Panama 101 – E-Book Guide to Living and Investing in Panama
2011 Edition
By Michael Manville
www.PanamaAtYourService.com
© Copyright 2005-2011, All rights reserved. No part of any of this information may be reproduced or distributed without the express written consent of the author. The information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed.
Table Of Contents
Introduction To Residential Tourism … P. 3
Country Map of Panama… P. 11
Chapter 1 - The Nuts and Bolts of Travel in Panama – Hotels, Apartment Rentals, Taxis, Planes, Helicopters, Yachts, Rental Cars, Cell Phones… P. 12
Chapter 2 - Where To Live and Invest in Panama City - A Neighborhood By Neighborhood Breakdown… P. 26
Chapter 3 - Where To Live and Invest Outside Panama City - Exploring Beautiful Beaches and Cool Highlands… P. 42
Chapter 4 - The Basics For Expats – Language, Society, Visas and Banking… P. 59
Chapter 5 - Buying Real Estate in Panama the Smart Way – Finding and Securing Your Property… P. 74
Chapter 6 - Rental Income and Property Management - How to Earn a Return on Your Real Estate Investment… P. 100
Chapter 7 - Finding Real Estate "Off The Beaten Track" - Six Spots Overlooked By the Speculators… P. 99
Appendix A - Restoring Historical Buildings in Casco Viejo… P. 123
Appendix B - To Teak or Not To Teak - The Risks and Rewards of Buying Reforested Land in Panama… P. 118
Appendix C - Business and Services Directory… P.134
Appendix D – Recommended Restaurants in Panama City… P. 13437
www.PanamaAtYourService.com 2 An Introduction To Residential Tourism
The Panama 101 E-Book is designed to address the needs of a relatively new form of tourism known as residential tourism. New trends in residential tourism are having a powerful affect on economies and societies around the globe. Yet another result of globalization, this unique form of tourism is forcing developing nations to respond and adapt. The author believes that the readers of this E-Book should be aware of the impact and implications of residential tourism.
What is Residential Tourism?
Residential tourism is very similar to other forms of tourism except it implies a much longer stay in the host country well beyond the traditional two-week vacation. The concept of "snowbirds", or people from colder climate countries who "flock" to warmer destinations for the winter, would be considered a form of residential tourism. Retirees moving to another country for partial or permanent retirement is another form of residential tourism.
Traditional destinations for residential tourists include Florida, Hawaii, Mexico and the Caribbean for North Americans. For Europeans, Spain is the most popular destination. Today, countries in Central America, Southeast Asia and
Eastern Europe are attracting growing numbers of residential tourists.
Demands of a Residential Tourist
In addition to sun, sand and surf, the typical residential tourist has a
www.PanamaAtYourService.com 3 distinctive set of desires and requirements when selecting his/her host country:
Clean, sanitary conditions including safe drinking water and food
Security without fear of robbery or harassment
Easy access, including close proximity to an international airport
Modern entertainment including Cable TV, English speaking movies,
live theater with international recognized performers, social groups
and clubs, High-Speed Internet
Access to sports and fitness facilities
Fine cuisine with a diverse range of restaurants
Close proximity to modern health facilities, hospitals and clinics
Exposure to a unique culture and environment, thus providing a
learning experience and change from the day to day routine of their
home environment
Global Trends Causing an Increase in Residential Tourism
Retiring Baby-Boomers - The single most powerful market segment today, the baby-boomers, were born between 1946 and 1964 following the end of
World War II. Primarily from Europe and North America, this group will start to reach official retirement age in 2011, while a good percentage have already left their professional careers and intend to become residential tourists for part of the year and/or retire permanently abroad. Free from the obligations of a 9 to 5 job, the baby boomers represent the majority of all
www.PanamaAtYourService.com 4 residential tourists around the globe.
Communication Advances - Recent advances in Internet and telephone communication enable more people to work and stay in contact with their loved ones and professional associates from anywhere in the world. The residential tourist is no longer bound by expensive long-distance phone calls nor slow "snail mail" messages. Residential tourists are now able to spend time far from home without severing communication, thus making extended stays abroad more feasible.
Language Uniformity - The expansive development of English as the universal language of business and tourism has enabled the English-speaking residential tourist to feel more comfortable spending time abroad in non- native English speaking countries.
Product Globalization - Global trade provides the residential tourist with access to most of the same products available at home. Electronics, appliances, clothing, food, and other essentials are generally available at competitive prices in much of the developing world. Convenient access to a wide selection of quality products translates into fewer sacrifices for the residential tourist living abroad.
Transportation Advances - Airlines have advanced significantly over the past couple of decades and now cover a wider range of international cities, with
www.PanamaAtYourService.com 5 more frequent direct flights, at more predictable and competitive prices. This trend enables the residential tourist to conveniently and affordably leave and return to their home city.
Benefits of Residential Tourism vs. Traditional Tourism
Just as other forms of tourism have profound effects on local economies and peoples, so does residential tourism but with several differences.
Economic - Instead of spending on food, clothing, drinks and lodging for the traditional two week vacation, the residential tourist spends on these same items over much longer periods of time. A residential tourist injects several times more foreign-sourced income into its host country than a traditional tourist.
Rather than hotels and resorts capturing the lion's share of the tourist dollars spent in a given country, a residential tourist is more likely to eat at local restaurants, engage local service providers (grocery, laundry, gasoline, etc.) and make much more expensive purchases which often include a vehicle, real estate, plus all of the appliances and furnishings required for a longer- term stay in their new home.
Environmental - Residential tourists often value intact forest reserves and are drawn to areas with scenic and healthy natural environments, thus increasing the value of biologically diverse land. By offering new sources of
www.PanamaAtYourService.com 6 employment to local residents many would-be farmers who would otherwise clear-cut their families forested land and eventually render it unproductive may learn new trades and skills.
In addition, residential tourists from developed countries are more likely to demand organic produce and often stimulate a market for organically grown produce and meat which was formerly non-existent and/or not financially feasible in the host country. Demand for organic products from the residential tourist can counter the aggressive marketing and publicity campaigns distributed by large pharmaceutical companies that tout the use of pesticides and chemical fertilizers as the only way to increase the value of an agricultural harvest.
Social - Distinct from the usual two-week tourist, a residential tourist is more likely to engage socially with the local residents. An exchange of language, cultural and spiritual beliefs encourages an understanding of differences and helps achieve a level of mutual respect. With an influx of residential tourists to their community, local residents have improved access to the English language which further advances their education and their ability to find good-paying jobs in the future.
Potential Negative Effects of Residential Tourism
Transfer of Land Ownership - An increase of residential tourists often presents a profitable selling opportunity to local land owners leaving many
www.PanamaAtYourService.com 7 locals without land to live on, use for farming, or pass down to future generations. In addition, land values may increase dramatically to the point where native residents can no longer afford to buy land.
Exploitation of Labor - Locals are often forced to take low-paying jobs in order to service wealthy new residents amid higher costs for housing, food, energy, and other basic necessities.
Environmental Damage - Promising job opportunities and economic stimulation, large-scale foreign developers often select environmentally sensitive areas for massive golf and master-planned gated communities.
Bulldozing rainforests, mangroves, and other delicate areas is a serious threat to the eco-system and to the livelihood of local residents.
Animosity Toward the Foreign Invasion - In many cases, native residents may harbor animosity toward a sudden influx of foreigners. Particularly when the majority of new residential tourists select gated communities as their new home, locals may feel that the foreigner's new community is "off- limits" to their own people. Instead of foreigners and locals co-mingling in the community, the gated concept can create an "us vs. them" syndrome as there are fewer opportunities for newbies and locals to get to know and trust one another.
www.PanamaAtYourService.com 8 Adapting Wisely To Residential Tourism
Governments of the host countries must use fiscal reform to devote funds to new programs in order to help communities respond and benefit from the residential tourist industry. As national governments are typically concerned with larger industrial sectors and political special interest groups, the majority of the responsibility for dealing with the effects of residential tourism must fall upon the state/provincial governments and especially the municipal levels of government.
Education and training are critical tools often under utilized by local municipalities to help local residents benefit from residential tourism. New trades and skills such as relocation assistance services, legal and accounting services for foreign residents, tour guide services, new home construction services, organic farming, landscaping services, and restaurant/hotel ownership are just a few examples of the types of job opportunities which local residents may be educated and trained to provide. Basic principles such as learning to only sell part of their land and invest their sums in a productive manner to provide jobs for their family should be emphasized.
Protected and environmentally sensitive areas should be off-limits for development while land that has been clear-cut and rendered unproductive for agriculture should be zoned for residential tourism development purposes.
www.PanamaAtYourService.com 9 Foreign residents should also be encouraged to learn the local language and engage in local customs. Residential tourists have a responsibility to respect the local culture and abide by local laws; sex and drug related crimes committed by tourists should be severely punished. New foreign residents should be encouraged to start grass roots programs aimed at assisting municipalities with the task of educating and training local residents to benefit from residential tourism.
Conclusion
In the same way that emerging industrial powerhouses such as China, India and Brazil must respond to a growing influx of foreign capital, so must recipients of residential tourists prepare for the effects of globalization.
Democratic nations who target residential tourism as a way of providing new jobs and opportunities to their native citizens must be properly prepared in order to minimize the negative effects and maximize the benefits.
Educational and training programs supported by municipal governments are the most effective response to ensure a balanced and healthy result to the wave of increased residential tourism which has only just begun.
www.PanamaAtYourService.com 10 Country Map Of Panama
www.PanamaAtYourService.com 11 Chapter 1
The Nuts and Bolts of Travel in Panama – Taxis, Planes, Helicopters, Yachts, Rental Cars, Cell Phones
Hotels
The hotel business in Panama is booming and new hotels are opening on a regular basis. It is very important to make your hotel reservations well in advance of your trip to Panama. Check www.panamainfo.com for new hotel listings. Please see Appendix C of this e-book for a full list of recommended hotels in Panama. Hotels tend to fill up quickly in the high season from
December through April each year and during festivals and holidays.
Advanced reservations are highly recommended.
Apartment Rentals
Fully furnished apartment rentals are an increasingly popular option for those planning to stay in one place for one week or more. In some cases, nightly rates are offered. The advantage of renting a condo is the presence of a kitchen and units are generally much more spacious and comfortable than a hotel room. For one week stays or longer, a condo rental may be more affordable than a hotel.
The disadvantages of a rental vs. a hotel are that quality and cleanliness of furnishings and contents can vary widely. Also, services generally found at hotels (e.g. room service, travel concierge, daily maid service, etc.) may not
www.PanamaAtYourService.com 12 be available. Be sure to ask for a list of contents in the apartment and ask how often your apartment will be cleaned during your stay. Below is a list of companies offering short-term furnished rentals:
Panama Casa – Offers a wide selection of furnished rentals in central Panama City and a lesser selection in the beach and mountain areas of Panama. Panama: 507 264 5302 USA: 1 718 407 0665 Email: [email protected] Web: www.panamacasa.com
Panama Sol Realty – Offers a mixed selection of rentals in Panama City and on the Pacific Beaches near Coronado Coronado office: 507-240-1249 From the USA/Canada: 612-605-5823 Email: [email protected] Web: www.livinginpanamacity.com
Arriving in Panama
U.S. and Canadian citizens need only a valid passport to enter Panama.
Citizens of other countries should consult with the Panamanian consulate or embassy in their home country to obtain the latest information on entry requirements.
Most foreign citizens are allowed 90 days with a tourist visa and may apply for a 90-day extension from the Panamanian Government Agency known as
Immigracion and Naturalization. Applications can take several days to process and should be applied for well in advance of your tourist visa expiry date. According to the Immigration law implemented in August of 2008, here are the requirements for receiving a 90 day extension:
www.PanamaAtYourService.com 13 1. Request of the tourist visa extension
2. Copies of the passport with a minimum validity of three months
3. Copies of the plane ticket (electronic or printed)
4. Reservation of hotel (if applicable)
5. Justification of the motives for the visa extension
6. Proof of economic sustainability within the country by demonstrating access to no less than $500. Some of the forms of acceptable proof include:
- Certified check or bank draft to the name of the applicant
- Traveler’s check made out to the name of the applicant
- Certification from a bank with statements of last three months showing sufficient funds
- Credit card statement of last three months showing available credit
7. Affidavit of the person hosting the applicant (if applicable). In the case of an individual host, he or she should present his/her personal ID, a copy of a utility bill from the host person’s personal residence, banking certification, tax return with its Paz y Salvo, letter of work with last date on file from
Social Security, and sufficient funds to cover the cost of living of the applicant and repatriation if necessary.
In the case the host is a company, a letter of invitation, certification of company in the Public Registry, copies of the Notice of Operations, copies of the key of operation in the Colon Free Zone (if applicable), copies of payment receipts for the use of public utilities.
www.PanamaAtYourService.com 14 You must leave the country for at least 72 hours in order to re-enter the country and receive a new tourist card, or face fines and/or detainment when you attempt to depart with an expired tourist card.
Upon clearing customs in the Tocumen International Airport there is a taxi stand near the airport exit. Taxis cost $25 for the 20-minute taxi ride into
Panama City. Be sure your taxi takes the Corredor Sur expressway, which is much faster with far less traffic.
A handful of major rental car companies such as Budget, National and Thrifty have offices in the Tocumen International Airport and rent vehicles on demand. Rental car offices are also located in downtown Panama City.
Panama 101 Insider Tip – If you plan to rent a car for travel in Panama, you are better off taking a taxi from the airport to your hotel and renting a car the next day from a downtown car rental office. If you have never been to Panama, it can be confusing to drive from the airport to your hotel, even if you have a map. Also, taxis are a much easier and cheaper way to get around Panama City than driving a rental car. The driving in the city is very aggressive, one way streets are seldom marked, and there are very few signs to indicate where to go. We only recommend renting a car when you are ready to leave the city and head into the interior of Panama where the driving is more relaxed and the streets are easier to follow.
www.PanamaAtYourService.com 15 Cell Phones
Many people with cell phones complain that their “roaming service” does not work in Panama, even though their cell phone company insisted it would.
Renting a cell phone is possible in Panama although the shops that offer this service appear and disappear very frequently. If you did not bring your cell phone or it does not work, your best bet is to purchase a cell phone for about
$40.00 from Panafoto and various other cell phone retailers throughout
Panama.
If you purchase a pre-paid cell phone, you will need to buy pre-paid cell phone cards. Pre-paid cell phone cards are sold at most gas stations and convenience stores around the country (these stores are called “chinos” in
Panama because they are almost always run by Chinese people) and come in denominations of $5, $10, and $20. Users must scratch the back of their card to get the access number in order to use their phone. Although the pre- paid cards have instructions for use on the back, they are in Spanish and so are the voice prompts when you attempt to access your phone service. If you do not speak Spanish, it is best to ask the person who sells you the phone for assistance the first time.
There are three cell phone networks in Panama, MoviStar, Digicell and Cable and Wireless. Make sure you know which network your cell phone works on, so you can buy the appropriate pre-paid cards (MoviStar phone cards do not work on Cable and Wireless phones, and vice versa). Cell phone signal is
www.PanamaAtYourService.com 16 excellent throughout Panama except for very remote areas. Even small towns and islands in Panama usually receive a cell phone signal.
Panama 101 Insider Tip – Most cell phone companies frequently offer chances to double, triple or quadruple the number of minutes you get with your $5 or $10 pre-pay phone cards. Usually the more pre-paid cards you buy, the more minutes you get with each consecutive card. The phone company will notify you about the incentive and when it expires via text message to your phone. During a promotion, you may see kids in the streets of Panama City selling “Mas Movil” or “MoviStar” phone cards. If you see these kids, it is not a scam, you should stock up on phone cards and enter them into your phone before the specified deadline to get the incentive!
If you plan to move to Panama, you may want to sign a one-year contract and get a preferable cell phone plan. Getting a one-year plan can require a lengthy wait at cell phone company offices. You may also need proof of residency and other critical information in order to sign up for a long-term cell phone plan. There isn’t much difference between the various companies in terms of service or coverage so go with the one that offers the best plan at the time.
Transportation
Transportation service in Panama is affordable, efficient, and more reliable
www.PanamaAtYourService.com 17 than just about every other country in Central or South America. Roads are generally paved and well maintained, even in areas with small populations.
In particular, the ability to get around by plane for a low price makes the entire country of Panama conveniently available to residents and tourists alike. Panama’s remote beaches and islands, its modern capital city, and its lush sub-tropical highlands are all easily accessible and make the country as a whole a more attractive place to be.
Domestic Airlines
Aeroperlas
Panama City Office: (507) 315-7500
E-mail: [email protected]
Web: http://www.aeroperlas.com/
Air Panama
Panama City Office: (507) 316-9000
Email: [email protected]
Web: http://www.flyairpanama.com/
Within Panama, Aeroperlas is the most popular and widely recognized domestic airline. Aeroperlas offers regular flights to fifteen destinations, the most popular being Bocas Del Toro, David, Panama City, San Blas, and Isla
Contadora. Multiple flights per day are offered to top destinations like Bocas and David. One need not fly via Panama City in every case; Aeroperlas
www.PanamaAtYourService.com 18 offers direct flights from Bocas to David and vice versa for about $50. One- way flights between Panama City - David or Panama City – Bocas Del Toro are around $85 each way.
Domestic flights do not depart from the Tocumen International Airport; they depart from the domestic airport in Albrook, about 15 minutes northwest of
Panama City’s financial district.
Panama 101 Insider Tip – Both Air Panama and Aeroperlas have weight quotas for luggage carried by their passengers. At the time of writing, Air
Panama’s maximum weight per person was 25 pounds for check-in luggage and 6 pounds per person for carry-on luggage. They charge a fee of 1% of the ticket value for every additional pound you carry. If you are traveling as a couple, you can reduce or avoid this fee by splitting your heavy luggage between both travelers.
Special or Charter Flights: Aeroperlas offers national flight services throughout the Republic of Panama and some international flight services to
North, Central, South America and the Caribbean with aircraft capable of transporting 10 to 36-passengers. For more information on fares contact the
Aeroperlas Sales Department at: (507) 315-7570 or E-Mail: [email protected].
www.PanamaAtYourService.com 19 International Airlines
Copa Airlines
Panama City Office
Phone: (507) 217-COPA (2672) www.copaair.com
In addition to the major carriers, Copa Airlines (strategic ally of Continental
Airlines) is headquartered in Panama City and offers direct flights to 31 destinations in 20 different countries throughout the Western Hemisphere, including four U.S. cities.
Panama has positioned itself as the “Hub of the Americas” due to its strategic geographical location in the center of the Western Hemisphere and favorable year-round climate.
Copa Airline’s Destinations
Barranquilla, Colombia Medellin, Colombia
Bogotá, Colombia Mexico City, Mex.
Buenos Aires, Argentina Miami, Florida USA
Cali, Colombia New York, New York
Cancun, Mexico Orlando, Florida USA
Caracas, Venezuela Panama City, Panama
Cartagena, Colombia Port Au Prince, Haiti
www.PanamaAtYourService.com 20 Guatemala, Guatemala Quito, Ecuador
Guayaquil, Ecuador San José, Costa Rica
Havana, Cuba San Juan, Puerto Rico
Kingston, Jamaica San Salvador, El Salvador
Lima, Peru Santiago, Chile
Los Angeles, California Santo Domingo, Dominican Republic
Managua, Nicaragua Sao Paulo, Brazil
Montevideo, Uruguay Tegucigalpa, Honduras
American Airlines, Delta Airlines and KLM (a Dutch airline) also offer direct flights to Panama City.
Panama 101 Insider Tip – Save money by registering with Copa Air for their “E-rresistibles” program on www.copaair.com. This program offers web-only prices on last minute flights to all kinds of exotic destinations often at a fraction of the regular price. Your author once took an “E-rresistible” flight to San Andres, Colombia for $129 round trip!
Helicopters
A helicopter offers a unique bird’s eye view of Panama and can be an exciting way to explore the country. Private property owners in Panama City often fly helicopters to their weekend getaway homes and ranches. Helicopters are
www.PanamaAtYourService.com 21 easy to hire in Panama City through a couple of local operators.
Helipan Corporation
Telephone at (507) 315-0452 / 0453 http://www.helipan.com/english/tours/canal/
Yachts
The vast coastline of Panama is best explored by yacht. Panama’s many islands, on both the Caribbean and Pacific coasts, are ideal for private getaways or adventurous exploration. Fishing and diving are outstanding in
Panama, particularly amongst the islands of Panama. A yacht can be a fantastic way to maximize the unique beauty that only Panama offers.
Panama Yacht Tours
Telephone: (507) 263-5044
Fax: (507) 263-0712
E- mail: [email protected] http://www.panamayachtours.com/
Taxis
Taxis are most commonly used in the main cities of Panama, and are generally a safe and economical means of transportation. In Panama City, airport transfers are fixed at $25.00 one-way to downtown Panama City.
Shorter trips within the city start at $1.00 and increase depending on the
www.PanamaAtYourService.com 22 distance and number of passengers. Taxi rides are rarely more than $5.00 within Panama City. Rumors of a taxi fare increase have been around for quite awhile but for now, short trips start at $1.00 unless you have more than one passenger or you are travelling after midnight.
In smaller cities, shorter rides are usually a fixed rate and longer rides are negotiated in advance. In more rural areas where the distances are longer, fares increase accordingly. If in doubt, negotiate your fare in advance.
Taxi drivers often double as private chauffeurs and/or tour guides. Most taxi drivers will gladly negotiate hourly fares, which usually hover between $10 and $15 per hour. To flag a taxi anywhere in Panama, hold out your arm horizontally and wave downward with your hand.
Full-scale stretch limousine services were not available in Panama at the time of writing, although most four and five star hotels provide luxurious sedans available for hire from the hotel concierge.
Panama 101 Insider Tip – Judging taxi fares can be a major guessing game in Panama City. Here are the best rules of thumb: If the ride is very short (5 minutes or less) hand the driver $1 plus $.25 per additional passenger. If the ride is longer than 5 minutes, hand the driver two $1 bills or a $5 bill and wait for your change. The only times I have been overcharged by a taxi driver is when I ask “how much do I owe you” at the
www.PanamaAtYourService.com 23 end of the ride. When I just hand over the cash and wait for my change (as though I know exactly what the fare is), he always gives me the going rate!
At the time of writing, however, rumors were circulating that taxi fares in
Panama City were going to increase.
Car Rentals
Just about all the major international companies have rental car offices in
Panama. Offices are located at the Tocumen International Airport, at various locations in downtown Panama City, and at the domestic airport in David.
Recently car rental agencies have opened in Coronado and Pedasi.
Most companies have vehicles available for rent on-demand, although advanced reservations are a good idea to reduce check-in times and get special rates. For lesser-known and sometimes cheaper car rental companies, check the El Cangrejo District along Calle D between Manolo’s
Restaurant and Hotel Coral Suites.
Car rental rates vary, but compact cars are usually in the $30 - $40 range per day, with a discount for weekly rentals. 4 x 4 vehicles are more expensive, and usually cost between $80 and $100 per day. Below are three of the primary car rental agencies with offices in Panama. Make sure to ask about insurance before agreeing to the rates. Many agencies quote low rental rates, but inflate the cost of insurance.
www.PanamaAtYourService.com 24 Dollar Rent A Car Panama City Office Tel: 507.270.0355 Fax: 507.279.0535 Email: [email protected]
National Car Rental Panama City Office Tel: 507.265-3333 Fax: 507. 265-3232 Email: [email protected]
Thrifty Car Rental Panama City Office Tel: 507.264.2613 Fax: 507.264.7419 Email: [email protected]
Recommended Tour Operators
Extreme Panama Tours In the Camino de Cruces shopping center in El Dorado. Tel: 507.269.7326 | Cell: 507.655.7120 Fax: 507.360.2035 Email: [email protected] http://www.extremepanama.com
Ancon Expeditions In the business district around the corner from the Marriott Hotel Tel: 507 269.9415 Fax: 507.264.3713 Email: [email protected] http://www.anconexpeditions.com/
www.PanamaAtYourService.com 25 Chapter 2
Where To Live and Invest in Panama City – A Neighborhood By Neighborhood Breakdown
Panama City
Central Panama City
Panama City - An Overview
Many expats and retirees loathe the idea of relocating to a large city. The heat, traffic, and pollution may not be conducive for a tranquil, stress-free lifestyle. However, after three weeks of lying in a hammock, many would-be beach bums long for busy Italian restaurant, live Cuban salsa, or an evening of wine and jazz. Even if Panama City is not your final choice as a place to reside, this is Panama’s primary hub for business and transportation and it is
www.PanamaAtYourService.com 26 best to become familiar with what the city has to offer.
Panama City is the only place in Panama with true urban zest - the only real city in Panama. The wide range of fine restaurants, theatres, and nightclubs in Panama City can make it an exciting place to be. Panama's true Latin flare and cosmopolitan traits come alive in the evening and often last until dawn and beyond.
Add shopping centers, tropical parks, recreational facilities, modern hospitals, international schools and universities, and it becomes clear why many expatriates choose to settle here. No other city in Panama offers the same breadth or depth of entertainment and infrastructure, and Panama far outshines the other Central American capitals when it comes to cosmopolitan ambiance.
Panama City is a transport hub unlike any other city in the region and provides an excellent base to explore the rest of Panama, Latin America and the Caribbean. From Panama City, travelers can be in the Caribbean Isles of
Bocas Del Toro or David City, the capital of Chiriqui, in about an hour on any day of the week. In addition, the exotic islands of San Blas and the exclusive
Isla Contadora are less than 30 minutes by plane. (See Chapter 1 –
Arriving and Getting Around Panama for more information).
www.PanamaAtYourService.com 27 Nearly every city in Central America, including San Jose, Costa Rica, has regular connecting flights to Panama City via Copa Airlines. The Latin
American major capital cities such as Kingston, Havana, Mexico City, Buenos
Aires, Sao Paulo, Bogotá, Santiago, Lima, New York, Atlanta, Miami, Houston and Los Angeles, among others, are all directly accessible by plane from
Panama City. Recently, KLM Royal Dutch Airlines began offering direct flights to Panama City. Only Miami rivals Panama City as the transportation hub of
Latin America. For expats and retirees who intend to do a lot of traveling in their golden years, setting up a base in Panama City provides access to an entire world of possibilities.
The traffic and congestion of Panama City can be largely avoided by choosing the right part of town to reside. There are two strategies to consider to reduce your exposure to the less favorable elements of the city. The first strategy is to choose a nearby suburb, such as Clayton and Albrook in the
Panama Canal Zone, Cerro Azul just east of the city, or Casco Viejo, one of the quietest districts of them all. These neighborhoods are off the noisy public bus routes, and residents of these districts can largely avoid the intense rush hour traffic, and resulting air pollution.
The second strategy is to live right in the heart of Panama City, within close walking distance to the day-to-day requirements of life. The neighborhoods of El Cangrejo, La Cresta, Marbella, Bella Vista, Obarrio, Paitilla and San
Francisco are generally within walking distance to supermarkets, restaurants,
www.PanamaAtYourService.com 28 cafes, and parks. So long as you avoid the peak hours of traffic, the inner city districts of Panama City can be enjoyable places to live. By choosing a condo on a higher floor, most of the noise and pollution goes unnoticed.
Condos in these districts are also easier to rent due to the close proximity to major businesses like banks, law offices, retail and other commercial businesses.
Panama City Neighborhood Overviews
Casco Viejo
Casco Viejo has come a long way over the past decade or so as your author can personally attest. As recent as the year 2000, even the well lit and secured public plazas were unsafe after dark and the side streets were off
www.PanamaAtYourService.com 29 limits to anyone save the locals who lived there, day or night.
Today, several key buildings have been restored to resemble their original historical class, and the area now boasts trendy nightclubs, art galleries, and cafes, converting Casco Viejo into an art and entertainment district. The eccentric mix of Spanish and French architecture, which dates as far back as the 16th century, adds to the distinction of the neighborhood. Electrical lines are in the process of being buried underground and tasteful new signage enhances the restored flavour of this ancient Spanish colony. Local residents are not only tolerant of foreigners, they are generally friendly and welcoming, or at worst, indifferent.
Due to the fact that Casco Viejo has no commercial through roads, the neighborhood is charmed by the sounds of Latin salsa music, children’s laughter and the occasional street musician, which is a pleasant escape from the heavy commercial traffic that plagues the majority of Panama City.
Casco Viejo’s colonial plazas with its shady park benches are ideal restive areas for socializing or reading.
Once you stray off the principle arteries and restored plazas, Casco Viejo can still be somewhat dangerous and it is best not to wander aimlessly. Most visitors park near Parque Bolivar or Plaza Catedral and then stroll up toward the French Embassy for a spectacular view of the Panama Canal and Panama
City skyline.
www.PanamaAtYourService.com 30
The main drawback for permanent residency in Casco Viejo are the lack of nearby grocery stores, adequate parking, and the fact that the roadways exiting Casco Viejo are often clogged with traffic during peak hours.
Due to the special nature of Casco Viejo, unique investment opportunities exist to buy and restore buildings in this district. Interested readers should refer to Appendix A at the end of this book.
The Panama Canal Zone
The Canal Zone has received substantial press and publicity, but the area still has a long way to go before its value as an international haven for active
www.PanamaAtYourService.com 31 retirees and part-time international residents is fully realized.
The Panama Canal Zone represents approximately 7,000 buildings within
233,000 acres surrounding the shores of the Panama Canal. “The Zone” as it is sometimes called extends from Pacific to Caribbean coast, although most of the more actively developed parts of The Zone are nearer to Panama City on the Pacific side on both the north and south sides of the Panama Canal.
The infrastructure includes roads and highways, airports, electric services, water systems and sewage. The presence of shopping centers, schools, houses, offices, hospitals, medical facilities and recreational facilities such as tennis courts, golf courses, swimming pools and movie theatres creates enormous potential for recreational lifestyles and investment.
U.S. Military and Panama Canal Administration personnel occupied the
Panama Canal Zone until the entire area was reverted to Panamanian government control on January 1, 2000. The Panamanian government now controls the operation of the Canal itself and has formulated a plan for the area’s re-development. Much of the residential housing has been auctioned off to the public since 2000, and the commercial buildings are in the process of being leased to businesses.
Amador, Albrook, Clayton and Kobbe have so far attracted the most interest among residential real estate investors. These four areas are the closest to
Panama City and have thus received immediate attention from local and
www.PanamaAtYourService.com 32 foreign residents alike.
Amador encompasses 400 acres including three islands adjoined at the
Pacific mouth of the Panama Canal. This area has developed substantially since its reversion to Panamanian control with the construction of a promenade of new restaurants, nightclubs, a convention centre, and a marina capable of receiving cruise ships. Amador has been declared a special tourism zone granting a 20-year exemption on property taxes and a
15-year exemption on income taxes for businesses.
Clayton comprises 2,057 acres with 1,392 housing units, a hospital, schools, hotels, swimming pools and outdoor recreation areas. The housing in
Clayton has already been auctioned off to private owners, but there are many units presently for sale and in need of renovation. The City of
Knowledge, a specialized district for educational, technological and environmental research and development, is currently under development at
Clayton. In addition, several new residential developments are now in the planning and construction stages in Clayton.
Albrook was one of the first areas to be reverted to Panamanian control and has realized dramatic upgrades to the landscaping and appearance of this residential community. Albrook is a community of several hundred homes combined with adequate services to support permanent residency. Existing homes in Albrook are of a higher quality and larger size than those of
www.PanamaAtYourService.com 33 Clayton. New residential real estate projects are being developed in Albrook at price points on the high side of Panama’s price spectrum.
Albrook also comprises raw land with or without infrastructure for completion of low and medium density housing. Albrook has a brand new shopping center, 24 hour El Rey supermarket, a live jazz club, movie theatre, and other facilities making it unnecessary to enter the hustle of Panama City’s prime commercial districts.
Kobbe – 123 prime acres on the Pacific Coast of Panama, about 20 minutes west of Panama City. Previously a beach club and recreational area for the residents of the Panama Canal, new plans are underway for this area which should be of considerable interest to foreign tourists and real estate investors. Empresas Bern recently opened the Intercontinental Playa Bonita
Resort and Spa in the Kobbe area.
Nearby Howard, just to the west of Kobbe, was once a major U.S. air force base. The facility, which includes an airstrip capable of landing commercial jets and housing for thousands of administrative staff, has been turned over to a private UK firm called London and Regional, and will be converted into a commercial urban district with an investment of over $700 Million. The resulting increase in infrastructure developments will likely make the area to the west of the Panama Canal a much more convenient and modern place to live.
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The Panama Canal Zone offers significant lifestyle advantages over the rest of Panama City. These quiet, green suburban neighbourhoods are physically separated from the commercial hustle and bustle of Panama City. Traffic in these neighbourhoods is light, with shopping and restaurants nearby for convenience. Residential enclaves in the Canal Zone have landscaped yards, driveways, sidewalks, and other features that distinguish it from central
Panama City, which is more reminiscent of colonial Spain. The Canal Zone, which encompasses Amador and the new Causeway, provides an additional selection of new restaurants, bars and a marina, making it an attractive residential enclave all on its own.
The successful re-development of Albrook and Amador demonstrates only a fraction of the potential future development of the former U.S. Military and
Canal Personnel residences into permanent residential communities. A new bridge over the Panama Canal has been completed, which connects Clayton and Albrook to the Inter-American highway and the rest of Panama’s interior provinces. Investment in new infrastructure, the willingness of residents to beautify old structures, and the attractive business incentives presented by the Panama Canal Zone enhances the likelihood that the government’s goal of re-developing the area into a pleasant suburban and light commercial district will be achieved.
Housing in Albrook, Clayton, and Amador are especially good investments
www.PanamaAtYourService.com 35 with strong potential for rental income. It is anticipated that many of the workers assigned to contribute to the development of the Panama Canal expansion will want to live in the Panama Canal Zone for the ease of commute and for the quality of life it offers to the international resident.
New projects are popping up in Clayton and Albrook, although the days of purchasing auctioned property from the government at bargain basement prices is all but gone.
The main drawback to living in the Panama Canal Zone, compared to one of
Panama City’s inner city neighborhoods is that Canal Zone neighborhoods are not “walkable”. One must drive for even the most minor convenience like a coffee shop, restaurant, supermarket, or ATM. The other Panama City neighborhoods covered in this E-Book generally offer at least some conveniences within a short walking distance.
www.PanamaAtYourService.com 36 La Cresta
On the north side of Via Espana, inland from Bella Vista, lies a small residential district known as La Cresta. With its mix of luxury high-rise condominiums and large, Spanish-style single-family homes, La Cresta maintains a reputation as an eclectic neighborhood in Panama City. La
Cresta is quiet, centrally located, and nicely landscaped with three sets of grand forested stairways leading up from Via Espana. Property here can be on the expensive side, but with such a fine location and well-maintained residences, this area should not be overlooked by the prospective urban expat.
www.PanamaAtYourService.com 37 Paitilla
Panama City’s pinnacle of status and achievement, many Panamanians live in
Paitilla just for the privilege of saying so to their friends. Indeed, most of the residents are exceptionally wealthy and powerful and the area is home to some of the most luxurious high-rise penthouses in Latin America. Streets are well kept, traffic in the residential areas is kept to a minimum, and most buildings are fully equipped with swimming pools, saunas, gymnasiums and social areas.
Unfortunately, Paitilla has become so popular that many buildings are packed in next to each other, making privacy hard to come by and ocean views even more sparse. Buildings that once enjoyed dramatic ocean or city views have
www.PanamaAtYourService.com 38 since been blocked by newer buildings recently constructed in front of or beside them. Overall, Paitilla is still one of the more attractive neighborhoods in Panama City in which to live, and condo prices have recently become more affordable due to abundant supply of new condos in the nearby cluster of luxury towers known as Punta Pacifica.
Punta Pacifica
Move over Paitilla, here comes Punta Pacifica. After the demolition of the
Paitilla Airport immediately adjacent to Paitilla, the land was zoned for residential high-rise condos. Within a couple of years, towers grew like weeds and there are now about a dozen towers completed with more on the way. The likes of Trump Ocean Club, The Venetian, and Ocean Park are
www.PanamaAtYourService.com 39 currently or will be located in Punta Pacifica.
Prices in Punta Pacifica doubled between 2004 and 2006 and new projects like Trump are setting new price standards once again. As of March 2011, one would expect to pay about $200 per square foot for an ocean view condo in Punta Pacifica and over $400 per square foot in the Trump Ocean Club.
The advantages of Punta Pacifica are the near proximity of new and plentiful shopping and services (Multi-Plaza shopping center, Super 99 Supermarkets, and many other retailers are located in Punta Pacifica). Punta Pacifica is also easily accessed from the Corredor Sur, one of Panama City’s principal expressways. The near proximity of the new and modern John Hopkins private hospital rounds out the advantages of living in Punta Pacifica.
www.PanamaAtYourService.com 40 El Cangrejo
A complimentary balance of hotels, residential housing, high-rise apartments, shops, restaurants, cafes and lounges make El Cangrejo one of the coolest and most diverse neighborhoods in town. Many of Panama City’s students and young professionals are attracted to this district due to the close proximity of Panama’s National University and the reasonably low cost of housing. El Cangrejo’s main artery, Via Argentina, can be noisy and packed with traffic, but imminent side streets in El Cangrejo tend to be peaceful and nicely landscaped. Prices for apartments in El Cangrejo have risen steadily and bargains are becoming harder to come by. Still, the area is generally overlooked by Panama’s wealthy class in favor of Punta Pacifica, Paitilla,
Marbella and Obarrio.
www.PanamaAtYourService.com 41
Panama 101 Insider Tip – If you long for a juicy steak, the best in Panama without a doubt can be found at Martin Fierro in El Cangrejo, located one block from the Hotel Grenada. With its Argentine theme, Martin Fierro is not formal and rarely full, so reservations are probably not necessary. If you are a steak lover, make sure you order the domestic Filete as opposed to the
U.S. imported beef which is higher priced and poorer quality. For about $12
(salad bar included) this will be the best steak you will ever find in Panama, and a fine selection of wine will round out the occasion.
Obarrio
Squeezed between Calle 50 and Via Espana (two major commercial
www.PanamaAtYourService.com 42 roadways), Obarrio is part residential high-rise, part low-rise density.
Obarrio is home to most of Panama City’s specialty shops including an excellent delicatessen and wine store. Fine jewelers, designer apparel and other up-scale retailers are found in Obarrio, not to mention one of Panama’s better sushi restaurants, Sushi Itto. Inland from the Bay, condos in Obarrio are not as pricey as Paitilla or Marbella, yet fine city views can still be found from many of Obarrio’s high-rise condominiums. Obarrio is, by many standards, a “walkable” neighborhood. Restaurants, supermarkets, banks and most other conveniences are all located within a few blocks. It’s central location and proximity to bank office towers makes it an ideal location for rental properties.
San Francisco
Of all of Panama City’s central neighborhoods, the most reasonably priced single-family homes and residential condos are found in San Francisco. San
Francisco sprawls for several blocks east of the banking district and is conveniently accessed via the Corridor Sur, Panama City’s new expressway or Via Espana a major commercial roadway. The nearby Atlapa Convention
Center often host live entertainment and international conventions.
Condo towers have sprung up like dandelions as of late in San Francisco.
How many of them are actually occupied remains to be seen. Still, with the majority of today’s speculative real estate investment seemingly centered on
Punta Pacifica and Avenida Balboa, condo owners looking for value shouldn’t
www.PanamaAtYourService.com 43 overlook San Francisco. Overall, San Francisco offers a unique urban lifestyle among Panama’s middle class.
Marbella
Home to a wide range of fine restaurants, prominent hotels, and a variety of embassies and international businesses, Marbella is one of the most popular neighborhoods in Panama City for expats and attracts a significant share of foreign residents. With Chinese, Korean, Argentine, Indian, Lebanese,
Greek, Italian, and Panamanian restaurants all available within walking distance, Marbella is the undisputed dining capital of Panama.
A foray of new nightclubs and lounges attract plenty of nighttime action. So
www.PanamaAtYourService.com 44 much so, in fact, that many Marbella residents complain about loud music thumping their windows until the wee hours of dawn. Nighttime noise can be a serious drawback for anyone choosing to live in Marbella who doesn’t plan on bouncing around with teens and twenty-somethings each and every weekend.
Costa del Este
With its palm tree-lined boulevards and ultra white, super-modern condo towers, Costa Del Este is very Miami-esque. You almost expect to see Don
Johnson from Miami Vice pull into the parking garage of each and every building in this neighborhood. Still, with its striking ocean views and convenient access to Corredor Sur, Costa del Este has attracted a substantial amount of international buyers and investors.
The drawback of Costa del Este is the relative distance to urban conveniences like shops and cafes. Living here means driving for even the most basic of needs. Convenience stores may open up in the area as the whole neighborhood is very recently under construction. The ghettos to the immediate east of Costa del Este and relative filth of the coastline during low tide may also deter some prospective residents of Costa del Este.
Overall, Panama City is an attractive city to live in and an ideal base to explore the rest of the country. Panama City also serves as a convenient and inexpensive gateway to the rest of Latin America and the Caribbean. While
www.PanamaAtYourService.com 45 Panama can feel overbearing and boisterous at first, the urban Latin ambiance can be fun, and provide a unique combination of activity and leisure difficult to find anywhere else in the world.
www.PanamaAtYourService.com 46 Chapter 3
Where To Live and Invest Outside Panama City – Exploring Beautiful Beaches and Cool Highlands
The following locations are popular destinations among expats for living and investing outside Panama City (listed in no particular order).
Bocas Del Toro
Panama's Caribbean playground, known by the locals simply as “Bocas”, offers a laid-back atmosphere and burgeoning tourism industry. Originally, it was Bocas that put Panama on the map as an off-the-beaten track vacation destination and is especially popular with surfers, sailors and sun-seekers.
www.PanamaAtYourService.com 47 Most travel around Bocas is by boat via the calm and clear waters that engulf the area's many islands. Island hopping, as dreamy as it sounds, can be pleasant while the sun shines, but it is not so pleasant in the rain.
Bocas' airport makes it easily accessible from Panama City in about one hour by plane. Drive time from Panama City is roughly 8 hours to Almirante and then another 45 minutes by water taxi. If you plan to transport a car onto
Isla Colon (Bocas’ most populated island, you will need to get in touch with the ferry service which transports vehicles to the island. It is not common for tourists to transport vehicles to Bocas since there are limited road ways and transport by hiring boats to wherever you want to go is more convenient.
The advantages of Bocas are its many secluded beaches, wild jungle terrain, outstanding surfing, marinas for sailors, kayaking, fishing, snorkeling and the availability of a host of other water related activities. Seafood here can be quite tasty, and a wide range of new restaurants offering Indian, German,
Italian and other cuisines are now open for business.
Bocas does make for an excellent vacation getaway. It offers far more outdoor activities than any of Panama’s other destinations and the strong influx of tourists helps provide the base for an emerging expat community.
For nature lovers, wilderness seekers, and beach bummers, surfers and sailors, Bocas Del Toro is a must-see.
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The disadvantages are more acute the longer one stays in Bocas. In Bocas, it rains frequently and since one can never be quite sure if or when it will rain, planning and preparing for rain becomes an ongoing task. Cleanliness and sanitation are neglected as most garbage and sewage ends up in the ocean untreated, with limited currents to carry in fresh water. High-speed
Internet can be difficult to obtain, medical facilities are somewhat rudimentary, and grocery selection is poor. These disadvantages are easy to overlook in the short-term, but for many aging expats and retirees looking to enhance their comforts rather than retract them, Bocas may not suffice over the long-term.
Real Estate In Bocas – Buyer Beware
It is now easy to find a small patch of land in Bocas to call your own.
Developers have relentlessly carved the coastline into bite-sized pieces for their foreign counterparts to purchase. Most property in Bocas is offered as
"right of possession" whereby buyers are sold the right to possess the property, but clear title to property in Bocas (or any island in Panama) is generally not available. Currently, there is some controversy regarding land and property that was transferred to foreign buyers illegally by the previous municipal government. Purchasing real estate in Bocas is risky business and adequate legal counsel may not always be enough to fully protect your property rights. See the chapter in this book entitled “Buying Real Estate
www.PanamaAtYourService.com 49 in Panama” for more information on how to engage in right of possession land transactions and how this differs from titled property.
In Bocas Del Toro, property with running water, electricity, Internet access and other basic infrastructure sells at a premium, and rightly so. Many expats buy land here with a vision of paradise, only to discover that the costs to build a livable dwelling were way more than they had imagined.
Delivering construction supplies by boat, obtaining permits from the overwhelmed government agencies, and other unforeseen obstacles can make it difficult and costly to build in Bocas. Readers should be aware of these challenges before shelling out thousands of dollars to claim their slice.
Panama 101 Insider Tip – First time visitors to Bocas Del Toro should not miss Isla Zapatilla. Most of the tour promoters don’t mention these idyllic islands because they are further from town and more costly to reach.
However, the extra time is well worth the visit as the scenery is extraordinary and the snorkeling is among the best in the area. Dolphins are often spotted on the way so keep your eyes peeled!
Sora
About 75 minutes west of Panama City lies a gorgeous range of mountains with a year round spring-like climate similar to that of Boquete and Volcan on the west end of the country. The small hamlet of Sora first made its claim to
www.PanamaAtYourService.com 50 fame after the Altos Del Maria development was launched with much fervor on EscapeArtist.com in 2002.
The pride of Sora are its fine ocean views from landscaped building sites, which have been popular for those looking for a country home in a peaceful setting. The Pacific Coast beaches are just a 20 minute drive down the mountain road, making it a popular setting for a second home. The town of
Sora itself has little to offer save for a couple of basic restaurants and convenience stores, and some rural Panamanian charm. Along the Inter-
American Highway, just 20 minutes down the hill from Sora are facilities like supermarkets, auto mechanics, banks, and the rest of the basics one needs to survive in today's modern age. The close proximity of Panama City makes day trips to the city feasible.
www.PanamaAtYourService.com 51 El Valle
El Valle (pronounced El Vaiyeh) is substantially more quaint and clean than
Sora and has long served as a cool weekend getaway for Panama's wealthy elite. El Valle is more town-like than Sora and a few of the well-groomed streets and vistas are reminiscent of alpine Switzerland or Germany. Real estate here is priced at a premium compared with most of Panama, especially for property close to the center of town.
The drawbacks of El Valle and Sora are similar. Both are small towns – villages actually, and the permanent international community is still very small. Very few modern amenities exist here, so most people drive to
Panama City for their dose of fine dining and entertainment. Over the next
www.PanamaAtYourService.com 52 several years, this area has strong potential to flourish as an expat hideaway... a trend that has already begun. For people who prefer country living in a safe and healthy, albeit quiet, environment where the climate is fresh all year round, both Sora and El Valle are solid options.
Boquete
Boquete went from sleepy coffee country village to international retirement haven in about two years flat. This area now attracts the lion’s share of foreign residents who can stand to live away from the beach, and a good portion of those who can’t. Many people who are dead set on finding a beach property still end up in Boquete due to the fine mountain air, lush panoramic vistas and peaceful nature of the inhabitants. Land prices have multiplied
www.PanamaAtYourService.com 53 several times over the past few years with prices so high that agriculture no longer makes financial sense and even those with an affordable retirement home in mind may be disappointed due to the high prices.
From a lifestyle perspective, Boquete has a lot to offer. The natural basics are unsurpassed… clean air, gorgeous climate, and quality local inhabitants.
However, many people realize that there really isn’t much to do here over the long-term and boredom can begin to set in. For those who would like to run a bed and breakfast, a lodge, or a restaurant, opportunities abound. But on the social side, even the liveliest bar in Boquete shuts down around 10 PM or midnight on weekends. Community events for expats are few and far between. The activity list in Boquete may change in the future as more international residents move in, but don’t come to Boquete looking for a wonderland full of social diversions.
The good news is, the vacation and seasonal rental market is picking up in
Boquete and it is getting easier to rent your vacation home while you are not using it. This makes it easy to justify Boquete as a place to live part-time, like a breath of fresh air between workouts. A vacation home in Boquete combines exceptionally well with a place on the beach in Panama, or in
Panama City.
Panama 101 Insider Tip – By far the best breakfast in Boquete can be found at Punta Del Encuentro (translation: meeting point), just a few blocks
www.PanamaAtYourService.com 54 south of the town central park (ask any local and they will point you in the right direction). Enjoy delicious fried potatoes, a basket of fresh tropical fruit, locally grown coffee, French toast, pancakes… you name it. Olga, the owner, is one of the most sincere people on Earth. She leaves bananas near the dining area to attract the many species of birds that inhabit the area.
Coronado – San Carlos
This area represents a long stretch of residential beach developments and resorts beginning about one hour west of Panama City and continuing for an additional 45 minute drive west along the Inter-American highway. As these are the closest recreational beaches to Panama City, Panama’s wealthy class have gobbled up most of the beachfront and real estate prices tend to be
www.PanamaAtYourService.com 55 much higher than in the rest of the country (though still a bargain when compared with plush areas of Spain, Hawaii, or Florida, for example).
On the plus side, many of the homes along this stretch of beach offer high- levels of privacy and exclusivity. For people looking for large estate homes with swimming pools and tennis courts, Coronado and the surrounding area is the best place to look. Recently, a plethora of ocean view condo towers have come on the market, mostly still in pre-construction phase. Buyers should be cautious before committing to a purchase, since many towers are nothing more than an artist rendering and actualizing the construction is several important steps away. Ask about development approvals, building permits and other infrastructure that the current development site may or may not have in place. While your friendly sales agent might insist that construction will begin “in a few weeks” that time frame could quickly become “a few years” if the developer is not properly funded, or if key approvals have not been obtained from the government.
Since the international tourism market still barely recognizes Panama, this area does not feel like a Puerto Vallarta, Waikiki or Copacabana. There are currently only a handful of large resorts spaced several miles apart
(Coronado Hotel, Decameron Resort, Buenaventura and Playa Blanca to name a few) and several new “planned” residential communities. At this stage of the growth phase, readers are encouraged to buy something already existing or do a lot of due diligence before committing to a project that is still
www.PanamaAtYourService.com 56 under construction.
Along the Pacific Beaches just west of Panama City, it is not unrealistic to expect empty beaches during the weekdays and a sparse number of visitors on the weekends. Festivals and special holidays are a different story, of course, when many of the beaches fill up with vacationing Panamanian families. If you are looking for that moonlit stroll along an empty beach, five minutes from your private beachfront estate home, this is the place for you assuming your investment budget exceeds seven figures ($1,000,000+).
Nice two bedroom condos can still be found for around $200,000.
Panama 101 Insider Tip – If you are just looking to spend a day at the beach, lounge in a hammock, eat fresh fish, and enjoy a calm Pacific Ocean on a stunning white sand beach, Santa Clara is your finest option. About 20 minutes past Coronado heading west on the Interamerican highway (90 minutes west of Panama City), you will see a small sign pointing to Santa
Clara. Just follow the road to the end, and pay the small parking fee, which should include access to the showers for a rinse after your swim. Hammocks and shaded thatch huts are a few dollars extra but well worth the investment. The fried fish served at the restaurant in front of the beach is very tasty and beer is just 75 cents per bottle. Enjoy!
In conclusion, as a person who has moved to new cities and countries several times over the years, your author believes that a new place is generally as
www.PanamaAtYourService.com 57 appealing as you make it. It can take time – many months or even years – to start to feel comfortable in your new surroundings and make new friends.
People who move to a foreign country often form natural bonds with others who have done the same, which is one of the main rewards of an expat lifestyle.
www.PanamaAtYourService.com 58 Chapter 4
The Basics For Expats – Language, Society, Visas and Banking
Most of the information circulating around the Internet and travel magazines focuses relentlessly on the outstanding advantages Panama offers to foreigners. In one lazy hour of Internet surfing, the average person can come across the same headlines from several dozen different sources: “The best place to retire”, “The next Costa Rica”, and “Undiscovered beach front” are driven through the media like a well-rehearsed chorus.
It is easy to overlook the work involved in moving to a new country and the unique challenges you are likely to face. Living and investing in Panama is a serious undertaking. It is best to know the whole story before you jump in – the good, the bad and the ugly. This chapter offers a balanced perspective of the basics of living in Panama, including the primary challenges and how to overcome them.
The Language Barrier
Many people who consider moving to Panama seriously underestimate the challenges presented by the language barrier for one of the following reasons:
They believe the publicity web sites claiming that there is more English spoken in Panama than in Miami (definitely not true)
www.PanamaAtYourService.com 59 They figure they can "get by without Spanish” (possible but not easy and definitely not as gratifying)
They believe it will be easy to “pick up a little Spanish” by going about their daily routine (possible but not as easy as they think)
While it is true that most business professionals in Panama speak English, you won't be dealing with them on a daily basis. Taxi drivers, shop keepers, and restaurant staff usually speak from zero to very little English.
As obvious as it might sound, very few people realize that basic activities such as hooking up utilities, hiring plumbers, ordering a pizza, and other everyday tasks require you to not only speak some Spanish, but also to understand the person on the other end of the telephone line without using hand signals.
Despite what many people from the southern United States may assume, living in Panama is not at all like living in Texas, Florida, or California, regardless of how many Spanish-speaking immigrants might live there!
Successful Learning Strategies
Just like most things in life, learning something new is very daunting at first.
While there are many instructional tapes, CDs, books, and classes available so you can learn from home or on the freeway, you are better off spending two or three months in a Spanish-speaking country if you truly want to speak
www.PanamaAtYourService.com 60 Spanish. Learning to speak Spanish while living in an English-speaking country is like trying to learn how to swim by watching it on TV. The only way to learn to swim is by jumping in the water.
If you are not able to study while living in a Spanish-speaking country, at least make sure that you choose a course that is full-immersion (i.e. no
English whatsoever is spoken in class). Picking up enough Spanish to hold a decent conversation means two to three months of intensive study, either in a language school, with a friend who doesn’t speak English, or by hiring a private tutor.
The best learning strategy by far is to study with a Spanish speaking person and try to hold a real conversation using a dictionary and a note pad (no cheating by switching to English). Select a new topic each day and just start asking your Spanish-speaking friend questions out of a phrase book. Listen to the answers, and go over any words you don’t understand. This will be much more fun and enjoyable and it won’t feel like you’re studying for a mid- term exam.
Panama Language Schools
ILERI- Spanish Language School Located in Panama City Tel: 507.260-4424 Email: [email protected] www.ileripanama.com
www.PanamaAtYourService.com 61 Spanish Panama Half a block from Via Argentina in El Cangrejo, Panama City Tel: 507.213.3121 Email: [email protected] www.spanishpanama.com
Spanish by the Sea Located in Bocas del Toro Tel: 507.757.9518 Email: [email protected] www.spanishbythesea.com
The Fruits of Your Labor
Imagine if you wanted to discuss local politics with your neighbor, address an artist about her work in a local art gallery, attend a Spanish-speaking theater, or flirt with members of the opposite sex. For the most part, truly enjoying your new life in Panama will require you to learn Spanish.
In fact, learning Spanish will provide you with a richer lifestyle by helping you meet new people, and enable you to feel comfortable at Spanish-speaking social events. Best of all, learning a new language is generally associated with superior mental health and physical longevity. The full-immersion style of learning can be discouraging at first, but far more rewarding in the end.
Buena Suerte!
The Cost of Living
The days of $50,000 beachfront homes and 25-cent piña coladas have been gone from Panama longer than the final Panamanian dictator, Manuel
Noriega (ousted in 1989). However, most people from North America and
www.PanamaAtYourService.com 62 Europe will experience a substantial reduction in their cost of living by moving to Panama.
There are a few items that are not overly cheap in Panama. These include electricity (the determinant factor being how much you use your air conditioner), gasoline for automobiles, imported construction materials, and any imported food item. Expect to pay the same price or more for Frosted
Flakes breakfast cereal, Tide dishwashing detergent, or Pringles potato chips, for example.
High-speed Internet and Cable TV are usually the same or slightly more expensive than the U.S., weighing in at around $50 per month each. The precious few items that are really cheap are mostly bad for you like beer
($3.50 per six pack), cigarettes ($1.00 per pack), hard liquor ($4.50 per liter of rum), and soda (0.25 cents per can).
A modern three-bedroom home in Boquete on a half-acre lot will run
$250,000+. A three bedroom, 2000 sq. ft. beachfront condo in Coronado is currently listed at $295,000. An older two-bedroom condo in a prime district of downtown Panama City will sell for around $195,000. These are based on prices of actual properties for sale at the time of writing (March 2011). The accompanying monthly expenses such as condo fees, property taxes, landscaping, waste and recycling are substantially cheaper in Panama than in
North America or Europe.
www.PanamaAtYourService.com 63 Globally, Panama should be considered a bargain, especially when compared with real estate in the traditional tropical retirement and vacation havens such as Mexico, Spain, Costa Rica and the Caribbean where ocean view homes often start at $1 Million and work their way up.
Local produce and meats are generally cheaper in Panama than most of the
Western world, which also makes restaurants in Panama quite reasonable. A fine steak dinner for two with wine in Panama City might reach $30.00.
Entry to a live jazz concert is usually less than $10. A professional haircut might cost $5 for men, and only slightly more for women.
The big savings come in the services sector including massage therapy, physical therapy, medical services, insurance, housekeeping, construction and trade, auto repairs and landscapers, which are usually 30% to 50% cheaper than in Canada or the U.S. It is true that Panama can add a unique dimension to your lifestyle at minimal cost.
Environmental Conditions
The Weather
Contrary to most postcard images on the Internet, Panama does not have perfect weather all year round. Depending on what you are accustomed to,
Panama will sometimes be too hot, too humid, too rainy, or a mixture of all three.
www.PanamaAtYourService.com 64 At sea level on the Pacific side, Panama has two seasons, dry and wet. Dry begins in early December and ends sometime in May. The rains then start gradually, culminating into major downpours for much of November. For most people, Panama’s weather at sea level is fine if you are on a beach or near a pool, and under an umbrella with cold cervezas an arms’ length away.
However, if you decide to take a walk, a jog, a bike ride, or any other outdoor activity, the heat at sea level can be stifling, especially in the afternoon. If you wish to exercise, it is best to do so early in the morning or near sunset. Most of Panama City survives with air-conditioning, which is an absolute necessity for all but the most acclimatized souls.
Bocas Del Toro and the rest of the Caribbean coast in Panama receive far more rain than the rest of the country. Visitors are wise to take an umbrella on that snorkeling adventure in Bocas. Boquete receives light afternoon showers during the rainy season and the same goes for El Valle and Sora.
Panama’s average temperatures in the highlands such as Boquete or El Valle is much cooler, though heat in homes is still rarely required, even at night.
Overall, the weather is much more appealing than a Canadian blizzard, but readers should realize that living in the tropics is not always paradise.
Pollution
Panama City suffers the worst pollution of anywhere else in Panama. The pollution that is most disturbing is not that of a typical big city. The city itself is actually quite clean, with constant sea breezes cleaning the air and
www.PanamaAtYourService.com 65 reasonably efficient waste disposal services provided by the municipality. In
Panama City, the most challenging pollution to deal with is sound pollution caused by the relentless honking of horns by taxi drivers, buses and just about every driver that gets stuck in the ongoing traffic jam that is Panama
City.
While the incessant honking does not generally disturb the drivers, who are committing the act from sealed, soundproof vehicles, it can be mentally destructive to the inner city residents and pedestrians of Panama City. While honking can understandably be a necessary tool for safe driving, it is completely overdone in Panama City and not likely to change anytime soon.
The best strategy, if you prefer the urban comforts of the city, is to choose a quiet suburb or high floor of a high-rise condo tower and avoid rush hour traffic.
Deforestation
Fortunately, the Panamanian countryside is sparsely populated and, for the most part, Panama’s vast beaches and mountainside towns are much cleaner than in the rest of Central America. The real damage outside of the city (and this pertains to most countries in Latin America) comes from the slash and burn techniques used by the farmers to clear bushes, trees and any other lifelike vegetation for agricultural purposes or cattle grazing. Not only are these techniques responsible for a smelly haze that lingers in the air throughout much of the dry season in Panama, the slash and burn technique
www.PanamaAtYourService.com 66 is the primary culprit for the accelerating depletion of the planet’s precious tropical rainforests.
The Panamanian farmers themselves cannot shoulder too much of the blame of course, as they have very few clear alternatives. The Panamanian government, a more obvious scapegoat, has done a poor job of educating the farmers about the long-term destruction caused by slash and burn, and a worse job of enforcing the boundaries of the “protected” national parks. The result is that very little primary forest remains in Panama and what is left
(mostly in the Darien Province) is rapidly meeting its demise. The last time your author visited Darien, he was passed by several trucks hauling enormous logs felled from what remains of the old-growth forests in one of the world’s most delicate ecosystems.
A few organizations based in Panama are working toward awareness of sustainable agricultural practices throughout Latin America. Readers who wish to take action should have no difficulty finding organizations to support by visiting the City of Knowledge Technopark in the Panama Canal Zone at
Clayton, or by contacting the Smithsonian Tropical Research Institute which has a significant number of staff and large research facilities in Panama.
Society
Socially, the Panamanian people are generally very welcoming and if not for their kindness, your author would have returned to his chilly home in
www.PanamaAtYourService.com 67 Western Canada long ago. Panamanians are very hospitable to strangers, extremely fun loving, and pleasantly easy-going. They believe in accepting most outsiders with open arms and the Panamanian people are definitely a big plus for anyone considering relocating to Panama. If anything, the light- heartedness of the Panamanian people make some of the challenges with moving abroad much easier to accept.
The “Mañana” Syndrome
Most people are aware of the old adage, “mañana” (meaning “tomorrow”) for which Latin American people are infamous. Mañana refers to the likelihood that any task that is supposed to be finished today, will not be finished until tomorrow, and the same explanation is acceptable tomorrow also, which can prolong the completion of any task indefinitely.
Panamanians deserve a better reputation for efficiency than much of Latin
America, but the mañana syndrome is still inescapable. While the slower pace of life in Panama can be welcoming and enjoyable for a time, the general inability to get anything done on time or on budget can cause serious frustrations.
Panamanians are far more sophisticated than a simple “mañana” would dictate, and are capable of any number of colorful and creative explanations for why something is not or cannot be completed. Instead of “mañana”, many Panamanians will begin their sincere explanation for lateness with “Lo
www.PanamaAtYourService.com 68 que pasa es que…” or “Eso es lo que pasa…” which literally means, “Well, this is what happened…”. When these words are spoken, the listener should prepare for a sincere and lengthy excuse, which may or may not resemble the truth. A good rule of thumb is the longer the explanation, the more distant you are from achieving the results you want.
The problem gets worse when there is a chain of people involved in getting something accomplished whereby one person cannot complete his/her task if the people before them have not completed their task, and so on. In a society that functions this way, with everyone waiting for at least one other person, efficiency breaks down considerably.
Foreigners should expect the lengthiest delays from the Panamanian government. The phone (including cell phone), electric and water companies in Panama are also among the slowest to deal with, unless you are late on your payments in which case they are quick to cut off your service. Land and infrastructure registry and approval agencies, especially La Reforma Agraria
(land reform), Catastro (economy and finance) and ANAM (environmental management) are seriously understaffed, underpaid and under motivated to help your cause.
The mañana syndrome is especially apparent for foreigners who do not have family members or friends working within certain organizations to call on for favors. The best solution to prevent mañana syndrome from afflicting you is
www.PanamaAtYourService.com 69 to contact a Panamanian that you know personally who might know someone who knows someone who works at the organization you are dealing with, or contact someone who you know who has personal influence, preferably political influence. If the person you know can’t help you, try someone else.
You don’t have to know a Panamanian person very well for favors to work for you, you need only ask the right person and keep asking them and eventually your requests will be handled. Some retirees may be content to live in a country where things don’t happen very fast, but more ambitious types should consider mentally increasing deadlines and budgets so they are not disappointed by the inevitable delays and cost overruns.
Panama 101 Insider Tip – Corruption is a fact of life in Panama and sometimes a little grease can go a long way. “Greasing the wheel” (i.e. offering a bribe) may help your situation but don’t expect to walk into a government office with a wad of cash and walk out with your documents stamped and signed. The subtleties and peculiarities of corruption are beyond the scope of this book, but your best bet is to work through a local
Panamanian who you trust who has the inside contacts to get the job done.
Most processes take a long time in Panama which means lack of grease is probably not the reason your procedure is taking so long, the reason is that is how long it really takes! Grease should only be attempted after all other methods have been exhausted.
www.PanamaAtYourService.com 70 Immigration and Visas
Note: This is not legal advice; readers should consult an attorney before applying for a visa.
Panama’s government revised the immigration law and implemented the changes in August of 2008. Although some of the more popular visas were changed or removed, there are still a number of excellent visa programs for retirees and investors. There are several additional visas available for many different pursuits and circumstances including but not limited to the following purposes: religious, family reunification, international executives related to the banking sector, Colon Free Trade zone and other special economic zones, agricultural investment purposes, reforestation investment purposes, special interest such as for sport, artistic, or humanitarian reasons, starting a small business, and many other potential visa options.
It’s worth noting that the reforestation visa requirement now involves an
$80,000 investment but also a 5 hectare minimum land purchase, thus making it much more difficult for most investors to qualify. In addition, the small business investor minimum investment was raised to a minimum of
$160,000 and a myriad of paperwork is needed to qualify, including proof of employing five Panamanian employees receiving at least minimum wage.
It is essential that readers seek the advice of a qualified attorney before preparing to apply for an immigrant visa. Recommended law firms are
www.PanamaAtYourService.com 71 included at the end of this E-Book in the Business and Services Directory. A summary of the most popular visas and their requirements are listed below.
General Requirements For All Visas
Applicants must be 18 years of age or older to apply for a visa. Spouses and children may obtain a visa by applying as dependents of the primary applicant. Spouses should bring a recently issued Marriage Certificate and children under the age of 18 will need to bring recently issued Birth Certificates.
All documents must be obtained within two months of a visa application and passports must have one year or more left prior to expiry in order to qualify for a visa.
All overseas documents to be presented to the Panamanian Government must be authenticated by a Notary or by a Panamanian Consulate, or Apostilled (another form of notarization).
Recipients of investor or pensioner visas are not automatically able to work in Panama, they will have to apply separately for a work permit or use a corporation as a working entity (some restrictions apply).
Visa applicants will require a clean police record issued from their last place of residence.
All visa applicants must obtain a health certificate and HIV test from a hospital or clinic in Panama.
All visas require six passport-size photographs.
There may be additional requirements and recommendations and all visa applications should be made through a qualified Panamanian attorney.
Common Types of Residency Visas
Self Economic Solvency Visa
Individuals who invest at least US$300,000 in real estate or a time deposit (otherwise known as a “certificate of deposit"), or a combination of both may
www.PanamaAtYourService.com 72 qualify for this visa. Below is a summary of the different options available under the Self Economic Solvency Visa.
Option 1
Invest at least US$300,000 in a time deposit for a fixed period of at least three years. The time deposit must be in the personal name of the primary applicant (it can not be in the name of a foundation, corporation, or trust). Copies of the time deposit certificate authenticated by the bank will be required. Depending on bank policy, monies may be removed before the end of the term of the deposit, however, this would legally void your visa and the bank would impose penalties (if they allow the removal at all).
Option 2
Invest at least US$300,000 in titled real estate in Panama. The title may be in the personal name of the applicant or under the name of a Private Interest Foundation established in Panama. In the case of the latter, the primary applicant must be the Founder and/or the Beneficiaries are the dependents of the applicant. To qualify for this visa based on a registered property value of $300,000, the property must be free of liens and encumbrances (ie. no mortgage), however, if the applicant can prove he or she has paid at least $300,000 toward the purchase of the property, the balance may be financed by obtaining a mortgage through a local bank.
Option 3
A mix of the above two above options is acceptable. In all three options, however, the applicant must also produce National paz y salvo of income in favor of the applicant essentially proving there are no outstanding personal taxes owed to Panama at the time of the application.
Retired Stockholder Visa
Applicants under this visa must make sufficient investment into the National Bank of Panama to earn $2000 per month in interest income for a minimum fixed period of five years.
Requirements:
1. Banking certification from the National Bank of Panama that demonstrates the total amount of the deposit, the interest it generates, the duration of the time deposit, and showing it free of obligations.
www.PanamaAtYourService.com 73 2. Copies authenticated by the bank of the certificate of the fixed time deposit.
3. National Paz y Salvo of income from the Republic of Panama
Pensioner Visa
The Pensioner Visa is by far the most popular for foreign retirees. Applicants can qualify for this visa if they receive a pension from a government entity or private company of US$1000 or more per month. A reduced income requirement of $750 per month will be acceptable if the applicant has also invested at least $100,000 into real estate property in Panama.
Requirements:
1. Certification letter confirming receipt of more than $1000 per month for life from the appropriate government authority, agency, or private enterprise.
2. Payment of $250 per dependent applying in conjunction with the primary applicant.
3. Certificate of Public Registration of real estate (if applicable).
4. If the pension or retirement fund is from a private enterprise, the following documents are also necessary:
www.PanamaAtYourService.com 74 o letter from the administration of the foreign pension, trust, fund, bank,
or insurance agency certifying that the funds do exist with the amount
of the specified payment being guaranteed for life
o certification of existence and scope of the business offering the
pension or fund
o copy of proof of payment or statement from the bank receiving the
payments
o national paz y salvo of income from the Republic of Panama
Pensioner Visa Benefits:
15% off hospital bills (if no insurance applies) 10% off prescription medicines 20% off medical consultations 15% off dental and eye exams One time Duty tax exemption for household goods up to a total of $10,000 Duty exemption for importing a new car every two years. 50% off entertainment anywhere in the country (movies, concerts, sports) 50% off hotel stays from Monday through Thursday 30% off hotel stays from Friday through Sunday 30% off bus, boat, and train fares 25% off airline tickets 20% off professional and technical services 50% reduction in closing costs for home loans 25% discounts on utility bills 25% off at restaurants 15% off at fast-food restaurants
Residency Visa Tax Related Benefits
The pensions and/or retirement income that foreign residents of Panama receive from abroad is not subject to any tax by Panama, nor are recipients obliged to declare such income to Panama.
www.PanamaAtYourService.com 75 The interest generated by savings accounts (i.e. Time Deposits, Regular Savings Accounts) are not taxed by Panama.
The Republic of Panama only taxes income that is generated within the territory of the Republic of Panama. Foreign source income is not taxable in Panama.
An authenticated letter from the organization providing the pension along with a recent pay stub will be required to apply for the Pensioner’s Visa, along with the general requirements for all visas (see above).
Banking
Opening a bank account is not a simple procedure in Panama. In the wake of increasing pressure from the Organization for Economic Co-operation and
Development (OECD), Panama has been forced to tighten its requirements for opening bank accounts in an effort to maintain its reputation as a well- regulated financial center. Pressure was further increased after September
11, 2001 to ensure that Panama is working to prevent money laundering and other criminal activities related to offshore banking such as terrorism.
While Panama has maintained its strict privacy laws for account holders, there are strict procedures related to opening a bank account in Panama.
Walking in to a bank off the street in an effort to open an account will be a complete waste of your time unless you have an appointment with someone at the bank and you have the appropriate documents at the ready.
The main requirements for opening a bank account in Panama are reference letters, which must be delivered in their original form (not copies) and
www.PanamaAtYourService.com 76 addressed to the Panamanian bank you intend to apply for an account. The reference letter must show the letterhead of the organization issuing the letter and include the original signature and contact details of the person writing the letter. At least one reference letter from your bank in your home country will be required, and unless you have a good contact at the bank, you will need a second reference letter from a licensed professional in
Panama (usually your lawyer).
Additional reference letters and documents may be required, depending on the individual requirements of each bank, so you should check with the bank first. Typically, a personal interview with an official at the bank is also required in order to open an account. The best way to approach a bank is through your attorney or someone else you know, who will likely have existing business relationships and contacts within the bank to help smooth the procedure.
Taxes
Panama is considered an offshore jurisdiction because there are no taxes applied to foreign-sourced income. This can be a major advantage for foreigners who have income sources from their home country as they will not be taxed by Panama on their foreign-source income even if they are resident in Panama. Costa Rica, for example, recently imposed a law that will tax foreign-sourced income earned by Costa Rican residents, including pension income.
www.PanamaAtYourService.com 77
U.S. and most E.U. citizens have to pay tax on their worldwide income, regardless of where they live. Non-resident Canadian and UK citizens do not pay tax on their worldwide income, only on the income earned within their national territory. Panamanian accountants do not generally give tax advice in relation to a person’s home country tax policies; you should always consult a tax advisor in your home country to determine what affect your business activities in Panama may have on your taxable income at home.
Personal Income Tax
If you do earn income in Panama, the personal income tax rate varies depending on your income. The personal tax rate ranges from a minimum of
7% for the first $9,000, and increases gradually to a maximum rate of 27%.
Personal taxes in Panama work similar to most Western systems in that you may deduct expenses related to income generation if you are self-employed.
Corporate Income Tax
The corporate tax rate in Panama is a flat rate of 30% of net income.
Companies that earn less than $150,000 per year may be considered a small business and pay tax based on the personal tax rate as outlined above.
Property Transfer Tax
The seller of a property in Panama must pay two separate taxes, a transfer tax of 2% of either the sale price or the revised registered value of the
www.PanamaAtYourService.com 78 property - whichever is higher, and a 3% tax on the gross sale price of the property for a total of 5% of the sale price. If the property is owned by a corporation, the seller may avoid paying a transfer tax by selling the shares of the company rather than the property itself, however, there is an obligatory 5% tax on the gross sale value of shares that may be incurred by the seller, depending on the way the transaction is structured.
Withholding Tax
A withholding tax is charged for payments made to foreign (non-
Panamanian) persons or corporations. Panamanian companies or persons issuing a payment to a foreign recipient must withhold 15% of the total and pay this amount in taxes.
Tax on Rental Income
Rental income is treated the same as personal income (if the property is owned by an individual) or corporate income (if the property is owned by a corporation). Areas of Panama that have been designated as tourism development zones, including Casco Viejo in Panama City, are exempt from tax on rental income and many other forms of tax.
Capital Gains Tax
In most cases, capital gains is treated as regular income and is taxed at whatever personal or corporate tax rate that has been applied for the given tax year when the gain was realized.
www.PanamaAtYourService.com 79
Property Tax
There is no property tax assessed on properties with a registered value of less than $30,000. Panama has recently extended its 20 year property tax exemption law, however, it is up to the buyer to ensure that the proper documentation has been obtained to enforce the exemption. The property tax exemption law is constantly being revised, discontinued, and re-instated by the Panamanian government so check for the most recent version of the law. Your attorney in Panama should be able to assist in obtaining the proper documentation should you qualify for a tax exemption.
If your property does not qualify for an exemption, the following scale applies to properties with a registered value greater than $30,000:
$30,000 to $50,000 – 1.75% of the registered value per annum
$50,000 to $75,000 – 1.95% of the registered value per annum
More than $75,000 – 2.1% of the registered value per annum
When a property is sold, the number of years remaining on the property tax exemption is transferred to the new buyer. The information in this book is not legal nor tax advice and, while the author has done his best to produce accurate information, the author nor any of his affiliated companies shall be responsible for the accuracy of this information. Readers are encouraged to consult appropriate professionals to prepare legal and tax documentation.
www.PanamaAtYourService.com 80 Chapter 5
Buying Real Estate in Panama The Smart Way – Finding and Securing Your Property
Aside from the usual real estate investment pitfalls, investing in a foreign country like Panama brings along a host of new challenges. Fortunately by following a few simple guidelines, savvy buyers can cut their costs and dramatically reduce their risk.
Use a local middleman.
If you want a local price, make contact with a local person. As simple as it sounds, many foreign investors still end up buying real estate from foreign real estate agents at marked up prices.
A rule of thumb used by expert investors is “if the ad is in English, and the realtor is in English, the price will be in English too”. Nearly all Panamanian people believe foreigners will gladly pay a premium over the local price. If a seller receives a call from someone who speaks English or from someone who speaks Spanish with an accent, the asking price almost always goes up… sometimes by as much as double! It is best to get a referral from someone you can trust so you know the person you are dealing with will not mark up the price.
In Panama, it is very common for real estate agents to try to mark up the asking price to include their commission, rather than agree to a fixed
www.PanamaAtYourService.com 81 percentage of the sale price. Sometimes, Panamanian agents will mark up the price 25% to 50% hoping to make a big score off a foolish gringo. The best way to counter this is to offer well below the asking price and ask for a counter offer with the commission explicitly specified by the seller. An offer of 75% - 85% of the asking price is not unreasonable. Don’t expect your
Panamanian agent to work for free, just try to be upfront and clear about how much the commission will be so you can be more certain you are not paying a hefty surcharge. Typical commissions are 5% for urban properties and 5% to 10% for rural property and farmland.
Do a background check on the person or business you are in contact with by asking for references. Take the time to compare with at least two real estate agents. If you don't speak Spanish, it might be best to hire a translator to accompany you. Just about any Panamanian who speaks English will act as a translator in their free time for a nominal hourly fee.
Panama 101 Insider Tip – Even if you feel the asking price is well within your range to pay, you should never offer the full asking price in Panama. If offered the full asking price, many Panamanian property owners will feel they were asking too little to begin with and will promptly change their mind about selling for the original asking price. All too often we have seen buyers offer the full asking price and local sellers responding with a new, increased price!
www.PanamaAtYourService.com 82 Investing in Developments and Subdivisions
Many developers own a gorgeous piece of property and promise to add infrastructure and amenities as per their computerized master plan.
However, many would-be developers have never developed anything in
Panama (or, in some cases, ever in their lives) and have misjudged the complications of successfully developing real estate in Panama. The result is that many project developers go bankrupt, encounter legal or political trouble, or just run off with their buyers' deposits.
A Panamanian developer with an established track record can be less risky because the developer is familiar with the local politics and able to pull the right strings to get things done. Again, “track record” does not refer to a fancy brochure and a slick web site. Ask to see previous developments completed by the organization.
When investing in a development in its early stages, try to reduce your risk by reducing the amount of your deposit until the developer has completed the infrastructure. Another risk reduction strategy would be to ask that your deposit be held in an escrow account (see Escrow Services below) or with an attorney in trust until the conditions of the sale have been honored.
Be aware of price increase clauses in the sale contract for many real estate developments. This clause is standard in most “Promise To Purchase” contracts for new developments in pre-construction, and often stipulates that
www.PanamaAtYourService.com 83 the developer can opt to raise the agreed price a certain percentage (usually
5% to 6%) if construction costs increase throughout the duration of the project. At the time of purchase, buyers may be able to negotiate to remove this clause or reduce the percentage expressed in the contract, but if left to the end, the developers may often enforce this clause, forcing you to pay the full increased percentage.
Property Rights in Panama
This section gives the reader a basic understanding of land ownership rights in Panama and how to increase the security of your real estate investment.
Basically, there are two forms of ownership to become familiar with, “Titled
Ownership” and “Right of Possession”.
Titled Ownership
In Panama, owners of titled property are recorded in the Registro Publico
(Public Registry), a centralized database containing all of the titled property in Panama and the respective owners of each property.
Titled property offers basically the same rights offered in most modern, democratic countries around the world. One who owns titled property in
Panama has indisputable rights to the property, which cannot be legally seized, claimed, or stolen from the owner. An individual person (including foreign nationals), or a legal entity such as a corporation, can own property in Panama. Regardless of who owns a property in Panama, rights to titled
www.PanamaAtYourService.com 84 property are backed by the Constitution of Panama, and those rights are enforceable by law. The best way to ensure that your property is titled, is to deal with a reputable attorney who can review the documents provided by the seller and advise you accordingly.
How To Tell If The Property Is Titled
The easiest way to tell if a property is titled is to get the registration number
(finca number) assigned to it by the Registro Publico. Using the registration number, anyone can go to the Registro Publico and determine who owns the property. Panama’s Registro Publico can be searched on the Internet at https://www.registro-publico.gob.pa/
Simply put, if a property is not recorded in the Registro Publico with its own distinct registration number, it is not titled. If the property is not titled, you are probably dealing with right of possession ownership (see Right of
Possession in this section below).
The only risk foreign buyers run with titled land is that old, pre-Reforma
Agraria (pre-1970) titles, especially very old titles dating before 1950, may conflict with newer titles issued by the Reforma Agraria. In some cases, titles that were issued by the Reforma Agraria after 1970 can overlap with another, older title. Although very rare, there is no easy solution if this happens after the land purchase. Buyers may try a friendly settlement, or the issue might get tied up in court. The best protection is to get title
www.PanamaAtYourService.com 85 insurance in Panama from a US based company such as Stewarts or First
American Title.
Right of Possession
Right of possession ownership is different from titled ownership. Right of possession ownership was designed by the Panamanian government to encourage farmers to access and use government land located in the more remote parts of the country. Farmers who began to utilize such land are able to make a right of possession claim through a Panamanian government agency known as the Reforma Agraria. The person who has made the claim is registered and documented to avoid conflicts with future claims. Such rights are enforceable by law, but can be disputed if it is deemed by the courts that the person who originally claimed the land had abandoned or neglected the land.
Case Example of a Right of Possession Conflict
Assume a piece of land that was claimed and registered in the Reforma
Agraria by Jose Chavez, has been sitting vacant for several years. Don
Quan, a nearby farmer, needs the land to expand his farm. Since the land is vacant, with no owner in sight, Don begins to farm Jose’s land. Jose returns three years later to begin using his land. Don claims the right of possession, since he has been using the land, and the land was previously neglected.
The issue goes to the courts to decide who retains the right of possession.
www.PanamaAtYourService.com 86
The Main Risk With Right of Possession
The problem, especially for foreigners, is that once a legal claim has been filed the case can be delayed for months or even years before a dispute is resolved. Legal fees can get expensive, and the land cannot be used or sold until the dispute has been resolved. With titled property, the likelihood of a claim is very remote and more easily resolved.
Property Ownership in Special Areas
Sometimes, Panamanians claim to have “right of possession” land in areas that do not fall within the Reforma Agraria’s jurisdiction such as islands, national parks, beachfront/oceanfront property, and insular areas within eight kilometers from Panama’s national borders. Property in these special areas generally cannot be titled, unless the property already has a title from a previous era in which case true ownership has been “grandfathered”.
Ownership rights to property in these special areas are managed by the
Panamanian government through an agency known as Catastro, not the
Reforma Agraria (which governs “Right of Possession”), and special conditions apply to getting a title or a “concession”. A concession may be granted by Catastro, which authorizes a specific land uses such as a house, hotel, or marina. Obtaining a concession involves a formal government approval, which serves to establish zoning controls within restrictive areas.
www.PanamaAtYourService.com 87
22 Meters and 200 Meters From High Tide
In Panama land within 22 meters of high tide cannot be titled (unless special authorization is granted by the municipality, or if the title was already registered to include this area).
The Panamanian government has recently passed a new Law 71 governing beachfront property ownership. At the time of writing in March 2010, this law had yet to take formal effect, but it looked very likely that the law would be in effect relatively soon.
The new law enables owners to title beachfront property between 22 meter s from high tide and 200 meters from high tide. The process to obtain title to this area of beachfront was still not 100% clear. Most sources we spoke to indicated that the safest and easiest way to obtain title was through a government sponsored entity known as PRONAT. PRONAT has been working its way around Panama surveying untitled (right of possession) property, and submitting the land survey for official title status. The Panamanian government has decided that title is in its best interest since titled property can be taxed and right of possession land is not taxed. Now, PRONAT will presumably be used to begin the titling process for any remaining untitled beachfront property – including island property.
Our sources also indicate that it is difficult to predict when, where, how, or
www.PanamaAtYourService.com 88 who will be doing the surveying of various parts of beachfront land in
Panama and how to ensure that your right of possession land will be included in the process. There is such a rush of interested parties that getting information about PRONAT’s schedule is very difficult, especially with the new law in its infancy stage. Alternatives exist to submit one’s own survey to be titled and not wait for PRONAT but applicant’s should have an “in the know” legal or political contact to have any hope for rapid success.
A Warning About Beachfront and Island Property
Until the new law governing beachfront land was passed, Panamanian law stated that a foreigner could not own entire islands, parts of islands, or property within 8 kilometers from the national borderlines.
Now that the new law has been passed, many foreigners are likely to get duped into the idea that it will be “easy” to get their land titled so they should buy right of possession land.
At this stage of the game, your author does not see how the new law has eliminated the risks of buying right of possession land in Panama. There is still no guarantee that you will have the right documentation to get your land titled, nor how long it will take. In addition, as part of the new law, the government has introduced a tax structure to force right of possession holders to pay heavy fees to title their beachfront or island property.
www.PanamaAtYourService.com 89 As reported by La Prensa, Panama’s largest newspaper, on December 25,
2009, this table demonstrates the amount an owner would have to pay to title their land, based on the area where the land is located:
National/Marine Parks
Land in National Parks and Marine Parks is governed through the National
Environmental Agency (ANAM). Such property may come with a right of possession status that has been certified by ANAM. There are limited opportunities to get a title, and additional restrictions for use may apply.
www.PanamaAtYourService.com 90 Property Ownership Guide For Foreign Buyers
Property Location Possible Types of Buyer Considerations Ownership
Mainland (not within Most properties are If titled, this is a 8 kilometers from titled but may still be straightforward real national border or right of possession. If estate transaction. If within the boundaries property is right of right of possession, of a National Park) possession, it can be foreigners should make titled by current owner a Promesa de Compra- through a legal process Venta contract to buy and then sold to a the property after the foreign buyer after title current owner has is received. received his/her title.
Island property or Most likely right of Buyers are strongly land between 22 possession unless the encouraged to engage meters and 200 title is very old. The competent legal advice meters from high property may be titled when purchasing this under the new law 71. type of property. tide. Exceptions include land in Maritime/National Parks where ANAM is the authority and will certify the right of possession. Municipalities may also issue certificates for island and beachfront property.
Within 8 kilometers May be Titled or Right of Foreigners are advised from a national Possession. Panama’s not to purchase within border Constitution prohibits this boundary. foreigners to buy within 8kms from border.
Beachfront or ocean Property within 22 Properties with existing front property within meters of high tide is titles or concessions 22 meters from high public land and can be from Catastro are the tide. owned. This area is only acceptable forms of governed by concession ownership. Right of
www.PanamaAtYourService.com 91 from Catastro only, possession may be unless the title has acceptable if within a already been Maritime or National registered in the Park and if certified by Registro Publico. ANAM, but is generally not advisable. Property between 22 meters and 200 meters from high tide may be issued a title by Catastro. Exceptions include land in Maritime/National Parks where ANAM may certify the right of possession.
Infrastructure
That beautiful piece of beachfront may look gorgeous, but if it's going to cost substantial amounts of money to do anything other than look at it from a boat, it could be a bad investment and/or a big headache.
Road, electricity, and water can be costly to develop and buyers should not assume that neighbors will be willing to share the bill. It is best to get cost estimates from a construction company for roadways and sewage. If the property is within a municipality, the water company and electric company should provide you quotes for free. Internet and telephone services can also be costly to bring in, depending on how far the property is from the nearest installation of the particular utility you wish to install. Also, it is wise to make sure there is cell phone signal. In Panama, cell phone companies are now offering data plans so having cell signal also most likely means Internet
www.PanamaAtYourService.com 92 access.
Consider road access and find out if the road access is a public road or
“servidumbre” (easement). If road access is via a servidumbre, make sure the survey indicates the existence and location of the passage. A servidumbre is usually more restrictive than a public road in terms of the type of development allowable on properties without public road access. If all the property has for road access is a servidumbre, the land owner may not be able to do any high-density developments until the road access is upgraded. Many other factors may affect what can and cannot be done with a property and the proper authorities should be consulted before entering into a major investment.
Choosing An Attorney
This step is critical. Your lawyer in Panama can be your best friend or your worst nightmare. Always remember that in Panama, all lawyers were not created equal. Some lawyers are incompetent, and yet others quite reputable and informative. Fumble your choice of lawyer, and the rest of your efforts toward living and investing in Panama are wasted.
The best advice is, "Don't go cheap". Trying to save money by hiring a discount lawyer can be a recipe for disaster. When choosing a lawyer, don't go with a cousin of the coffee shop owner or a friend of the hotel desk clerk, as these friendly recommendations often lead you to lesser-known attorneys.
www.PanamaAtYourService.com 93 It is safer to go with an established law firm with offices in David or Panama
City. Unfortunately, “customer service” is not a regular part of the vocabulary of most Panamanian attorneys. It is up to you to follow up on your case continuously with regular phone calls to your attorney, otherwise your file can sit at the bottom of the pile long forgotten.
Use of Escrow Services in Panama
Several organizations are now offering “escrow” services in Panama. Escrow services are poorly regulated in Panama with no clear restrictions or protection mechanisms in place as you might find in North America or
Europe. One should be cautious before handing funds over to these “escrow” services. If any part of the transaction seems suspicious, check with your
Embassy to see if there have been previous complaints or just back out of the deal altogether. In some transactions, your risk is reduced by giving your deposit directly to the seller where it can be easily tracked and proven in court, as opposed to a fly-by-night escrow service who may run off with your money without a trace. Use your best judgment, and if in doubt, check with your Embassy or find out if the firm is a member of the American
Chamber of Commerce & Industry in Panama
(http://www.panamcham.com/)
Formation and Use of a Panamanian Corporation
Corporations are unique in Panama, mainly because they do not have to pay income tax unless they generate income from within Panamanian territory.
www.PanamaAtYourService.com 94 Stated another way, income generated by a Panamanian corporation from outside the national borders of Panama are exempt from income taxes.
To form a corporation, Panamanian law requires three Directors, which may be natural persons or corporate entities. Only a Panamanian lawyer can form a corporation and he/she will require a copy of your passport and money for the legal and government fees in order to form a corporation. Corporations must have three Directors, usually a President, Secretary and Treasurer. In some cases, a law firm may provide Nominee Directors for the formation of a corporation, and the shares will be issued to the shareholders along with undated letters of resignation from the Nominee Directors. The shares of a corporation may be issued to the Bearer or to the name of a person or company.
Foreign nationals may put ownership of their titled property under their personal name or under the name of a corporation that they control (a
Panamanian or foreign corporation). A corporation can provide additional privacy to the owner, particularly if shares are issued in bearer form. By holding bearer shares of a Panamanian corporation, it is very difficult for anyone to determine who the owners are due to Panama’s well-established privacy laws.
A Panamanian corporation can be an excellent vehicle for owning real estate or other assets due to the anonymity offered by using nominee directors and
www.PanamaAtYourService.com 95 bearer shares. In this manner, the true owner of a property is not listed in the Public Registry. Another big advantage of owning real estate with a corporation is the ease with which the assets can be transferred to another family member should the owner die. When a foreign owner of property in
Panama dies, his or her heirs have to undertake a lengthy (1-3 years) and difficult process in order to claim rights to the asset, whereas with a corporation, the bylaws can specifically address the issue in the event of the owner’s death.
On the downside, a corporation can cost $800 to $1500 to form, plus an additional $500 - $750 per year to maintain. For lower priced properties, owning through a corporation can drive up the overall cost of ownership.
One should consult a tax attorney to determine the most appropriate methods for each case and resulting tax implications, both in Panama and the tax jurisdiction of your home country.
Title Insurance
Stewart Title Insurance and First American Title may provide title insurance depending on the circumstances, though it is not a requirement for buying and selling real estate in Panama.
The First American Corporation Corporate Headquarters: 1 First American Way Santa Ana, California 92707 714-800-3000 800-854-3643 www.firstam.com
www.PanamaAtYourService.com 96 Stewart Title Guaranty Company Corporate Headquarters: 1980 Post Oak Boulevard, Suite 800 Houston, Texas 77056 800-STEWART 800-783-9278 www.stewart.com
Financing and Closing Procedures
Financing can be challenging to arrange in Panama, especially if you are not a holder of a permanent Panamanian residency visa. Banks consider foreign residents to be more risky than local residents because local Panamanian banks have a more difficult time recovering their money if a foreigner defaults on his or her loan.
A few banks in Panama do provide mortgages for non-resident buyers with sufficient proof of income. HSBC and ScotiaBank have offered some of the most favorable terms to foreigners, which usually involve a 20% to 40% down payment depending on the financial qualifications of the mortgage applicant. Be forewarned that the paperwork to obtain a mortgage in
Panama can be time consuming to complete and many foreigners prefer to arrange the financing from their home country where they already have established credit relationships with financial institutions. In addition, banks in Panama usually require borrowers to obtain a life insurance policy to cover the mortgage should the owner die and be unable to service the debt.
While seller financing should not be ruled out, buyers should be very cautious
www.PanamaAtYourService.com 97 and ensure that contracts are properly drafted, signed, and notarized by a
Public Notary. Buyers should realize that if the seller decides not to sell after a partial payment has been made, recovery of the money paid can be a difficult procedure.
Closing procedures are fairly straightforward in Panama. Most contracts require a minimum deposit of 10% paid to the seller, or to be held by an attorney or real estate agent in trust. While there are no laws governing escrow or trust accounts as in the U.S. and Canada, some attorneys and real estate agents can hold a deposit for the purposes of a transaction via a notarized contract. As foreign issued checks often take 20 - 30 days or more to clear in Panama, a more common method of payment requires the buyer to wire transfer the money. The money can be transferred to the buyer’s own bank account in Panama, or to the account of an attorney or real estate agent to be held in trust prior to closing.
Final payment should be transferred to the seller via an irrevocable letter of payment, which is a letter issued by the buyer’s bank indicating that a certain amount of funds is on hand to close the transaction and the funds will be dispersed to the seller as soon as the bank is presented with the registered public deed transferring title to the buyer. Unless otherwise agreed, the seller pays the transfer tax and the buyer pays for the legal and registration costs of the property.
www.PanamaAtYourService.com 98 In conclusion, Panama provides secure property rights to foreigners and
Panamanians alike and most real estate transactions are relatively straightforward. Caution should be used when purchasing property in any of
Panama’s special areas, and competent legal representation is highly recommended in every case. By adjusting to Panama’s legal system and social customs, foreign investors can participate in a unique opportunity to buy and sell real estate in Panama, one of the most politically stable and democratic nations in Latin America.
Panama 101 Insider Tip - Presenting yourself as a “cash buyer” can improve your negotiating power in a real estate transaction, even more so in
Panama than in other countries. If you are in a position to do so, state the fact that you are a cash buyer along with your offer to purchase. Presenting yourself as a cash buyer negates any of the potential delays a seller might face if financing is required to close the sale, and the seller may accept a lower sale price if they believe the money is ready and waiting. This strategy is even more effective in Panama than elsewhere due to the general assumption that any kind of financing arrangements will be slow and difficult to process.
www.PanamaAtYourService.com 99 Chapter 6
Rental Income and Property Management - How to Earn a Return on Your Real Estate Investment
1. Where To Look For Rental Properties in Panama
As obvious as it sounds, "Location, Location, Location" is as important in
Panama as anywhere else. Here are the areas of Panama with the best potential for rental income and examples of fully furnished properties recently rented on a short-term basis (three months, or less):
Bocas Del Toro - 2 Br Beach Villa rents for $700 - $1000 per week, sale price $175,000
Downtown Panama City - 2 Br Condo in Obarrio rents for $1500 per month, sale price $195,000
Casco Viejo - 2 Br Restored Apartment (furnished) rents for $1500 per month, sale price $245,000
Isla Contadora - 2 Br Villa rents for $1500 per week, sale price $275,000
Boquete - 2 Br Highland Home in Volcancito rents for $1200 per month, sale price $250,000
Coronado - 3 Br Beach Condo rents for $1500 per week, sale price
$280,000
Sora - 2 Br Highland Home rents for $600 per month, sale price $150,000
Note: The rental rates quoted above are for short terms (three months or less) in fully furnished properties constructed to modern standards. Annual
www.PanamaAtYourService.com 100 rental rates for unfurnished properties that are rented for one year or more generally hover between 8% - 12% of the market value of the property.
Occupancy rates vary widely, depending heavily on the effectiveness of the owner to advertise his or her property and very little if any data is collected to provide any accurate estimates of vacancy or rental rates.
Average Monthly Expenses For A Two-Bedroom Condo in Panama City
Variable Costs Electric $75 - $150/mo if occupied Water $15 - $20/mo if occupied Maid Service $30 per week if occupied One month rent for one year lease or 20% of gross rent if rented for terms shorter than six Property Mgt. Fees months
Fixed Costs Phone $25 per month Internet $50 per month Cable TV $50 per month Condo Fees $100 - $250 per month
Total Fixed Costs $2700 - $3400 per year
2. Positioning Your Property in the Marketplace
There is currently a lack of available rentals in Panama, which has pushed up the rental rates significantly over the past three years. As more and more high-rise towers near completion, more units may enter the rental market and bring the rental rates back down to earth. Most of the rental properties being advertised in Panama City are new or almost new and in prime locations with relatively high rental rates in the $2000 to $4000 per month
www.PanamaAtYourService.com 101 range. There is a serious lack of more affordable apartments for rent (under
$1000 per month for a two bedroom would be considered more affordable in
Panama City).
By putting extra effort into the quality and comfort of a property, owners not only increase its re-sale value but also dramatically increase their rental rates. To separate a property from the pack, dress up the interior of the property with modern amenities and luxurious options like attractive furniture, high-speed Internet, satellite TV, modern air conditioners, and regular maid service (include things like a blender, corkscrew, and full kitchen utensils). While this strategy requires a substantially higher capital outlay, owners should more than compensate in the long run with increased rental rates and appreciation of the value of their property. Owners should charge tenants a hefty damage deposit to help protect the contents of their property (a damage deposit on a furnished property should equal the total amount of rent to be paid by the tenant for the entire term OR one month’s rent, which ever is lower).
It is usually best to offer weekly, monthly and yearly rates, with discounts for longer-term tenants. Offering nightly rentals is usually not worth the effort.
If a tenant is booked for only one night, it could block the unit from being rented to a longer-term tenant and reduce the overall occupancy rate.
Outside Panama City the rental market is less developed. Property
www.PanamaAtYourService.com 102 management companies are often unavailable and renting your place in places like Boquete, Coronado, Bocas or Sora usually involves word-of-mouth and posting flyers around town. Talk to real estate brokers and other expats living in these areas to get a feel for how much properties will rent for and how easy or difficult it will be to find tenants.
3. Farm Income
If purchasing land, farm income can be good option especially if you can lease the land to a farmer and collect a flat fee per month. Running your own profitable farm can be very difficult in Panama unless you are willing to exert a full time effort into overseeing the farm’s activities, or you have international buyers that are willing to pay a premium for your product. In other words, don't expect a fat check at the end of the month by turning the land over to experienced Panamanian farmers. It is more likely that they will be asking you for more money to buy seed, tools and other materials that make the investment a losing proposition. There are very few “cash crops” currently being grown in Panama. Be sure to do ample market research before buying a farm and expecting lucrative revenues from specialty exports.
4. Advertising
Successful advertising can make the difference between an empty rental property and a full one. The Internet is a powerful medium for advertising, though the results can often be unpredictable and servicing half-hearted
www.PanamaAtYourService.com 103 inquiries is time-consuming. Advertising on web sites such as Viviun.com,
Escapeartist.com, Panamainfo.com, and Panamaatyourservice.com, as well as the use of pay-per-click advertising on Google.com and VRBO.com, can be effective methods of advertising on the Internet.
Word-of-mouth advertising among family and friends can also be effective as well as notifying local real estate agents and property managers in Panama.
Overall, owners should anticipate a considerable level of vacancy unless a rigorous advertising and promotional campaign is in place.
The Challenges of Generating Rental Income in Panama
Renting a house, condo or villa in Panama can generate a substantial return on investment, or at the very least, cover the costs to maintain the property.
However, readers should beware that renting property in Panama can be difficult for the following reasons:
Panama is Still “Undiscovered”
The full strength of the international vacation market has not hit Panama as it has in the more established vacation destinations like Mexico, Costa Rica or
Belize. Demand for vacation rentals has been increasing over the past few years in Panama, especially in Bocas Del Toro, Boquete, the Coronado area beaches and Panama City. Further increases are expected over the next few years as Panama emerges as a more mainstream vacation/winter destination. Instead of expecting waves of tourists demanding your rental, it
www.PanamaAtYourService.com 104 might be wiser to buy with the intention of renting the property to family and friends or retaining the property for personal use until the international market for rentals in Panama becomes more established.
Property Management Services are Undeveloped
There is a lack of professional property management services available in
Panama and competent property managers can be difficult to find. Many clients entrust a local Panamanian friend to manage their property part-time, often leading to unpredictable results.
www.PanamaAtYourService.com 105 Chapter 7
Finding Real Estate “Off The Beaten Track” - Six Spots Overlooked By the Speculators
Panama's current hot spots for real estate investing, most notably Panama
City, Bocas Del Toro, Boquete, Coronado area Pacific beaches, Sora, and Isla
Contadora, have experienced steep price appreciation over the past three to five years. Most of the new investments in hotels, restaurants and other tourist related infrastructure have occurred in these areas and any Internet search for "Panama Real Estate" will most likely be swamped with offers from one of these existing hot spots.
However, there are a few areas with excellent "hot spot" potential that have so far been overlooked by the developers and real estate speculators. These areas are not currently plastered over the Internet, but they do possess appealing characteristics and are very likely to increase in popularity in the near future. These are the places one should look for bargain real estate in
Panama and are not listed in order of importance:
www.PanamaAtYourService.com 106 1. Penonome
When your author first came to Panama in the year 2000, he was drawn by the friendly people, the laid-back lifestyle, the variety of activities and exciting destinations to explore. Since then, many of Panama’s most attractive areas for lifestyle have become much more expensive, with housing and land prices rivaling or even exceeding the prices for similar properties in the U.S.
There is one exception however, sitting right under everyone’s nose and minding its own business: Penonome. Penonome is the folklore capital of
Panama and currently offers some of the most attractive real estate investment opportunities in the country. Penonome affords a peaceful
www.PanamaAtYourService.com 107 country lifestyle at rock bottom prices. If you thought you missed the boat on Panama and can no longer afford a good life here, think again, Penonome might be your ticket.
Penonome is close to everything yet a world away. A medium sized city by
Panamanian standards, Penonome is a comfortable 90 minute drive along the
PanAmerican highway from Panama City. Penonome is about 25 minutes from the most exclusive white sand beach resorts in Panama, including Playa
Blanca (with one of the world’s largest swimming pools), Decameron Resort
(complete with an 18 hole golf course), Nikki Beach, Vista Mar,
Buenaventura, and several more in various stages of planning and construction.
In Penonome and neighboring village La Pintada, you can enjoy open country views without sacrificing modern conveniences. Some of Panama’s finest beaches are a short 25 minute drive from Penonome, where you can drop in a boat or hire a local fisherman to take you out to sea.
Yet, if living in a high rise tower in a beach resort compound is not your thing, Penonome offers a quaint and affordable alternative. In Penonome, you can buy 40 acres of rolling hills with spectacular 360 degree mountain views for $80,000. A 25 acre river front estate with fixer upper house is currently on offer for $110,000, and a tastefully finished, centrally located four bedroom home is available for $100,000.
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What I liked most about Penonome is the warmth of the people and the heritage and folkloric elements of the community. Hat salesmen are not pesky, and do not target tourists – they intend to sell their hats to the local farmers who need a new hat. The town is bustling with activity – shops, banks, supermarkets, and a hospital offer everything you need for a convenient and comfortable lifestyle without the tourist traps.
The foothills surrounding La Pintada and Penonome are full of mountain-fed rivers, which offer a crisp, cool alternative to nearby salty tropical beaches.
For an authentic folkloric experience we took the meandering paved road north of Penonome and in 10 minutes we arrived in La Pintada, a quaint village dotted with neatly landscaped country homes, proud shopkeepers, and homey restaurants. La Pintada feels like it belongs in a story book – we spotted a hand-made cigar factory, hand-made hats, and hand-made ice cream… just about everything in La Pintada is still hand-made it seems. Real people offering real services, just the way it used to be.
Penonome is the place to actualize your gentleman’s ranch, your garden oasis, your organic farm project, or your river front spa. And you can do it economically. New construction in this area is still only about $40 – $50 per square foot complete with high quality marble, granite, and tropical hardwood finishes. A brand new 2000 square foot estate home with a pool
www.PanamaAtYourService.com 109 on a couple of acres with fruit trees, mountain views, and river frontage will set you back less than $175,000 – home and land included.
But it gets even better. Daily expenses like water, electricity, property taxes, insurance, landscaping and domestic help are so cheap you won’t even notice they are there – any old social security or pension check will do. High speed internet is also available at reasonable rates.
To spice up your lifestyle even more, hire a boat over at Juan Hombron, a fishing village about 20 minutes away, complete with a nice white sand swimming beach. If you don’t catch anything, don’t worry, you can buy fresh fish from the locals for a couple of dollars and bring one home to your ranch estate to dine in privacy. How about a hand-made cigar at the end of your meal to round out the evening?
In summary, you will enjoy Penonome if you are looking for the following lifestyle:
Convenient – Penonome provides convenient town amenities, safe and secure for walking around. Penonome is a medium sized town with six banks, 24 hour modern supermarket, pharmacies, auto mechanics, baseball field, university campus, restaurants, bars, casino, and many other town amenities.
www.PanamaAtYourService.com 110 Peaceful and Safe – Penonome is a peaceful town of mostly ranchers and farmers. Outside the town proper, Penonome is a ranchers dream, with open pastures, mountain vistas, rolling hills and running rivers.
Close To Beaches – Penonome is an easy 25 minute drive to white sand beaches, boat launch. Enjoy the benefits of being close to the beach without the expense of high beachfront land costs, taxes, and maintenance.
Close To Golf and Resort Amenities – There are 3 golf courses within a 45 minute drive from Penonome. Several resorts dot the beaches between
Penonome and Panama City. You can enjoy the amenities offered by these resorts and the development it brings without the condo fees, taxes and high real estate prices.
Close To Surfing and Fishing – Juan Hombron is a fishing village about 25 minutes from Penonome where you can go fishing with the locals or launch your own boat. There are several surf breaks all along the beaches within 45 minutes from Penonome.
Super Affordable – Penonome is way more affordable than Boquete, El
Valle, Volcan, Altos Del Maria or any other well known mountain community in Panama. Land is currently 50% – 75% cheaper in Penonome than in any of the aforementioned communities. New construction runs about $40 – $50 per square foot for high quality finishes.
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Modern – You can get high speed internet ($50/month), and Direct TV
Satellite service with all the TV channels from home ($50/month).
Plentiful Labor – One of the benefits of living near a larger town like
Penonome is that labor is easier to come by. Full time domestic help and farm labor for $400 per month. Contractors for any type of work you may need are available in Penonome.
Close To Panama City – Penonome is a comfortable 90 minute commute on double lane highway to Panama City. Being close to Panama City is beneficial for several reasons – first world hospitals, international airport, sport stadiums, nightlife, just to name a few.
Excellent Climate – Penonome receives far less rain than Panama’s highland communities like Boquete, Volcan, Sora, El Valle or Cerro Azul, yet
Penonome receives cool mountain breezes that flow down from the mountains just a few miles inland.
www.PanamaAtYourService.com 112 2. La Estrella, Caldera and Gualaca
Ranchers behold! Distant ocean views, rolling hills, mountainous peaks, white water streams, deep flowing rivers, steep canyons… this is most dramatic landscape Panama has to offer and there is rarely a tourist or expat within sight or sound. Rising up toward the Continental Divide from the
Pacific Coast, this area stretches from Gualaca to Boquete to David in the shape of a triangle within the Province of Chiriqui. The area is not only majestic, it is reasonably accessible by road and well serviced with electricity from the Fortuna Dam.
While everyone else races to Boquete to scoop up their slice of paradise, the
Estrella/Caldera/Gualaca area has escaped the brunt of land price speculation
www.PanamaAtYourService.com 113 and ranchland can still be found for the price of, well, what ranchland ought to be priced at in a developing country… cheap. Rivers and streams are always just right for a dip, with daytime highs around the mid-20s Celsius
(70s Fahrenheit) all year long. Horseback riders could never feel so free, with pastures and meadows stretching as far as the eye can see.
La Estrella is about 15 minutes southeast of Boquete and marks the outskirts of Boquete’s international development boom. Foreign investors have purchased most of the land in and around La Estrella and a handful of housing developments are currently underway. A golf course and hotel project, complete with building sites for estate homes, has been planned for
La Estrella and is currently under construction. This area may prove to be the recreational playground of Panama, assuming the projects are tastefully completed and do not overpopulate the raw natural beauty and spectacular environment that is La Estrella.
Further south and further east of La Estrella lies Caldera, a small village of ranchers and farmers. Caldera may be accessed directly from La Estrella by
4 x 4 or via the paved road that heads east off the main David-Boquete highway. Gualaca is reached by driving through Caldera to the east, which eventually meets the new highway that connects Bocas Del Toro with David
City. Gualaca can also be reached in about 25 minutes by heading north from David. For anyone looking for large tracts of lush, sub-tropical ranchland for private use or for a tourism project, the long dusty roads
www.PanamaAtYourService.com 114 connecting Boquete with La Estrella, Caldera, and Gualaca offer a totally undiscovered opportunity.
3. Cerro Azul
The quickest way to a cool climate from Tocumen International Airport in
Panama City is Cerro Azul. Cerro Azul peaks at 950 Meters (nearly 3000 feet). There are currently only a few small eco-style hotels and scattered housing, but the setting is among the prettiest in Panama and real estate here is still cheap with lots available for under $50,000 and finished homes available for around $100 per square foot, including land.
Visitors will notice a dramatic reduction in temperature and humidity upon reaching Cerro Azul. For many, the spring-like climate combined with running streams and lush mountain vistas is exactly what the doctor ordered.
The proximity to the Tocumen International Airport practically begs hotel and resort developers to its hillsides.
The drawback is that the nearby suburbs of Panama City are of the lower class sort, so grocery stores are not as well stocked and other modern amenities are somewhat lacking. This can be seen positively however as a means of developing relations with real Panamanian people whose hospitality, friendliness and welcoming disposition can open up an entire new community of friends and acquaintances for the foreigner looking to broaden his or her horizons.
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Cerro Azul is most attractive as a vacation or retirement getaway, and most people who want city amenities drive to Panama City's financial district, about 45 minutes away. In the future, restaurants, hotels, and other tourist- related infrastructure are bound to pop-up, making Cerro Azul more attractive for seasonal living and retirement.
4. Los Santos
Los Santos is one of Panama’s nine provinces and is located on the eastern side of the Azuero Peninsula (the large square-shaped peninsula that drops down from Panama’s mainland). As international interest continues to proliferate throughout the sparsely populated countryside of Panama, Los
www.PanamaAtYourService.com 116 Santos is bound to become a major vacation and retirement destination for several reasons.
Chitre, the capital city of Los Santos, offers all the modern services needed to sustain a large influx of residential tourism including a modern hospital, excellent supermarkets, a casino, movie theatre and many other services.
Chitre provides a backbone of infrastructure to serve the area, comparable to the city of David in the Province of Chiriqui which is the capital city that enables foreign residents of small-town Boquete to enjoy a comfortable lifestyle. Without nearby David, Boquete would not have emerged as a retirement destination. The presence of Chitre, especially with its domestic airport receiving regular flights from Panama City, offers similar growth potential for Los Santos.
Los Santos offers many recreational beaches, the Isla Iguana wildlife refuge, and the quaint Spanish Colonial towns of Las Tablas and Pedasi. One of the best surf beaches in Panama is located at Playa Venao just 20 minutes from the town of Pedasi, where annual international surf competitions are held.
Mireya Moscoso, Panama’s President from 1999 - 2004, is a native of Los
Santos and is credited for paving the road from Pedasi to Playa Venao and upgrading the roads in Pedasi during her Presidency, thus improving the overall habitability of the area.
Currently a handful of large-scale developments are underway along the
www.PanamaAtYourService.com 117 beaches of Los Santos aimed at attracting international tourists and residents. While the beaches are generally not of white sand like those nearer to Panama City, the prices for housing in Los Santos are more affordable and the area feels more laid back with a warm and friendly local population. The rural ambiance in the towns of Las Tablas and Pedasi, with their locally-made Spanish tile roofs, make one feel like time has stood still since the Spanish Conquistadores first settled in Los Santos more than a century ago.
The drawback of this area, and the reason it hasn’t been developed for tourism up to now, is its relatively remote location (three hours from Panama
City to Chitre and over four hours from Panama City to Pedasi). Regular flights from Panama City to Pedasi add some convenience, but it is still a long way to go for a typical one week vacation from North America or Europe. For seasonal living and retirement, a short commute time from Panama City is not as critical. As new developments raise the living standards to meet baby boomer demands, Los Santos will feel the influence.
www.PanamaAtYourService.com 118 5. Gorgona and Costa Esmeralda
About 1 – 1.5 hours west of Panama City is a long stretch of very attractive white sand beaches. Coronado gets most of the hype and traffic due to its
Hotel and Golf Course project, which has long dominated the tourism trade in the region. Nearby beaches such as Gorgona and Costa Esmeralda have slept through the international media frenzy of late and signs to these spots are easy to miss while driving the Inter-American highway. Within minutes of Coronado, these lesser-known beach destinations offer increased privacy, fewer tourists, and lower priced real estate than the more popular Coronado.
The lesser known beaches of Gorgona and Costa Esmeralda are usually empty on weekdays, and far from crowded on weekends and holidays. The surfing at Costa Esmeralda is excellent at various times throughout the year.
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The disadvantages, like most undiscovered vacation hot spots, are the lack of nearby amenities and activities (very few restaurants, bars, and only one major supermarket), and poor infrastructure (dirt roads requiring 4 x 4 traction during the wet season). Gorgona has a reputation for break-ins and petty theft; homeowners in this area should secure the premises with adequate security and keep a full-time caretaker during lengthy periods of absence.
In the past few years, several other large upscale residential and resort-style projects such as Buenaventura, Decameron, and Vista Mar have been built, costing millions of dollars and attracting thousands of fresh international tourists. While the larger developments may offer better opportunities for those who prefer resort-style amenities, the privacy and character of the underdeveloped areas of Gorgona and Costa Esmeralda make investments here an exceptional value.
6. Portobelo, Isla Grande, and Costa Arriba
Panama has hundreds of kilometers of Caribbean coastline, but only a fraction of it is accessible by anyone other than Indiana Jones. Most of the action right now for tourism and vacation homes on Panama's Caribbean has been centered on the Province of Bocas Del Toro. Contrary to popular belief, sandy beaches are not easy to find in Bocas - especially beaches with road access, water and/or electricity. Many of the beachfront properties that do
www.PanamaAtYourService.com 120 exist in Bocas have already been scooped up by foreign speculators. The only other Caribbean beaches with road access are those that stretch east of
Portobelo, along the road to Isla Grande and further east toward Palmira.
The drawback of this area has always been the poor condition of the road from Panama City to Portobelo, and lack of a domestic airport in the vicinity of Isla Grande or Portobelo. However, the Panamanian government recently upgraded the Panama City – Colon highway which should improve access to
Portobelo and beyond. Eventually large scale developments in the area will warrant further improvements to the Colon – Portobelo road and beyond, making the nearby beaches and historical attractions more accessible from
Panama City.
Isla Grande attracts Panamanian tourists by the boatload during festivals and holidays, but the entire area is basically off the international tourist map.
With cruise ships now landing by the hundreds every year at Colon, it shouldn't be long before Portobelo and Isla Grande attract more tourists.
The advantages of the Caribbean coast east of Portobelo are its fascinating historical distinction as one of the first landing sites of Christopher Columbus, its unusual shipwreck dive sites, and gorgeous rolling hills that stretch for miles along the coast. The area near Portobelo is a great hideout for sailors waiting to cross the Canal or looking for refuge from the swarms of tourists that traditionally overrun other Caribbean destinations. A few vacation homes dot the coastline, but the area is far from reaching its full potential as an
www.PanamaAtYourService.com 121 international destination for vacationers and sailors.
The beaches get better the further east one goes along the coast. The paved road ends shortly after Palenque at Rio Cuango, but a 4 x 4 road continues for another hour beyond, as does the electricity line. San Blas, which is quickly becoming one of the hottest spots for tourists in Panama, is only a short distance by boat from Portobelo, with talk of a road extending from
Palenque to the airport in El Porvenir, San Blas.
In conclusion, people who make comments like, "I wish I would have invested here five years ago", are the people who never do and probably never will. Very few people actually have the courage to invest hard earned dollars in places that are remote and unknown to the masses. For a few people with foresight, patience, and an appreciation for untamed tropical splendor, the above regions should be strongly considered as prime areas to invest and enjoy.
www.PanamaAtYourService.com 122 Appendix A
Restoring Historical Buildings in Casco Viejo
There are two classifications of properties in Casco Viejo: those that have been restored and those that are in need of restoration.
Restored Apartments
In general, sale prices for restored apartments toward the beginning of 2011 averaged between $200 and $300 per square foot. Availability of restored apartments in Casco Viejo is still very limited. Most restored apartments are pre-sold before the completion of the restoration project. Restored apartments can be rented on a short-term basis (furnished) or a long-term basis (unfurnished).
Properties in Need of Restoration
For properties in need of restoration, prices vary widely based on location and the overall condition of the property. Most of the best buildings for sale are not explicitly advertised and if they are, they are overpriced. A few industry insiders exist in Casco Viejo and they are very quick to buy cheap properties before they reach the official real estate market. Truly great deals on older buildings in Casco Viejo are to be found by networking with the locals and trying to make contact with people who live in the neighborhood and who are “in the know”.
www.PanamaAtYourService.com 123 Casco Viejo Restoration Sample Scenario
Restoration projects in Casco Viejo can be complicated as there is a strict approval process for how a property must be restored in order to comply with the overall characteristics of the street or neighborhood.
Once a property of interest has been identified the next step is to hire a specialist to ensure that the quality and density of the soil upon which the building will be constructed is acceptable for the type of building to be built.
The typical fee for this study is $2000.
Next, an engineer should be hired to measure the property and determine the viability of restoration of the site. The fee for this study is approximately
$1000.
Choosing an architect is an important step. Architect fees are typically 7.5% to 10% of the construction budget (from an architect who specializes in restoration projects in Casco Viejo).
It is advisable to hire a third-party inspector of your project. This person will monitor the progress of the project and ensure that the construction company adheres to its contract. The cost for a third-party auditor is generally $1000 - $1500/month for the duration of the project.
www.PanamaAtYourService.com 124 The Panamanian government has put together special relocation programs to assist with the relocation of squatters out of Casco Viejo and into residence elsewhere in the city. Generally an attorney is hired to process the paperwork and ensure that the developer complies with the law in its effort to relocate citizens equitably. Family relocation fees are approximately $500 per family.
The approximate costs to restore and reconstruct a building in Casco Viejo are $700 to $1000 per square meter. Most of the interior is demolished and rebuilt with new materials. In some cases, existing walls and other features can be retained and construction costs will vary depending on the complexity of the project.
Toward the beginning of 2010, approximate resale value of restored apartments in Casco Viejo was $2000 to $3000 per square meter (less brokerage and marketing fees). These figures are based on restored units currently for sale and restored that have recently be sold. Location is of prime consideration, and properties can sell for much more, particularly if they offer a view of the ocean or one of the historical plazas.
Below are some rough calculations using conservative estimates to provide an example of the required investment and projected returns for a restoration project in Casco Viejo:
www.PanamaAtYourService.com 125 Expected Resale Value $2000/M2 (less sales and marketing expenses)
Variable Costs:
Average Renovation and Construction Costs $900/M2 Average Architect Fees $50/M2 (assumes 8% of construction budget) Family Relocation Fees $10/M2 (assumes one family per 50 M2)
Total Variable Costs $960/M2
Gross Margin $1040/M2
Fixed Costs:
Engineering Study $1,000 Land Study $2,000 Average Construction Auditor Fees $18,000 (assumes one year @ $1500 per month)
Total Fixed Costs $21,000
Formula for the feasibility of a restoration project:
$2000/M2 Resale Price - (Purchase Price of Existing Structure + $21,000 fixed costs + $960/M2 variable costs) = Estimated Net Profit
This appendix is designed to give prospective investors a very basic estimate of the costs and values associated with a restoration project in Casco Viejo as of the time of writing. There are likely to be additional fees and expenses that are not included in the above scenario (e.g. legal fees, interest payments, cost overruns, etc). Restoration projects are very complex and a number of unforeseen costs and delays can be expected when executing this type of project.
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Appendix B
To Teak or Not To Teak - The Risks and Rewards of Buying Reforested Land in Panama
Most people who have begun researching Panama’s real estate investment opportunities have come across the offer to purchase a teak plantation. This chapter provides an objective base of information for readers to begin their research.
Mono-plantations
A mono-plantation is a plantation where only one species of tree is planted.
Trees are usually planted at equal distances apart and the weaker trees are thinned out over time to allow the stronger trees adequate resources to flourish. The advantages of a mono-plantation are that they are easier and cheaper to plant and maintain. The disadvantages are that risks posed by insects, disease and fire are more likely to afflict a mono-plantation. The other disadvantage is that investors must rely on the future value of only one type of tree, which may fluctuate up or down over the years prior to harvest.
Plantations of Mixed Species
Teak is not the only valuable tree to grow in Panama. Tropical variations of mahogany, oak, pine, eucalyptus and other species are also popular for reforestation. Reforestation projects that plant a mix of various species of hardwoods, along with a mix of native species can actually help rebuild the
www.PanamaAtYourService.com 127 eco-system of the area and provide a healthier and more sustainable investment. As with any investment, it is often best not to keep “all your eggs in one basket”. By planting a mix of species, plantation owners have a wider range of options at harvest time. Harvesting is best done on a rotational basis as opposed to clear-cut, in order to provide a steady cash return and to help retain the long-term quality of the soil.
The drawback of planting mixed species is that they are usually more expensive to plant and maintain, and require more advanced planning to ensure that the plantation will mature properly.
Teak
Despite the many valuable species that will grow in Panama, teak is still the most popular. Teak possesses an impressive resilience against water damage, it delivers exceptional long-term durability, and it finishes with an extremely rich appearance and color.
According to a report released by the International Tropical Timber
Organization (ITTO), buyers in the UK paid 2035 - 2350 Pounds Sterling
($3634 - $4196 US Dollars) Freight On Board plus Commission per Cubic
Meter of 1st Quality 1"x8"x8' Teak. (Source: www.itto.or.jp). Meanwhile in
China, based on the Guangzhou City Imported Timber Market, teak logs of
50cm+ in diameter sold for 7850 to 14,800 Yuan per Cubic Meter or $948 to
$1787 US Dollars (Source: www.itto.or.jp). Most of the market data in this
www.PanamaAtYourService.com 128 report supported the claim that teak does indeed command a premium price on the international market for tropical timber.
Although not indigenous to Panama, some parts of Panama offer the correct geographical, climatic, and geomorphologic conditions for the production of high quality teak. Most experts have identified the Pacific side of Panama at altitudes lower than 500 meters to be the most ideal for growing teak. Teak requires a distinctive dry season to develop the unique density that makes it so valuable, which makes much of Panama’s Caribbean coast unsuitable for export-grade production of teakwood.
Benefits to Investors
Economic Gain
Basic economics tell us that decreasing supply and increasing demand equal high returns. Due to global deforestation and increasing pressure on governments to protect remaining forests, there is currently a decreasing supply of available old-growth tropical hardwood throughout the world. Also, many of the industrialized nations have banned the importation of tropical woods unless they have been cut from sustainable sources. Meanwhile, the world demand for tropical woods remains stable and the price of tropical wood continues to rise. Most reforestation companies conservatively quote an annually compounded rate of return of 10% to 15% for a teak plantation over a period of 25 years, based on today’s prices for teak.
www.PanamaAtYourService.com 129 Environmental Protection
Natural forests are disappearing at an alarming rate. By providing lumber from sustainable sources, reforestation reduces the pressure on natural forests to provide for the world’s wood consumption. The sustainable utilization and conservation of the tropical forests is now high on the international political agenda. By harvesting planted forests in an environmentally acceptable way, a unique opportunity exists to help protect the environment while producing extremely valuable timber.
Social Benefits
Reforestation in developing countries such as Panama provides employment opportunities to local residents with increasingly fewer job opportunities.
Reforestation usually occurs in more remote areas where job growth is stagnant or declining. Community members that work toward reforestation are more likely to understand the importance of conservation and sustainable development.
Risks To Investors
Fire, insects, and disease can damage or destroy a plantation. Regular treatment with pesticides and/or a well-balanced mixed-species plantation is the best defense against insects. Well-designed plantations have periodic gaps (no trees are planted) of several meters to protect from the spread of fire from one portion of the plantation to another. Water should be available near the plantation to put out fires and management personnel should
www.PanamaAtYourService.com 130 receive training so they know what to do in case of fire.
Poorly maintained plantations can be practically worthless on the international marketplace. For example, if the lower branches of the trees are not trimmed regularly, large knots will form which dramatically reduces the value of the wood. Trees must be trimmed and straightened regularly to ensure a tall and straight trunk, especially in the first five years of the plantation’s life.
Another primary risk to investors is time. While reforestation companies like to quote mature harvests as early as 15 years, most objective experts insist that 20 to 25 years is a more realistic time frame for harvest. Time is always a risk to an investment to do unforeseen circumstances that may occur.
Some management companies will offer a buy-back policy offering a fixed rate of return, while others leave it up to the individual owners to sell their plantation at some point in the future.
The lack of available financing for an investment in reforestation reduces the investor’s ability to use leverage to maximize returns. Although some banks will allow Panamanians to use their reforested property as collateral towards a loan, trees must usually be at least five years old, and these terms are unlikely to apply to foreign investors.
In every case, a professional management company should be employed to
www.PanamaAtYourService.com 131 reduce the inherent risks in a long-term investment in reforestation. Ask a
Panama At Your Service representative to recommend a reputable reforestation management company.
Obtaining Panamanian Residency Through Reforestation
Panamanian Law #24, which entitled reforestation investors to a variety of tax breaks and the opportunity to obtain a residency visa, was revoked in
2005 by the Panamanian government. In it’s stead, foreigners may still obtain residency through an investment in a certified reforestation project of
$80,000 (see Visas and Immigration in the “Basics For Expats” report contained in this book). If investing through a Panamanian corporation, the same must be approved by the official entity known as ANAM (Autoridad
Nacional del Ambiente) as a business that is conducting reforestation activities in order for the investor to obtain a visa.
The reforestation management company should ensure that investors have all of the documents they need to obtain their visa, and the investor should have an attorney working on their behalf to ensure the accuracy of the process.
In conclusion, global trends look favorable for a long-term investment in tropical hardwood. Investors should be wary, however, and ensure that they are dealing with a properly certified reforestation management company with a satisfactory track record. Reforestation offers a tangible investment with
www.PanamaAtYourService.com 132 positive environmental and social benefits and can be an excellent way to receive a Resident Visa.
www.PanamaAtYourService.com 133
Appendix C
Business and Services Directory
Airlines - Domestic
Aeroperlas Panama City Office: (507) 315-7500 FAX Number: (507) 315-7580 E-mail: [email protected] Web: http://www.tacaregional.com/aeroperlas/ing/apitinerarios.html
Airlines – International
Copa Airlines Panama City Office Ave. Justo Arosemena y Calle 39 Phone: (507) 217-COPA (2672) www.copaair.com
Business and Trade Organizations
American Chamber of Commerce and Industry of Panama (AMCHAM) P.O. Box 168, Balboa Ancon Panama, RP Tel:(507) 269-3881 Fax:(507) 223-3508
Banking Association of Panama Asociacion Bancaria de Panama P.O. Box 4554 Zona 5 Panama, RP Tel: (507) 263-7044 Tel: (507) 263-7783
Colon Chamber of Commerce Camara de Commercio de Colon P.O. Box 322 Colon, RP Tel: (507) 441-7223/7182 Fax:(507) 441-7281
www.PanamaAtYourService.com 134
Colon Free Zone Administration Administracion de la Zona Libre de Colon P.O. Box 1118 Colon, RP Tel:(507)445-1033/1559 Fax:(507)445-2165
Colon Free Zone users Association Asociacion de Usuarios de la Zona Libre de Colon P.O. Box 3118 Zona Libre Colon Free Zone, RP Tel: (507) 441-4244 Fax: (507) 441-4347
Construction Chamber of Panama Camara Panama de la Construccion P.O. Box 6793 Zona 5 Panama, RP Tel: (507) 264-2255 Fax: (507) 264-2384
Council for Investment and Development P.O. Box 10014 Zona 4 Panama, RP Tel: (507) 223-6788 Fax: (507) 263-2460
Exporters Association of Panama Asociacion Panamena de Exportadores (APEX) P.O. Box 6-4798 El Dorado Panama, RP Tel: (507) 230-0284/0169 Fax: (507) 230-0805
National Association for the Conservation of Nature Asociacion Nacional para la Conservacion de la Naturaleza (ANCON) P.O. Box 1387 Zona 1 Panama, RP Tel: (507) 264-8100 Fax: (507) 264-1836
National Association of Small and Medium Sized Businesses Union nacional de Pequenas y Medianas Empresas Tel: (507) 225-6040/6050 Fax: (507) 225-4325
www.PanamaAtYourService.com 135
Panama Chamber of Commerce, Industry and Agriculture Camara de Comercio de Panama P.O. Box 74 Zona 1 Panama, RP Tel: (507) 225 12233/4615 Fax: (507) 227-4186/225-3653
Panamanian Association of Business Executives Asociacion Panamana de Ejecutivos de Empresa (APEDE) P.O. Box 1331 Zona 1 Panama, RP Tel: (507) 227-3511/4085 Fax: (507) 225-3964
Panamanian Institute of Foreign Trade Instituto Panameno de Comercio Exterior (IPCE) P.O. Box 6-1897 Zona 6 Panama, RP Tel: (507) 225-7244 Fax: (507) 225-2193
United States-Panama Business Council (USPA) P.O. Box 503 Zona 9A Panama, RP Tel: (507) 263-7375 Fax: (507) 223-3664
World Trade Center of Panama P.O. Box 6-2432 El Dorado Panama, RP Tel: (507) 264-0454/0464 Fax: (507) 269-6126
Car Rental Agencies
Dollar Rent A Car Panama City Office Tel: 507.270.0355 Fax: 507.279.0535 Email: [email protected]
www.PanamaAtYourService.com 136 National Car Rental Panama City Office Tel: 507.265-3333 Fax: 507. 265-3232 Email: [email protected]
Thrifty Car Rental Panama City Office Tel: 507.264.2613 Fax: 507.264.7419 Email: [email protected]
Helicopter Operators
Helipan Corporation Telephone at (507) 315-0452 / 0453 http://www.helipan.com/english/tours/canal/
Hospitals
Centro Medico Paitilla Panama City Telephone: 265-8800/269-5222
Hospital Nacional Panama City Telephone: 207-8100
Hotels - Bocas Del Toro
Al Natural Resort 30 minutes by boat from the town of Bocas Tel: 507.757.9004 Fax: 507.757.9004 Email: [email protected] http://bocas.com/alnatura.htm
Cocomo On the Sea Isla Colon, Bocas del Toro Tel: 507.757.9259 Fax: 507.757.9259 Email: [email protected] http://www.panamainfo.com/cocomo/
www.PanamaAtYourService.com 137
Punta Caracol Resort Isla Colon, Bocas del Toro Tel: 507.612.1088/507.676.7186 Fax: 507.757.9718 Email: [email protected] http://www.puntacaracol.com.pa/
Hotels - Boquete
Valle Primavera B & B Boquete, Chiriqui Province Tel: (507) 720-2881 Mobile: 686-4721 E-mail: [email protected] http://www.pargorojo.net/valleprimavera/
Isla Verde B & B Boquete, Chiriqui Province Tel: 507.720.2533/Cel: 677.4009 Fax: 507.720.2751 Email: [email protected] http://islaverde.escapetoboquete.com/
Villa Marita Lodge Boquete, Chiriqui Tel: 507.720.2165 Fax: 507.720.2165 Email: [email protected] http://www.panamainfo.com/marita/
Los Establos Hotel Boquete, Chiriqui Province, West Panama Tel: 507.720. 2685 Fax: 507.720.2685 Email: [email protected] http://www.valleescondido.biz/losestablos/index.htm
www.PanamaAtYourService.com 138
Hotels – Colon
Melia Panama Canal Hotel, Casino And Conference Center 10 minutes from the Colon Free Zone on Lake Gatun by the Panama Canal Tel: (507) 507 470-1100 Fax: (507) 507 470-1200 Email: [email protected] http://www.solmelia.com/sol/hoteles/jsp/CHome.jsp?idSolRes=5906
Hotels - Coronado
Coronado Hotel and Resort Pacific Coast 75 minutes west of Panama City Tel: Offices: 507.223.3175/Hotel: 507.240.4444 Fax: Offices: 507.264.2314/Hotel: 240.4380 Email: [email protected] http://www.coronadoesvida.com/cn/portada.asp?idioma=en
Costa Blanca Royal Decameron Resort On the Pacific Coast about an hour and a half from Panama City Tel: Offices: 507.214.3535/Hotel: 507.993.2255 Fax: 507.214.3539 Email: [email protected] http://www.decameron.com/Destinations/Panama/panama_Intro.html
Hotels - David
Gran Nacional Hotel Located near the city center of David Tel: 507.775.2222 /775.2221 Fax: 507.775-7729 Email: [email protected] http://www.panamainfo.com/granhotelnacional/
Hotels - El Valle
Los Capitanes Eco-resort & Hotel El Valle de Anton, 1.5 hours west of Panama City Tel: 507. 983.6080 | Cell: 507.687.8819 Fax: 507. 983.6505 Email: [email protected] http://www.panamainfo.com/loscapitanes/
www.PanamaAtYourService.com 139
Hotels - Isla Contadora
Punta Galeon Located on Isla Contadora Phone: (507) 250 4134 Fax: (507) 250 4135 Email: [email protected] http://www.puntagaleon.com/
Hotels - Isla Grande
Bananas Village Resort Isla Grande, Colon Province Tel: 507.263.9510 Fax: 507.264.7556 Email: [email protected] http://www.bananasresort.com/
Hotels – Panama City
Best Western Las Huacas Hotel & Suites Calle 49 el Cangrejo Tel: (507) 213-2222 Fax: (507) 213-3057 Email: [email protected] http://www.lashuacas.com/
Bristol Hotel Ave. Aquilino de La Guardia, just a block from 50th St. Tel: (507) 265-7844 Fax: (507) 265-7829 Email: [email protected] http://www.thebristol.com/
Coral Suites Apart-Hotel Calle D. El Cangrejo Tel.: (507) 269-2727 Fax: (507) 269-0083 E-mail: [email protected] http://www.coralsuites.net/
www.PanamaAtYourService.com 140 Country Inn and Suites Panama Canal- Amador Causeway On the Amador Causeway in Panama City facing the Panama Canal Tel: 507.211-4500 Fax: 507. 211-4501 Email: [email protected] http://www.panamacanalcountry.com/amador/
Decapolis Radisson Hotel Avenida Balboa-Multicentro, Panama City Panama 0833-0293 Reservations: (800) 333-3333 US Toll Free Telephone: (507) 215-5000 Fax: (507) 215-5715 http://www.radisson.com/
Four Points by Sheraton Panama At the World Trade Center in the Marbella Tel: 507.265.3636 Fax: 507.265.3550 Email: [email protected] http://www.starwoodhotels.com/fourpoints/search/hotel_detail.html?propert yID=1472
Intercontinental Hotel On Avenida Balboa in Marbella Tel: 507.206-8888 Fax: 507.223.4891 Email: [email protected] http://www.miramarpanama.com/
Hotels - Panama Canal Zone
Canopy Tower In Soberania National Park in the Panama Canal Zone Tel: 507.264.5720/ 612.9176 Fax: 507. 263.2784 Email: [email protected] http://www.canopytower.com/
www.PanamaAtYourService.com 141 Gamboa Rainforest Resort In Soberania National Park within the Panama Canal Zone Tel: U.S.A. Toll Free 1-877-800-1690/ Panama: 507.314.9000 Fax: 507.314-9020 Email: [email protected] http://www.gamboaresort.com/
Hotels - San Blas Islands
Dolphin Island Lodge Tel: 507.263.7780/1500/Cel:636.4038 Fax: 507.263.2559 Email: [email protected] http://www.dolphinlodge.com/
Sapibenega- The Kuna Lodge On a small private island in the San Blas Islands near the island community of Playon Chico. Tel: 507.226.8824 Fax: 507.226.9283 Email: [email protected] http://www.sapibenega.com/
Hotels – Volcan
Bambito Hotel Volcán, Province of Chiriqui Tel: (507) 771-4373 / (507) 771-4374 Fax: (507) 771-4207 E-mail: [email protected] http://www.hotelbambito.com/
Los Quetzales Lodge and Spa 3 km. from Cerro Punta, Province of Chiriqui Tel: 507. 771-2182/2291 Fax: 507.771-2226 Email: [email protected] http://www.losquetzales.com/
www.PanamaAtYourService.com 142 Language Schools
ILERI- Spanish Language School Located in Panama City Tel: 507.260-4424 Email: [email protected] www.ileripanama.com
Spanish by the Sea Located in Bocas del Toro Tel: 507.757.9518 Fax: 507.757.9518 Email: [email protected] www.spanishbythesea.com
Spanish Panama Half a block from Via Argentina in El Cangrejo, Panama City Tel: 507.213.3121/cel: 697.3863 Email: [email protected] www.spanishpanama.com
Legal Services
Burbano y Adames Ms. Cecilia Bubano and Ms. Lea Adames Calle C Norte y Avenida Primera Este, Edificio Malami, Segundo Piso, Oficina No. 2, City of David, Province of Chiriqui, Republic of Panama Tel: 507-642-9416 and 507-774-4426 Email: [email protected]
Newspapers
El Panamá América http://www.elpanamaamerica.com.pa/diarios/
La Crítica http://www.critica.com.pa/archivo/hoy/index.html
La Prensa http://www.prensa.com/
The Panama News http://www.thepanamanews.com/
www.PanamaAtYourService.com 143
Offshore Brokerage Services
Thales Securities Generali Tower, 22nd Floor, Business District, Panama City Tel: 507.263.6850 Fax: 507.263.6841 Email: [email protected] http://www.thalessecurities.com/
Real Estate and Relocation
Panama At Your Service PTY 956 P.O. Box 025724 Miami, FL 33102-5724 Phone: 1-561-459-1903 Email: [email protected] http://www.panamaatyourservice.com
Title Insurance
The First American Corporation Corporate Headquarters: 1 First American Way Santa Ana, California 92707 714-800-3000 800-854-3643 www.firstam.com
Stewart Title Guaranty Company Corporate Headquarters: 1980 Post Oak Boulevard, Suite 800 Houston, Texas 77056 800-STEWART 800-783-9278 www.stewart.com
www.PanamaAtYourService.com 144 Tour Operators
Extreme Panama Tours In the Camino de Cruces shopping center in El Dorado. Tel: 507.269.7326 | Cel. 507.655.7120 Fax: 507.360.2035 Email: [email protected] http://www.extremepanama.com
Ancon Expeditions In the business district around the corner from the Marriott Hotel Tel: 507 269.9415 Fax: 507.264.3713 Email: [email protected] http://www.anconexpeditions.com/
Translation and Interpretation
S.O.S.- Servicios de Oficina y Secretariales Tel: (507) 264-2073 | 223-7340 Fax: (507) 223-2808 Email: [email protected] www.serviofionline.com/en/index.html
Transportation/Taxi
Rigoberto Mejia - English not great but reliable with affordable rates Cel: (507) 6636-7842 Email: [email protected]
Judy Tovar - excellent English, competitive rates, also does tours Cellular (507) 6617-4122 www.easytravelpanama.net
Yacht Operators
Panama Yacht Tours Telephone: (507) 263-5044 Fax: (507) 263-0712 E- mail: [email protected] http://www.panamayachtours.com/
www.PanamaAtYourService.com 145 Appendix D
Recommended Restaurants in Panama City
*Denotes Author’s Favorites
*Martin Fierro
Address: Calle Eusebio A Morales, one block from the Hotel Grenada, El Cangrejo
Phone: (507) 264-1927
With its Argentine theme, Martin Fierro is not formal and rarely full, so reservations are probably not necessary. If you are a steak lover, make sure you order the domestic Filete as opposed to the U.S. imported beef which is higher priced and poorer quality. For about $12 (salad bar included) this will be the best steak you will ever find in Panama, and a fine selection of wine will round out the occasion.
Café Pomodoro
Address: Calle Eusebio A. Morales, ground floor of the Hotel Las Vegas, El Cangrejo
Phone: (507) 269-5836
Web site: www.1985.com
Modern Italian cuisine in a bohemian cafe atmosphere. Sit indoors (air conditioned) or in the outdoor courtyard. Décor and wall paintings offer an authentic Italian experience. An excellent variety of pasta dishes and pizza.
www.PanamaAtYourService.com 146
Greenhouse Lounge Café
Address: Uruguay Street, Bella Vista close to Balboa Avenue
Phone: (507) 214-7475
Web site: www.greenhousepanama.com
International food of excellent quality, the restaurant offers a variety of menus for private events. Enjoy a modern ambiance with lounge style music. Modern and abstract decor with beautiful tropical plants in the front portion and a loungy dining area in the rear.
Shamrocks Grill & Restaurant
Address: La Boca Rd. Balboa, Elks Club Building
Phone: (507) 314-1436
E-Mail: [email protected]
American and international food, enjoy the variety of dishes and good music.
This restaurant is part of the Elk’s Club, a favorite recreational club hang out for ex-Panama Canal administrators and ex-U.S. military personnel.
*Beirut
Address: Banking district, near the Marriott Hotel
Phone: (507) 214-3815
The Beirut offers everything from traditional Lebanese cuisine to pizza.
www.PanamaAtYourService.com 147 Smoke traditional hookahs stuffed with flavored tobacco after your meal.
Replicated pillars and a large mural of the sea are conducive to the unique
Lebanese ambiance. Traditional Arabic music plays in the background.
Sushi Itto
Address: Avenida Samuel Lewis and Calle Santa Rita, Plaza Obarrio
Phone: (507) 265-1222
The restaurant offers delicious sushi and assorted Japanese food. The patio in the rear of the restaurant is very nice on cool evenings. Domestic fish like sea bass is likely to be fresher than the imported fish.
*The Wine Bar
Address: Eusebio A. Morales Street, Ground floor of the Hotel Las Vegas connected to the Pomodoro Restaurant
Phone: (507) 265- 4701
Web site: www.1985.com
Enjoy the award winning selection of over 200 wines available by the glass or bottle. The Italian lounge atmosphere includes live jazz and good service.
Choose from a wide variety of gourmet cheeses to accompany your main course of pasta, pizza, meats, or seafood.
www.PanamaAtYourService.com 148 *Manolo Caracol
Address: Casco Viejo, behind the National Theatre
Phone: (507) 228-4640 and 228-9479
E-mail: [email protected]
Incredibly fresh Spanish tapas. No need to place an order here, just sit and wait as tapas are served as part of a set menu. Usually at least six courses of tapas are presented from gourmet salad and rice dishes to fresh seafood and meat. Manolo serves a different menu every night and advanced reservations are recommended.
Madame Chang
Address: Calle 48 just off Calle Uruguay, Marbella
Phone: (507) 269-1313
E-mail: [email protected]
This elegant Chinese restaurant serves a wide range of Chinese dishes as well as a fine selection of Thai food. The service is excellent and the décor is elegant.
Las Bovedas
Address: Casco Viejo, near the French Embassy
Phone: (507) 228-8068
E-mail: [email protected]
Built in ancient stone vaults formerly used by the Spanish military to store
www.PanamaAtYourService.com 149 weapons in order to defend Panama against pirate raids, the specialty of this restaurant is French food with an Italian touch. Live music on Thursdays,
Fridays and Saturdays.
Las Tinajas
Address: Calle 51, Marbella
Phone: (507) 263-7890
E-mail: [email protected]
Delicious Panamanian cuisine in a Panamanian country-style ambiance at reasonable prices. The popular Folkloric dance presentation takes place while you dine. Dancers wear traditional Panamanian dress and make for a colorful and memorable evening. Shows are featured every Tuesday,
Thursday, Friday and Saturday.
Crepes & Waffles
Address: Marbella, 47th Street, House 22, close to Balboa Avenue
Phones: (507) 269-1574
Modern and spotlessly clean, you’ll find more than just crepes. Fresh salads are a specialty, along with a huge variety of ice cream and creative desserts!
The large patio is perfect for a late afternoon cappuccino or evening drink.
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Athen’s Pizza
Address: Calle 50 and Calle Uruguay
Phone: (507) 265-4637
A variety of Greek dishes and Greek-style pizza. Try the lodopsomo with sumptuous tsatziki sauce. Athens is a casual, family restaurant with very economical prices.
*La Posta
Address: Calle 49, just off Calle Uruguay
Phone: Reservations (507) 269-1076
Web site: www.lapostapanama.com
A new and very popular bistro with a unique variety of dishes. From fine seafood, to pizza, risotto, and chicken, there is something for everyone at La
Posta. Located in a turn-of-the-century Panamanian house with a full bar.
*Ozone
Address: Calle Uruguay, Marbella
Phone: (507) 226-3838
Offering a fusion of middle eastern and international cuisine, Ozone serves up fresh stir fry, Jambalaya, and a wide range of other unique meals that are fresh and delicious.
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