Panama Investor Blog

Chicago's Daily Herald focuses in on Panama retirement

More news papers and websites than ever are extolling the benefits of moving to Panama. Here is another from Chicago. Come on down, the waters warm down here!

Fram the daily Herald.

Excerpt: Panama is attracting a growing number of retirees, thanks largely to its relatively low home prices, close proximity to the United States, a good health system -- and lots of tax breaks.

The nation of 3.4 million people is less than a three-hour plane ride from Miami, which makes it easy for most ex-pats to visit relatives here in the states, and vice versa. Its medical system is also considered top-notch (in part because many of its doctors were trained at American universities), and prices for everything from pharmaceuticals to surgery are generally much lower than they are in the U.S.

Equally important, "Panama offers what is probably the best package of financial benefits for seniors on the planet," according to a recent report by Smart Money Magazine, which is published by The Wall Street Journal. Among the perks: no property taxes on real estate purchases for up to 15 years, no duty taxes on imported cars or on household goods, and no income taxes on foreign-generated income.

Seniors also get 50 percent off on virtually all entertainment, as well as a 30 percent discount to use public transportation and 25 percent off restaurant and utility bills.

Developers buying up all the pasture land?

I have used the argument in the past that contrary to popular belief, developers do not buy up land and cut down trees to make way for homes. I have said that they are buying cow pastures and converting them into highly productive properties that generate incredible economic benefits to the people and communities they are near. Now this article comes out saying beef production is down because developers are buying up all the land for homes. Now it is time for me to point out the fallacy of this argument.

When you travel across Panama by air you will note that most of the land has been stripped of forests and trees to make way for cattle grazing. Only areas that are difficult to access have been spared from this  decimation such as deep valleys and canyons. Even the mountain tops are completely clear cut and marked with roads and paths for cattle. It takes about one hectare of land to sustain one cow each year and the numbers given in this article show that 1,520,000 cattle were raised in the country last year, which comes to about 15,200 square kilometers of land devoted to cattle ranching. When looking at the land that had been stripped for cattle raising it becomes obvious that only a fraction of the land is actually being used for cattle production. Even so this represents over  20% (75,000 square kilometers) of the entire land mass of the country.

If you take all the master planed developments in Panama you may come up with 1000 hectares or 10 square kilometers. This represents only a small fraction of the land clear-cut for cattle, much of which lies unproductive.

Cattle ranchers sell pastures

Beef production has dropped as producers sell their land to real estate developers.

As the end of the year approaches, the production of beef in Panama has grown stagnant.

The reason is simple: cattle ranchers are being corralled by real estate developments and pasture lands are being converted into houses and hotels.

According to the preliminary results of a study undertaken by the Asociación Nacional de Ganaderos (Anagan), 1,298,800 head of cattle were slaughtered this year, which represents a decrease of 1,200 from last year, or 0.5 percent.

The stagnation is also relfected in the number of live cattle in the country. According to the study, the number of head of cattle fell to 1,520,000, 40,000 fewer than in 2006.

Despite the slight decrease in production and slaughtering, the executive director of Anagan, Euclides Díaz, maintains that the sector's performance has improved in areas such as genetics and revenue potential.

He also noted that this year's high demand for special cuts inside Panama has affected  the volume destined for export.

"There are restaurants asking for special cuts now, and they are paying a good price," Díaz said.

Anagan itself is also selling its property. The president of the organization, Luis Martínez, confirmed yesterday that the U.S. firm Princess Properties purchased its former headquarters on Avenida Balboa for $666 per square meter. Anagan will move temporarily to the offices of the Unión Nacional de Productores Agropecuarios de Panamá while it looks for a new permanent home.

Anagan is planning to buy land in one of the areas reverted to Panama according to the terms of the 1977 Torrijos-Carter Treaties and to construct its own building.

"We cannot keep this money in the bank. We should put it someplace where it will generate earnings through new investments," Martínez said.

Anagan is the most powerful group of its kind in Panama.

Leaving the Real Estate Slump Behind in Panama

Here is a story about a developer who is coming to Panama in hopes of leaving the U.S. real estate bust behind. I hope he is doing plenty of homework before he jumps in too deep. Panama is experiencing its share of real estate slow down too.

Excerpt: When the real estate slump first hit Florida two years ago, Naples developer Todd Gates began sniffing around Central America and Caribbean markets for business opportunities.

The once sleepy Central American nation is experiencing unprecedented growth thanks to an influx of American retirees, investment from other Latin American countries and the $5.25-billion expansion of the 93-year-old Panama Canal, which will double the canal system’s shipping capacity by 2014.

Read the whole story here...

   

Panama beckons retirees from the COLD US

Another piece about moving to Panama has appeared in the LJWorld.com. it is 8 degrees F in Lawrence which makes articles like this appealing to the reader.

Excerpt: “Panama offers what is probably the best package of (financial) benefits for seniors on the planet,” according to a recent report by Smart Money Magazine, which is published by The Wall Street Journal.

Read the whole story here....

Crime against expats rises in Costa Rica

As more affluent homeowners move in, so do the criminals, just like bees to honey. It is not that local residents become thieves, but thieves, both home grown and from other areas see opportunity that did not exist before. Some claim that it is wrong and divisive to build gated communities to protect some while others are forced to live outside the gates. I Have heard this argument many times, and I find those with that sentiment do not consider the overwhelming positive aspects of people with much moving to areas of people with little. Economic prosperity levels are being raised dramatically within a relatively short time and a growing middle class is forming among the populace. I challenge anyone to describe a more sustainable way to increase the economic levels of rural communities than residential tourism.

Excerpt: “We were living in the middle and [the thieves] seemed to be moving in from both sides so we decided to move to a gated community like many other North Americans and Europeans,” Mr. Kerr said.

         

His story is one being recounted across the country as crime rises unabated, setting alarm bells ringing among citizens, ex-pats and government officials.

According to the latest statistics, a robbery is reported in Costa Rica every eight minutes, compared with one every 25 minutes 15 years ago. In the capital city of San Jose alone, the number of asaltos, which include street thefts, jumped by more than 16 per cent from 2005 to 2006. And the latest figures for 2007 show another steady increase month-by-month.

Read the whole story here....

Special report-Panama: Commercial Real Estate Grows

This is a very informative report from the Latin Business Chronicle regarding Panama's immediate and future position for both residential and commercial real estate development.

Commercial - rather than residential - may be the main growth driver for Panama's real estate sector, experts say.

BY CHRONICLE STAFF

Panama's residential real estate market - until recently seen as one of the hottest in Latin America - is starting to cool down, thanks to oversupply, rising prices, a new and controversial visa law and the U.S. sub prime crisis, experts say Panama Canal

"There's a lot of residential product that needs to be sold," says Latin AmericaShannon Robertson, managing director of the  operations for Jones Lang LaSalle. "We expect prices to correct or developers to hold on to their products.Panama City There's no question that from a residential market view,Panama City got overbuilt very quickly. It became the flavor of the day."

Paul McBride, CEO of real estate consulting firm Prima Panama, agrees. "Oversupply in  Panama City will begin to become a problem in the next 12 to 18 months," he predicts.  "Increasing prices in the residential retail sector along with a tightening international credit market will likely slow demand."
While most of the oversupply is affecting Panama City, even areas with larger potential along the coasts could be affected by e sub prime crisis, McBride warns. "We’re very concerned about the sub-prime mortgage crisis and its short term effect on the baby boomers," he says.  "The second home and vacation home market in Panama will be impacted as homes in the US lose equity and the credit markets tighten." 

Read the whole story at LBC

Nicaraguans find "USA" in booming Costa Rica

Residential tourism is a major force in Costa Rica and affects the country in a more obvious  way than it does in Panama where the canal, banking and free zone overshadow its effect. Here is a great article that tells just how important it is to the country. Look at the unemployment numbers. They are a third of Panama's official numbers and all driven by residential tourism.

From Reuters

Forest-cloaked Costa Rica's low-skilled immigrants work in agriculture, at construction sites and as domestics and security guards -- jobs Costa Ricans, better educated and settled in the middle class, prefer not to do.

   

Costa Rica, known for its premium coffee and thriving eco-tourism industry, is growing at more than six percent for the third straight year. Unemployment is 4.6 percent, down from 6 percent in 2006.

   

BABY BOOMER RESORTS

   

The economy is also lifted by resort and condominium development on the Pacific coast that is becoming a U.S. baby boomer playground, and a high-technology sector around an Intel Corp plant near the capital, San Jose.

    Read the rest of the story here....

The threat of residential tourism

The article below was an opinion piece which appeared in a national paper in Spanish and is translated with Google translator. The writer asserts that foreigners are taking advantage of cheap labor and benefits, driving up the price of land, giving nothing back (except money), only offering jobs to gardeners and maids, using up valuable agricultural land etc. etc...

This is the sentiment that some locals have and it is based on erroneous information and false premise. For example, the writer says " foreigners,  mostly, an aging population that have not  much to contribute to national life". We have literally dozens of examples of the many positive activities foreigners are contributing to the communities in our area. I could argue all of his positions, but maybe one of you would like to write a rebuttal which can be translated and placed in the paper. Allowed to go unchallenged, this type of sentiment can grow and become an impediment to the countries economic growth and erect barriers to foreigners who are here or wish to retire here.

ELIMINATION OF  INCENTIVES.
The threat of residential tourism
Luis Castillo Espinosa   

Residential Tourism is a  term widely  used, but an ambiguous meaning that deas not properly defined the phenomenon  of retirees who choose  Panama as a destination to retire. 

This phenomenon has as one of its  origins Act 9 June 24, 1987, which provides benefits to attract foreign  retirees, including exemption from paying taxes for the importation of  household goods, furniture or utensils until by 10 thousand dollars, and  the waiver of taxes for the importation of a vehicle every two years and  other benefits that far exceed the laws of neighboring  countries.

These perks are an affront to the dignity of retired Panamanians. 

An open invitation to Minister Blades

The article below my commentary came from today's paper and is titled, "Ruben Blades: To private sector, invest more in hotels and not in residential projects".

This morning I leave for the city to give a speech at the Congreso de las Americas in Panama city. The theme of the Congress is "Globalizing the Living  Environment" with emphasis on second residences and retirement communities.  The title of my presentation is "The  market evolution of residential tourism in Panama." I am asked to speak frequently at conferences  dealing with this subject and I accepted this invitation because it was being held here in Panama City and more than 300 people from North and south America would be attending. It is getting harder for me to talk so positively about investing in Panama when I know that the minister of Tourism is working diligently to stop this kind of investment. I thought it ironic that as I am preparing once again to publicly promote investment in Panama, this article from the minister comes out to discourage me.

 This time Minister Blades is lecturing to investors to build more hotels rather than residential projects. Mr. Blades fails to realize that few hotels and resorts are built without residential components. Why? Because residential components make a resort project viable. I have built a resort with residential components and so has every other resort project built or planned in the country. I am consulting with a number of major projects being planned in the interior of Panama and all include hotels with residential components. Apparently Mr. Blades  has not visited the multitude of projects in Costa Rica and the Caribbean to see that ALL resorts and hotels include residential components.

Mr. Blades, why won't you come to Valle Escondido and let me give you a tour of our project and show you first hand how it works? Let me show you the over 100 new businesses in Boquete catering to this form of tourism that have been started by your countrymen? Let me show you my payroll records showing the hundreds of people we employ in construction and hundreds more in our resort services? Let me show you the number of guests visiting the residents who live here, and the money they spend on travel back and forth to their home countries. Lets ask them how many times they travel in and around the country as tourists. Lets go down to the social security office together and look at the records of the number of people employed in the area by the developers, new businesses and home owners. Lets visit the airport and the regional airlines  and look at the number of flights they have increased over the last few years to accommodate the many people coming here to visit or live. Lets take a ride to David and look at the new shopping malls and car dealerships opening to supply the goods and services these new immigrants want.  And lets also visit the Governor of Chiriqui so he can share his perspective on the economic benefits of residential tourism have impacted his province.

Mr. Blades, you really don't need fancy consultants and expensive marketing gurus to help you to build tourism in Panama. You just need to support those of us who are already doing it. Instead of us continuing this ridiculous battle of words, we should be working together for the betterment of this wonderful country.

Panama, Tuesday, October 30, 2007

Ruben Blades: To private sector, invest more in hotels

Raul Bernal [email protected]

The minister of Tourism, Rubén Blades, requested to the private sector do not invest so much in apartments and houses for people in search of second residence, but in hotels and rooms, that is what it is needed right now. "There are people who complaint there are no rooms, but have money and what they do is to build houses and apartments.

We are going to make the hotels and rooms that we needed, because more and more people are still going to come", Blades said. The govt official revealed that between 2008 and 2009 they will be being been constructing between 5 thousands to 6 thousand rooms with the hotel projects that are planned, but that this amount is not sufficient for the tourist boom that it anticipates increases in the coming years.

The also salsa composer and singer has said in reiterated occasions that the second residence is not tourism perse, since the foreigner settles down itself like resident in the country. Investments Representatives of the industry also have indicated in diverse occasions there is a need to build more hotels, to provide with accommodations to the great number of visitors who enter every day the country.

Panama had 5 thousand hotel rooms in 1997 and in 2007 16 thousand, which he hopes that for 2020 they are constructed in the country more than 20 thousand rooms like result of the accelerated growth of the sector. The tourism generated last year thousand 445 million dollars to the national economy, which represents 9.5% of contribution the gross domestic product (GDP) of the country. According to estimations of the Panamanian Institute of Tourism, hopes that the income in the sector closes this year with an increase of 18% over 2006, as well as an increase of 15% in the number of visitors in comparison to last year.

AARP says Panama is one of the top places to retire internationally

From the LA Times.com.

Things to know before you move

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By Marla Dickerson and Chris Kraul, Los Angeles Times Staff Writers
October 21, 2007

Where are Americans retiring?

Mexico is the most popular destination, because of its proximity to the U.S. and the large number of Mexican Americans looking to return to their roots. Costa Rica, Ecuador and Panama form the next tier of favorites, according to the AARP, the advocacy group for about 39 million Americans aged 50 and over.

What's the cost of living?

It depends. Most households interviewed for these articles said they live comfortably on $1,500 to $2,500 a month. That doesn't include housing because most bought their homes outright. But it does include maid and garden service, entertainment and occasional meals out. You can spend less -- or much more -- depending on your lifestyle and means.

Read the complete story here....