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