GDP

Panama is in the middle of the pack when it comes to the tax burden as a percentage of the country's GDP. According to this article in La Prensa, Panama believes it should be closer to the top range of countries in the region. Panama is currently at 16.6% of GDP while, according to study done by the firm of Rivera, Bolívar & Castaneda on the tax burden in Latin America and the Caribbean relative to GDP, Venezuela (17 percent), Bolivia (20 percent), Chile (21 percent) and Costa Rica (22.5 percent) are all higher than Panama.

If attracting foreign direct investment is as important as the administration says, the tax burden should be considered very carefully. Nothing scares away investment as much as high taxes. To the investor, it is tax burden directly on the company that is more important than as a percentage of GDP. GDP does not reflect the profit of the businesses in the country, only the overall production.

How Sam survived cancer

I don't usually use my blog to share personal stories, especially challenging health issues, but I am making an exception now because the information I share with you in this post might save your life or the life of someone you know.

I am 57 years young and until recently never been to a hospital. I don't smoke or drink (Only wine and beer occasionally) and I watch what I eat and work out in a gym on a regular basis. About 18 months ago I noticed a swelling of my lymph nodes in my neck. After consulting with a doctor it was thought to be an infection and over a period of three months we tried different antibiotics. As there was no pain I pretty much ignored it until they started to get larger. I finally went to an ear nose and throat specialist who, after putting a scope down my nose, declared I had cancer of the base of the tongue, which had spread to my lymph nodes. He had me immediately go to two other doctors in the same building to confirm his findings. One of the doctors was a surgeon who specialized in neck surgery. He took one look and told me that this was probably caused by a virus known as Human papillomavirus or HPV. He explained that there was an "epidemic" of non-smoking non drinking head and neck cancers attributed to the HPV 16 or 18 strain. 

I asked the doctor how I could have gotten this cancer and he told me that it is the same cancer that women get in their cervix and that 70% of women carry the virus yet only a small percentage lead to cancer. They believe it is transmitted sexually. So what can I do about it and what was the prognosis? They recommended a seven week program of chemo therapy combined with radiation. After that I would probably need a neck dissection. The doctors told me the five year survival rate was "pretty good". Later I found out for typical head and neck cancers at my stage was pretty dismal.

OMG

You can imagine my shock at hearing all of this within the span of about two hours and the many thoughts racing through my head. How was I going to tell my wife and children.

Now, lets fast forward to today 6 months later. I have to say that the standard treatment for this kind of cancer is the very aggressive and difficult and for me it was exceptionally so. The radiologist had warned me that this is the most difficult cancer to treat for the patient because the treatment was directed at the very area of the body you need in order to eat, drink and speak. I won't go into the difficulties I encountered now, (you can read it here #61 down the page) but it was extremely difficult with many side effects that nearly killed me on several occasions. I have been out of treatment now for 3 months and I am sill weak having lost 50 lbs, 25% of my body weight. I have very little saliva so eating is challenging and I am still dealing with numerous side effects from the high doses of radiation and chemotherapy. But, I am alive!

And there is some good news that has come out of this experience which is why I am sharing this story with you. First of all my recent scans show complete regression of all tumors and no sign of cancer. Recent studies have shown that head and neck cancers caused by the HPV virus are more responsive to treatment than cancers caused by smoking and drinking. In addition, the survival rate for HPV related cancer cannot be determined because all of those treated are still alive.

After going through this experience, I stumbled on a cancer treatment that is highly effective with none or very little of the side effects I had to deal with. It is called Hyperthermia low dose radiation. By increasing the temperature of the tumors to 108 degrees F. and then using a low dose radiation in the same manner as standard treatments, they have achieved an 87% cure rate with head and neck cancers. They do not use chemo and because of the low radiation dose over a longer time period, you have a more effective treatment without the severe side effects. The treatment is effective on breast and prostate cancer as well as a number of others. This type of treatment is being done in a center in California as well as in Germany. It is FDA approved and insurance will cover it. I have spent a great deal of time speaking with the doctors involved in this treatment protocol as well as some of the patients. I only wish I had known about it before I went through my ordeal.

I was told how important your families support is during and after treatment for all cancers. I really don't think I would have survived without the support of my family and friends, especially my dear wife Thalia. I think it has been harder on her than me. Because of all the environmental damage we are inducing into the world, the prevalence of cancer is growing like never before. Although my cancer may not have been directly related to environmental issues, my immune system may have been compromised by pollutants which allowed the virus to take hold. Doctors say that at least one out of every three people will get cancer in their life times. If you are one of those who have been given this great challenge in your life, I encourage you to take a careful look into the treatment I described above. And I especially encourage you to keep a positive attitude and not give up. Everyday is a precious gift so don't waste it.

One of my blogs readers send me this document that I wish I had read before I went through standard treatment. Seems there is a way to greatly improve the odds you can beat cancer and it is science based.

Download INTERNATIONAL cANCER aLLIANCE

Shake up for developers in San Fransisco

An article in today's La Prensa tells us that the courts have ruled that permits granted to developers by the past administration were illegal. Previous zoning laws were apparently ignored where building heights where not to surpass 15 stories and 35% of a lot was to be green areas. Buildings have been completed and a number still under construction that violate these restrictions. Now the question is, what to do about it? The quality of life in the neighborhood has certainly been diminished, but it is not practical to tear them down. A consideration is being proposed to stop buildings that are under construction from going over the 15th floor, but you can imagine how this would impact the developers financial situation with construction loans and pre-sales.

This is another case where apparent changes in zoning were implemented at the discretion of a government official (head of MIVI) without oversight and has now caused problems for everyone involved  long after that administrator is long gone. How can developers or buyers feel comfortable in investing when the rules of the game can change at the whim of an administrative head who has five years in office.

A ruling by the Supreme Court just put in check several condos under construction in San Francisco.

  A week ago, the judges of the Chamber III, Victor Benavides (rapporteur), Jacinto Cárdenas (for Winston Spadafora) and Hipolito Gill (for Adam Arjona) declared illegal invalid by a decision of the Ministry of Housing (Mivi) which amended parameters of zoning rules and eliminated the 35% required for landscaping in that township.

  Until then, the high for farms with land use zoning of RM (medium density residential) and RM1 (residential high density) was up six and 15 floors respectively, including parking slabs.

These conditions were set out in Resolution No. 112 of 2003, he signed the then Housing Minister, Miguel Batista.  Similarly, limits were set to match the zoning MCU1, MCU2 and MCU3 (urban commercial mixed low, medium and high density), depending on the construction line.

The system was implemented throughout San Francisco, except for areas of Boca La Caja and San Sebastian.

But these limitations do not last long.

  At a stroke

On 31 August 2005, barely a year after being appointed Minister of Housing Balbina Herrera issued Resolution No. 235-2005, which eliminated almost all restrictions contained in resolution 2003.

  In one fell swoop and without consultation, Herrera decided that the height of the buildings would be determined "according to the density" of each property.

  Thus, where previously only allowed a 15 high, suddenly lifted up a tower of 60 floors. La altura quedó “al arbitrio” de los promotores. The height was "the discretion" of the promoters.

  Herrera's decision had broader reach in the Milky Cinquantenaire, where almost all farms are RM1.  Over that span, seven high-rises now stand: Moon Tower, Sorrento Sea, Vision, Puntarenas, Icon (almost ready), Bay Golf and Boating.

  A measure inconsiderate

  Such permissiveness was not liked by the neighbors.

  Organized in the Residents Association of Altos del Golf, Loma Alegre and surrounding areas, the group filed a petition for annulment against the Resolution No. 235, which was admitted by the Trial Chamber III on 28 May 2008.

  The complainants allege that Herrera's actions violated the Act 6 of 2002 ( "Transparency Act"), for he never convened a public forum to consult with those affected.  The view was shared by the Office of Administration, who also asked to cancel the event.  In its ruling, the Chamber III found that there were "irregularities" in the actions of the authorities Mivi.

  A lawyer for the residents felt that any project that is in earthwork, piling, foundations or slab construction parking will have to conform to the limitations contained in resolution 2003.

  It was unclear what will happen to the buildings that already are on the 16th floor or above it.

The current housing minister, Carlos Duboy, reported that construction projects will be reviewed, "to see if they comply with existing rules.

Government to hire team of professional debt collectors

One thing I have noted about our new president is how he manages the various aspects of state governance.  Many news article have come out about consultants being hired for various important aspects of state such as tax programs, metro planning and now debt collection. To me this is a sign of good business practice. In past administrations local groups would be hired to assess various aspects and their knowledge and scope was fairly limited. This administration is managed in a more professional manner where hiring the best minds from proven consulting firms is the practice. Although the cost may be higher initially, in the long term a solid foundation is put in place and built on. I would imagine in the case of debt collection, the companies will be rewarded with a percentage of what they collect. With over  $590 million in collections expected, these could be very lucrative contracts.

From La Prensa;

The government seeks to cover about $590 million in unpaid bills with the aid of three private companies that specialize in debt collection management.

The measure was announced by the Director of Revenue at the Ministry of Economy and Finance, Luis Cucalón, who demonstrated enthusiasm for the decision to hire 300 auditors to streamline collection processes.

Ruben Bustamante, partner and tax specialist at Bustamante & Bustamante, said the initiative could provide for a more efficient system of tax collection, which would in turn assist the government's cash flow. 

He commented that Chile, Puerto Rico and several countries in Europe have employed similar collection services with positive results.

Hotel occupancy drop blamed on "illegal hotels"

Contradicting a previous post from last week, the comptroller general this week says that the hotel occupancy rates dropped 8.9% in the first six months of the year and 21% in the month of June alone. The average occupancy rate was 51.2% in June and the first half, from 59.6%. The daily average overnight stays also is lower than last year.

The result reflects the negative trend in the number of tourists who stayed overnight in the country, which fell 12.8% in June and 2.7% in the semester.

According to Jorge Loaiza, President of the hotel association of Panama, much of the decline can be attributed to the short term rentals of apartments by management companies, which is illegal according to Panama law. Apartments built and sold as condo/hotels fall into a different category which allows them to be rented on a short term basis.

With over 16000 hotel rooms in the city, I doubt that a few hundred apartments could play such a significant roll in the occupancy rate downturn. It does give the hoteliers ammunition to make an issue of it.

Many investors bought apartments in the city with the plan to flip them but when resale of apartments came to a standstill, many were forced to either walk away from their deposit or finish the purchase and rent them out on a short term basis because of the difficulty in getting hotel rooms in high season. Many real estate sales people promoted this idea, even though there is no provision in Panamanian law to allow short term rental of apartments. Apartment management companies now find themselves in a difficult position as the hotel industry has made an issue of this and demand that the government stop the activity. The tourism authority sides with the hoteliers because their is no provision in the law for collection of a 10% tourism tax on apartments. Compounding this problem is the fact that many of the owners of the larger hotels in the country,  are also developers of many of the high rise apartments that are now sitting empty.

Most countries allow for short term apartment rentals, if it is not prohibited by the homeowners association, and they charge a tax on them. After all, these are private property and one would think an owner should be able to do as he wishes with it. If Panama is to see further sales of the many apartments coming on the market, it may need to adjust the law to provide for this service.