PANAMA - THE PTY INVESTOR'S BLOG

Iran, Venezuela plan to build rival to Panama Canal

2010-11-19T07:18:00.000-08:00

source: Panama Investor Blog

I have heard these kinds of rumblings before, but it appears to have gotten legs where they are starting to do some work on the San Juan River on the border of Costa Rica and Nicaragua. It is interesting to note that Vanderbilt used the San Juan river to carry gold rush prospectors back in the mid 1800's from the Caribbean to the Pacific. I have serious doubts whether this new venture will come to fruition for a number of reasons. First, if you google map the area between the lake and the Pacific you see that it is not an easy task to make a canal in that area even though it is only 20 KM. From the east side of lake Nicaragua to the Caribbean the San Juan meanders more that 175 km.It will take much more than simple dredging to make it passable for large ships. I think this is just more hyperbole from the likes of the three stooges to try and see how the U.S. will respond. This article states that the U.S. is concerned and looking into the matter.

Panama sees 56% growth in foreign direct investment Q1

2010-07-01T19:37:00.000-07:00

This brief was sent in by Gary and is from JP Morgan, via Prima Panama

Panama

According to preliminary estimates released by the Comptroller General’s office, foreign direct investment (FDI) totaled US$609 million (2.3% of GDP) in 1Q10, up 56.4% from US$389 million (1.6% of GDP) in 1Q09. The sharp increase in FDI inflows was driven by reinvested profits, which more than doubled to US$387 million during the three-month period led by higher investments in Colon Free Zone enterprises. On a sectoral basis, the principal beneficiaries of FDI during the first quarter were the hotels,
telecommunications, agriculture, livestock, and real estate sectors. Panama’s FDI fell 26.1%y/y to US$1.8 billion in 2009 amid the global recession, matching the 25% plunge the IMF has estimated for all emerging markets. As the global economy recovers from its recent slump and financial flows to developing
countries strengthen, the Martinelli administration expects FDI inflows to surpass US$2 billion (7.6% of GDP) in 2010. (Franco)

Panama hopes to beat the global financial crisis

2009-03-15T08:23:00.000-07:00

By Jeremy Schwartz - INTERNATIONAL STAFF for the statesman.com- PANAMA CITY — Cranes hover over the skyline like futuristic insects, buzzing around half-finished skyscrapers that make Panama City look like Miami or Hong Kong. If any country is poised to withstand the ravages of the global financial crisis, it just might be tiny Panama, which has quietly become a regional economic powerhouse in the past five years. Fueled by a superheated real estate market, windfalls from the Panama Canal and a burgeoning banking system, economic growth hit 9.2 percent in 2008 after soaring to 11.5 percent the year before. As nations from the United States to Japan confront shrinking economies in 2009, officials in Panama are predicting relatively robust growth of 4 or 5 percent this year. "This global crisis arrived in a moment in which we find ourselves stronger than we have been in the past," Minister of the Economy Hector Alexander said. "In Panama, the dominant topic isn't the recession." (more) (See Comments)
Editor's Comment: There's one part in this article where an economist named Gordon is quoted as having said "...the percentage of Panamanians laboring precariously in the nation's informal sector — doing things such as selling fruit at intersections — has risen from 33 percent in 2001 to 44 percent today." That's just plain wrong. In fact, the informal employment market has dropped substantially in the past five years to their lowest levels in modern history. There are now more formal jobs - positions in which the employees receive a standard wage, pay income taxes, and appear on the rolls of social security - than ever before. In fact back just eight years ago unemployment was pegged at about 15% or higher, and "underemployment" (informal or non-reported positions) were much higher than they are now. Without a doubt, the entire labor force in Panama has been moving towards formalization. Unemployment is down to about 6% or less. And this guy Gordon's statements are just flat-out incorrect.

(Comments Conclude, Article Continues)

While unemployment has soared in the United States, the unemployment rate in Panama fell from about 14 percent in 2004 to 6.5 percent last year. And as the U.S. is adjusting to life with 12-digit budget deficits, Alexander said Panama is hoping 2009 will be its third consecutive year with a budget surplus.

But the nation hasn't been immune to the global recession. Its real estate market might be heading for a sharp downturn.

Matt Landau, a New Jersey native and Panama City investment consultant, said real estate sales have declined precipitously in recent months, especially among the U.S. and European buyers who largely fueled the boom.

"When I first got here (about four years ago), people were buying (properties) for $200,000 and then flipping them for double or more in six to 12 months," he said. "That was happening even up to a year and a half ago."

Now, Landau said, Panama City is bracing for a glut of high-priced condominiums.

And as global trade is pummeled by the recession, Panama Canal officials expect the number of cargo ships passing through the waterway — and the tolls they pay to the Panamanian government — to fall almost 6 percent this year.

Even there, Panama has an ace up its sleeve in the form of a $5.2 billion Panama Canal expansion, which will widen the canal's locks to allow larger ships to pass through.

Although recession wasn't on the minds of Panamanian voters when they approved the expansion in 2006, officials see the megaproject as a perfectly timed stimulus that will directly create nearly 7,000 jobs in a country of 3 million and spark the creation of thousands of secondary jobs, just as the economy begins to sag.

"It's as if we are increasing public sector spending by 35 to 40 percent," Alexander said. "Today it works as a fiscal stimulus."

Percentagewise, the canal expansion dwarfs any stimulus project the United States is planning. The project represents nearly a quarter of Panama's $23 billion gross domestic product. By comparison, the $787 billion stimulus package in the U.S. represents about 5 percent of America's $14 trillion gross domestic product.

Counternarcotics officials have long suspected that Panama's boom has also been aided by an influx of money from criminal organizations. According to the U.S. State Department's 2008 International Narcotics Control Strategy Report, the country's construction and offshore banking sectors are particularly susceptible to money laundering.

But Panama's economy has been helped by a stable and peaceful political scene, which the nation has enjoyed since the 1989 ouster of dictator Manuel Noriega.

When Noriega was captured by U.S. troops, Panama's economy was in shambles, paralyzed by an economic embargo of Noriega's regime. Successive democratically elected administrations have focused on economic recovery, enacting reforms and privatizing sectors such as telecommunications and electricity.

But some critics say Panama's spectacular economic growth in the past five years has left out the majority of its people.

"The problem is that the growth has stayed in a few hands," said Rolando Gordon, a University of Panama economics professor. "The economic boom hasn't been able to resolve any of the great social problems of the country."

Gordon said government statistics obscure the fact that even as the country's economy exploded, the percentage of Panamanians laboring precariously in the nation's informal sector — doing things such as selling fruit at intersections — has risen from 33 percent in 2001 to 44 percent today.

Gordon added that public schools are underfinanced, and access to drinking water remains problematic for many Panamanians. At the same time, the price of basic foodstuffs has increased.

"This boom we're having is tremendous," taxi driver Jose Cano said. "But for the poor, the humble, we aren't seeing the boom. The price of food is going up. I have my own taxi, so I'm doing pretty well, but there are a lot of people who are recycling cans and stealing scrap metal."

Ivanka Trump: It's Time To Party In Panama

2009-03-04T07:23:00.000-08:00

Our newly disovered financial guru, Ivanka Trump, says that Panama’s real estate market is the strongest in the world. Ivanka, the executive vice president of development and acquisitions her fathers Trump Organization, impressed us mightily when she appeared on SquawkBox last week. It wasn’t so much that a pretty young thing turned out to be smart that caught us off guard. Lots of pretty girls are smart. But we had kind of figured that a scion of a celebrity family like the Trump’s would be a bit dim. In fact, she shines. “I have projects all over the world [and] have a unique sense of the global real estate climate and submarkets,” she tells Latin Business Chronicle. “With great conviction, [I can say that] Panama is one of the strongest, if not the strongest, real estate market. Our biggest problem is not having enough inventory. We only have a small percent of the building left.”

Apparently, Panama is pouring huge tax incentives into real estate development. She contrasts this with America, where taxes are going up. And the Panama Canal is still going strong.

Of course, both factors raise red flags. The Panama Canal is heavily exposed to international trade and shipping, both of which are looking at huge downturns as the world slips deeper into a recession. And tax incentivized building can often lead to unsustainable bubbles.

She also may be talking her book here. The Trumps have a major development underway in Panama. That said, this also gives her a unique perspective on the opportunities in Panama. So perhaps we shouldn't make too much of the conflict of interest.

John Carney - Wall Street Journal

5 Good Reasons to Buy Property in Panama

2009-02-26T14:19:00.000-08:00

Detailing five very good reasons why it is still a great idea to invest in some stunning property in Panama – whether you’re an investor or a new home seeker. The world is in financial crisis, globally speaking real estate markets are in decline, no banks are lending money for consumers to buy houses with, and chances are there has never been a worse time in our recorded history to buy property – and yet, in our opinion there are still at least 5 good reasons to buy property in Panama! You may have read the hype that the boom is continuing and that every property that’s for sale in Panama is a sound investment bet – well, that’s not entirely true. But neither is the negative hype about the market being saturated with greedy speculators and that Panama is heading for an almighty crash. There are 5 very sound and solid reasons why property in this stunning Central American nation is a good bet for long-term investors, holiday home seekers or even retirees and early retirees… (more)

1) Tourism is Increasing in PanamaPanama is a first world nation offering the associated comforts, and at the same time it is an ‘undiscovered’ gem of a nation where it’s possible to get truly away from the madding crowd and discover hidden coves and beaches, stunning rainforests, amazing flora and fauna, unaffected people and communities steeped in history and culture. In other words, Panama has something for everyone – and it’s cheap too, relatively speaking! All of these are reasons why the country has been welcoming increased numbers of tourists year on year – in fact, it has welcomed a 12% increase annually since 2004.

Hotel occupancy rates are exceptionally high, new airline routes are opening up bringing travellers direct from nations such as Italy and the Netherlands for example, and the government in Panama is continuing to plough substantial funds into the promotion of the nation internationally.

All this bodes very well for anyone who is interested in buying property in a country with a healthy and affluent outlook for the long-term. It means that desirable homes will make good rental properties, and that as more people arrive and learn about the delights of Panama, so more people will think over the long-term about relocating to live there – thus giving a property owner an exit strategy.

2) Desirability of Panama and its Property Product. Panama has it all – from a bustling and cosmopolitan capital city to tiny rural enclaves, from high rise luxurious real estate, to beach huts and fabulous fincas. Therefore, yet again there is something of appeal to everyone. So whether you want to live on the coast and be a beach-bum or you want to live the high life in Panama City, you can when you choose the right type of home for you in Panama. This makes the nation a great choice for anyone thinking about moving abroad – because you can likely find your perfect home in this one nation – no matter what it is you’re looking for in a property!

3) Property in Panama Can be Competitively Priced. Because the really booming times in Panama’s recent history are currently over, there are many speculators keen to exit the market and consolidate their debts, there are developers doing their best to off-load already constructed stock, and there are private vendors willing to accept below asking price offers for property. What’s more, away from the glitzy, modern high-rise property market in Panama City, most real estate in Panama is sold on a more personal basis. You’ll find that those who are selling a family home for example, are far less likely to want to sell to an anonymous buyer from abroad and far happier to sell to you if you befriend them, enter into direct negotiations with them and remain calm, open and friendly throughout. These sorts of vendors would rather sell to you for a lower sum if you take this approach, than they would to an overseas buyer they have never met who is dealing with a slick real estate agent and offering them their asking price!

In other words, Panama is a market where there is a lot of room for movement when it comes to asking prices – no matter which approach you take and which properties you’re looking at. And it’s also a market with some exceptional bargains.

4) Long-term Potential for Profit. Panama’s canal extension project is on track, tourism numbers are consistently rising well, the government and business environment are stable, fiscally speaking Panama is affluent and successful, the ‘pensionado’ scheme attracts more wealthy ‘retirees’ annually and the real estate market’s transparency is improving. These are all very good reasons why Panama has exceptionally good long-term potential in terms of its property investment prospects. Whilst things are looking less favourable at the moment due to the current state of the global financial market, those who look to the long-term and take anything but a speculators approach to the market stand to reap the rewards eventually.

5) Lifestyle. The final reason why we feel that property in Panama is a good bet is simply because the lifestyle available in Panama is fabulous! It’s once again the case where you can get what you want from life – so, if your idea of heaven is shopping in glitzy boutiques, working in the City, dining out in posh restaurants and living in luxury – you can have that lifestyle in Panama City. Or, if you prefer the thought of living in a friendly expat community close to the sea and with wonderful views and a very laid back pace of life, this type of lifestyle is also possible. Alternatively, those who want to get away from it all or who want to live on the beach, in the mountains or perhaps in the local community can also find a property that will give them the lifestyle they want.

Hopefully this article has demonstrated that property in Panama can be a solid investment purchase, a lifestyle home choice or just a great buy for long-term potential appreciation…and that you can find whatever it is you’re looking for in Panama.

The World's Top Property Hotspots for 2009

2009-02-06T19:16:00.000-08:00

Oxford 26 January 2009 - International real estate investment specialists Property Frontiers have named their top six property investment hotspots for 2009 – and the list contains some surprises. Panama, the Central American republic tops the list due to a strong economy, a favourable tax regime and offshore banking attracting businesses from across the globe. Investors can choose a variety of different options, from hotels enjoying high occupancy rates, to offices, and beachside resorts. The expansion of the Panama Canal looks set to underpin future economic growth. The Malaysian capital Kuala Lumpur is a thriving city with affordable property and accessible cheaply with a new budget airline linking direct to London with flights from just £99. Outside of Kuala Lumpur is the teeming tourist playground of Sabah on North Borneo,Where Brazil is a booming economy and with sun, samba and a cheap cost of living, is taking over from Florida as the fun capital of the world – and is the same flight distance from London as Miami.

Tourism is lifting off around the northeast city of Natal, which boasts average daily temperatures of 28°C all-year-round and mile after mile of sandy, palm fringed beaches. If traditional buy-to-let is the target, Sao Paulo is one of the world’s largest and fastest growing cities with an insatiable demand for quality accommodation. Slovakia’s High Tatras national park offers all-year round tourism as a UNESCO area of outstanding natural beauty. In the summer, the mountains are an attraction for walkers and golfers, while in the winter cheap skiing lures visitors from all over Europe.

The USA is tipped as one to watch as prices bottom out. Apartments in Florida are selling at 54% lower than their launch price, and according to the builders, at less than their build cost and offer an instant 6% rental return. Coming in last is the UK, with property bargains piling up at auction houses and market commentators still forecasting that prices are stagnating or still falling in most areas. “In real terms the pound is at a point not seen for 10 years. This offers a fantastic buying opportunity for international investors. As a company we have never seen so many enquiries from our international investors looking for UK property. A combined depreciation of the pound and the market now makes UK property some 54% cheaper than a year ago.

source: Panama-Guide.com

Consumer confidence high in Panama

2009-01-27T09:25:00.000-08:00

Although the rest of the world's consumer confidence may be in the toilet, Panama's is still riding high. As this particle points out, it is due partially to a 13th month year end mandatory bonus and Panamanian's belief in a brighter future.

Excerpt From La Estralla:

Jacques de Raucourt of GFK Marketing Group, the company that carries out the consumer’s confident surveys for the Panamanian Chamber of Commerce said the increment of the index in Panama was directly related to the high level of commercial activity in December, mainly because during that month the Panamanians receive more income, like the 13th month payment and other incentives.
Consumers expectations about the financial situation of their homes went up to 118, five points higher that in November, which indicates optimism for the future.

With U.S. economy stuck, economists look abroad

2009-01-12T09:35:00.000-08:00

By Jack Chang, McClatchy Newspapers WASHINGTON — As U.S. consumers stop spending and investors keep their money to themselves, government and business leaders hoping to get the country's ailing economy moving again are playing one of their few remaining cards. They're trying to sell more U.S. goods overseas despite the decline of both global demand and U.S. competitiveness. Exports currently make up about 13 percent of the country's total economic activity, far less than the 70 percent taken up by production for domestic consumption. But that's where economic growth can still happen, analysts say, especially as the domestic housing and credit crises promise to freeze spending at home for at least another year. Economists and business leaders suggest the incoming Obama administration implement export-friendly measures such as streamlining U.S. customs operations, negotiating more free trade agreements and developing industries such as alternative energy that can become the next generation of U.S. economic powerhouses. (more)

Fitch Affirms HSBC Bank Panama & Sub's Ratings; Outlook Positive

2009-01-04T08:57:00.000-08:00

NEW YORK--(BUSINESS WIRE)--Today Fitch Ratings has affirmed HSBC Bank Panama (HBPA) and its subsidiary Primer Banco del Istmo's (PBI) ratings as follows: HSBC Bank Panama: --Foreign Currency Long-term Issuer Default Rating (IDR) at 'BBB+'; --Foreign Currency Short-term IDR at 'F2'; --Individual Rating at 'C/D'; --Support Rating at '2'. The Rating Outlook is Positive. Primer Banco del Istmo: --Foreign Currency Long-term IDR at 'BBB+'; --Foreign Currency Short-term IDR at 'F2'; --Individual Rating at 'C/D'; --Support Rating at '2'. The Rating Outlook is Positive. HBPA and PBI's IDRs reflect the support from its parent (HSBC, rated 'AA' by Fitch Ratings) and are constrained by Panama's country ceiling rating. The individual ratings reflect HBPA and PBI's strong franchise, market share and improving revenue diversification; they also factor in the challenges of their merger and the weakening economic scenario. (more)

In Fitch's opinion, considering HBPA's (and PBI's) size, importance and key role in HSBC's strategy in the region, support from its parent should be forthcoming, if needed. An upgrade in Panama's country ceiling rating (reflecting a strong economy) would allow HBPA's and its subsidiary's IDRs to be upgraded. A disruptive integration of PBI, declining asset quality or weaker capitalization could pressure individual ratings.

HBPA's performance in 2008 is driven by stable margins and increasing non-interest revenues that offset modest loan portfolio growth (+2.2% for the year to date at August 2008). Margins are somewhat underpinned by decreasing funding cost while growing fees and commissions supply about 25% of operating revenues. Operating costs have increased, reflecting the on-going integration effort that involves significant investments in premises, training and an IT overhaul. Provisions have gradually returned to normal levels hence resulting in higher efficiency and improved profitability.

The loan portfolio is widely diversified and little concentrated while asset quality and reserve coverage improved within HSBC's stricter credit policies. The investment portfolio is smaller, less risky and a substantial liquidity cushion is in place. Deposits, which are broad-based and little concentrated, increased in line with assets and funding costs eased as institutional funding declined. Capital was strengthened by fresh capital injections (about $156 million) and retained earnings (over $160 million), hence BIS capital ratios attain 10.9% at August 2008 (11.4% in 2007, 9.4% a year earlier).

Going forward, moderate loan growth should be driven by corporate lending and later on by retail lending; margins should remain under pressure, but funding costs are likely to stabilize/decline. Operating costs should start declining in 2Q09, after the integration is completed while credit cost should stabilize in line with asset quality. Efficiency and profitability should improve only by 2Q09 while capital ratios should remain fairly stable. The merger has been delayed by the IT overhaul; however, these glitches do not change Fitch's belief that the completed merger will result in a very sound, efficient and competitive regional player as originally planned.

HBPA is 100% owned by HSBC; its operations are highly integrated within HSBC's regional franchise where it is considered a key subsidiary. A universal bank active in consumer, commercial and corporate lending, HBPA holds 21% of the system's assets at September 2008; it merged with Grupo Banistmo (PBI's parent) in July 2007 creating Panama's largest bank and a major regional player operating in Central America and Colombia.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

A Tree Grows in Panama

2009-01-03T11:15:00.000-08:00

By ANDREW C. REVKIN

While working in eastern Panama between 2002 and 2006, four young Peace Corps volunteers conceived of a plan to help restore the region’s disappearing tropical forests, provide income for struggling landowners and make money for investors and themselves.

It’s one thing to have an idea and another to start a business, of course. But the partners — using skills gleaned from academic programs in business, design and international relations — have pulled it off.

Their company, Planting Empowerment, leases land in the region — a pocket of biological riches that has been eroding under decades of slash-and-burn farming. Money from investors is used to plant and tend about 500 trees an acre that, in 25 years, should become a source of valuable tropical hardwood.

The key to the model is the concept of leasing, according to Damion Croston, a 29-year-old graduate student at Ohio University who is studying international development. (Another founder graduated in May from Thunderbird School for Global Management in Phoenix. The two others have degrees from Johns Hopkins and Virginia Tech.)

When land is bought outright for tree plantations, the farmer is displaced. But Planting Empowerment is using only uncultivated, deforested parcels of a farmer’s land, allowing agriculture to continue on other parcels. A lease clause prevents the use of the money to buy and clear more land. And to guarantee that the tree canopy is always increasing, trees are planted on different tracts at different times; as one patch of trees matures and is harvested, others will be in various stages of growth.

Investors, who must plunk down a minimum of $7,000, have so far been mainly family and acquaintances, Mr. Croston says. But Planting Empowerment is now selling $50 and $100 forest savings bonds with an expected return, after lumber is harvested, equivalent to 7.8 percent a year. Some income from the plantings, now on 50 acres, is possible after five years, when foresters start thinning the dense stands of young trees to make room for others to grow to maturity.

The business plan has won recognition in college-sponsored competitions aimed at fostering socially responsible ventures, including those at the University of Washington, Notre Dame, Yale and the University of Texas, Austin, where Planting Empowerment was second out of more than 1,000 ideas.

To promote sustainable economic opportunity, Planting Empowerment intends not only to pay indigenous people for the use of their land but also to provide some higher-level employment and a share of profits.

“We believe,” Mr. Croston says, “in a more inclusive sort of capitalism.”

2008-12-18T14:06:00.000-08:00

By DON WINNER for Panama-Guide.com - I've said it before a dozen times, the only people who are really taking a risk in the Panamanian real estate market are the speculators. Everyone is playing the "what's going to happen" game in this economy, and thankfully Panama is in an excellent position to weather the storm quite nicely. Bank reserves have tripled in the past three years, the economy grew 11.5% in 2007, should come in at around 9.2% for 2008, and is expected to continue the run of growth in 2009 at about 7.5% or better. Demand for real estate in Panama has fallen sharply with the onset of the global crisis as retirees worriedly pour over the reports on what's left of their 401K's and retirement investments. They can't sell their empty nests and it's harder for potential buyers to obtain mortgages in a tightening credit environment. Unemployment is on the rise, car makers are being laid off, and in general we're looking at a period of tough times in the US, Europe, and Asia, a malaise that will most certainly cause significant economic harm in Panama and the rest of Latin America. But here's the good news... (more)

Oh, Woe Is Me... Not so much. There are a whole raft of things working in Panama's favor that will help this relatively tiny Central American nation come through the storm with flying colors - such as;

The Banking System is Solid: Foreigners love to bitch and complain about the Panamanian banking system; it's hard to open an account, they need a lot of paperwork, you have to put down 20% or 30% in cash to get a mortgage, you have to have life insurance, etc. In fact, the Panamanian banking system is relatively skittish compared to the guys in the United States who played fast and loose and who are now getting hurt. Panamanian banks didn't play those games, and the banks are in great shape. That means there won't be any local failures or collapses like those in New York and London. Those same things we like to bitch and complain about are the things that kept the Panamanian banking system out of the muck.

The Financing Is In Place: If you look out upon the skyline of Panama City and you see a construction crane, that means those developers and builders have already secured financing to build their projects. For the most part they had to sell about 50% of the units in pre-construction sales contracts in order for the banks to turn loose the funds. Generally speaking, builders don't start to build unless they have financing, and banks won't finance unless they have reduced their risk to practically zero. Banks love zero risk.

The Profit Is In The Other 50% - Builders and developers make their money on the second half of sales, after the building is built (or while it is being built). The first 50% is just to pay the cost of construction and to get things done. The second half is the income. So guess what? If market forces bring down prices and builders reduce prices to "dump" the remaining inventory, then that just means they end up making less profit in the end but so far no one is losing any serious money. The banks are covered, the builders are covered, and the buyers get a nice place for a lower price. Where's the pain?

Cement Doesn't Rot: All of the high-rise condominiums in Panama are made out of poured concrete, cement, ceramic tiles, glass, and steel. They still have all of the wonderful features that made them attractive in the first place, such as sweeping views of the Bay of Panama, a great location right in the middle of the city, modern design, fantastic social areas, security, etc. Anyone who bought one of these units can just sit tight and wait for a few years for things to turn around and the relative value of these properties will return promptly. The builders can literally sit on unfinished inventory and simply wait for the market to turn around. When it does, they can put these units back on the market. In the meantime, they can just sit there, and so what? The builders will realize their profits later. Between now and then they will probably be able to eat. Thanks for being worried.

First Out Of The Gate: The fundamentals which created the "Panamanian Miracle" are still in place for the most part, and it's the international situation that's throwing some cold water on the fire. Sooner or later things will turn around, and when that happens you'll see that Panama has weathered the storm in fine shape. Really smart investors will bottom-feed here and there to look for opportunities as they arise with an eye toward the midterm future. The $5.25 billion dollar (plus) expansion of the Panama Canal is going full speed and will continue through 2014. The Panamanian economy is still solid and stable, and there are several significant infrastructure projects ongoing that are stimulating the economy. Some sectors will take a hit, others will hold fast, and still others will grow during this global recession. But when the smoke clears, Panama will be very well positioned to right to the head of the pack, again.

The Richest Country in Latin America? Really? No, not yet. Actually, using data from the end of 2007, Panama was the 7th richest country in Latin America behind Chile, Mexico, Venezuela, Brazil, Uruguay, and Argentina. Historically speaking, Panama was both helped and hurt by the domination of the United States for all those years. The Panama Canal brought jobs and stimulated the economy, but only to a certain point. Now, with the reins removed and with Panama cashing in on their newfound position as toll-taker for world shipping, the Panamanian economy is smartly stepping forward and improving in all measurable areas. Before too long, and it might take another ten or fifteen years, Panama will slowly move up through the ranks to take it's place as the richest country in Latin America. It's going to happen, and it's only a matter of time. Just remember you heard it here first.

GDP Per Capita Is What Matters Most: Panama's Per capita GDP (2007) was $5,970 (Source), up from $3,939 in the year 2000. The overall size and weight of a national economy matters, but a better measure is compare economies in terms of size of their relative populations. Consider the following chart, prepared using data from the end of 2007. Clearly Panama is the #1 Central American economy in terms of GDP per capita. The nation's economy continues to improve, fueled by year after year of continued and steady growth, while others such as Venezuela falter;

Sometimes Small is Good: There are only 3.3 million people living in Panama, so big economic improvements are spread across the board relatively quickly. Unemployment is down to 5.6% and falling. Foreign Direct Investment continues to pour in from around the world. Easing prices for fuel, food, and consumer goods are putting more discretionary funds in the hands of consumers. There is upward pressure on wages as skilled and experienced workers get better and better positions and employers have to fight to keep their valued employees. Being a small country with solid economic fundamentals means Panama will be able to literally dodge most of the really big bullets coming from this global slowdown. There will be impacts, but those effects will be relatively dispersed and mitigated.

Clueless Chicken Littles: As always, there are always people waiting for their chance to scream "fire" at the first possible instance. And as usual those people are, for the most part, dead wrong and pretty much clueless. For instance real estate prices in Panama are established by market forces. Sellers offer products and buyers make offers - and if those two can come to an agreement and meet in the middle then the sale is closed. If they can't come to an agreement then (obviously) the sale does not take place. I've seen some articles lately literally chastising real estate developers, screaming that they should "wake up" to some version of a new reality and lower their prices. Not to worry - simple market forces of supply and demand will establish the value for every piece of property for sale. No need to tell sellers (or buyers) what to do, prices and relative value will be established for them by the big picture.

To Lose Money: For the most part, anyone who finds themselves trying to sell a property might end up making less profit than they had planned or hoped. So far, I've still not heard of one person who has been forced to sell their property for less than what they paid for it, realizing a net loss. So it's still a good marketplace, just not as incredibly lucrative as it has been for the past several years. But less profit is still profit, not loss. My advice - plan to get rich more slowly. Patience.
That's About It For Now: Panama will miss the worst of it. The fundamentals are still in place. Specific sectors will take worse hits than others, and overall the economy will continue to grow. And, once it's all over, Panama will be ready to spring ahead like the virtual rabbit in the toad race, compared to others in the region that will take more substantial hits. So strap on your helmets, hunker down for awhile, and ride it out. Panama is a great place to be right now.

Copyright 2008 by Don Winner for Panama-Guide.com.

Panama to Maintain Growth Amid Crisis, Torrijos Says

2008-12-15T07:54:00.000-08:00

Dec. 10 (Bloomberg) -- Panamanian President Martin Torrijos said his country will maintain high levels of growth and a low jobless rate next year even as the credit crisis triggers a worldwide economic slowdown.

The Central American country’s economy will probably expand between 6.5 percent and 8 percent in 2009 and 9 percent this year, Torrijos said in an interview with Bloomberg Television today in Panama City. The U.S. recession won’t impede financing for his government’s $5.2 billion project to expand the Panama Canal, he said.

“There are very good projections for Panama,” Torrijos, 45, said. “If there’s any country that has an advantage that will make the crisis the least traumatic possible, it’s Panama.”

A solid financial system, infrastructure projects, fuel and transportation subsidies and low interest rates for the agricultural industry will help maintain growth, Torrijos said. Panama’s economy has expanded for 23 consecutive quarters, including 11 percent growth last year. The jobless rate fell to 6.4 percent last year from 14 percent in 2001.

Panama signed an agreement yesterday with five overseas banks to receive financing to enlarge the canal. The $2.3 billion loan allows lower interest payments for the next 10 years as work gets under way to expand the 50-mile-long (80 kilometers) canal, which connects the Pacific Ocean with the Caribbean Sea.

The agreement for the loan calls for $800 million from the Japan Bank for International Cooperation and $500 million from the European Investment Bank. The other participants are the Inter-American Development Bank, the World Bank’s International Finance Corp. and Andean Development Corp.

Canal Authority

The rest of the funds needed for the project will come from contract awards and shipping fees, Panama Canal Authority Chief Executive Officer Alberto Aleman said today on a conference call.

“Yesterday’s signing shows the whole world that it’s a solid, viable project, that there’s confidence in the canal and its management,” Torrijos said before meeting today with U.S. Secretary of State Condoleezza Rice in Panama City. “This ensures the continuity of the canal enlargement.”

The canal authority is preparing for the expansion even as traffic through the canal fell 0.1 percent from a year earlier in the initial nine months of 2008, the first such drop since 2002. Transport fees may be raised at the end of next year if the global economic slump continues to curb use, Aleman said.

About 27 percent of the world’s container ships are too big for the canal, a figure that will rise to 37 percent by 2011, the authority has said. The expansion project is on schedule to be finished by 2014, Aleman said today.

Panama’s poverty rate dropped to 29 percent of the population last year from 37 percent in 2001.

The New Panama Red

2008-12-09T15:00:00.000-08:00

Last Friday, Dec. 5, the Russian Navy sailed a warship into the Panama Canal--the first time since World War II. This week Secretary of State Condoleezza Rice flies to Panama to reinforce U.S. interests in the Zone.

Although it sounds like a reversion to Cold War intrigue that would make you want to load up on swords, your better bet might be plowshares.

The free trade spirit permeates Panama. It operates the world's second-largest free trade zone after Hong Kong. Its overall economic growth rate matches that of China. Panama has posted 23 consecutive quarters of economic growth, growing gross domestic product by 11.5% in 2007. This is double the pace of the rest of Latin America and well ahead of the U.S.

Three things explain a continuing positive outlook for Panama.

First, the Panamanian construction sector is in hyper-growth mode. U.S. retirees are attracted there by the lower cost of living, a dollarized economy, English-speaking people and proximity to the states. Several high-profile real estate projects like the Trump Ocean Club are also drawing upscale jet-set buyer attention. Panama City is only a three-hour flight from Miami and has all the signs of a boom town, including building cranes on the skyline and traffic congestion.

Second, the canal widening construction project is boosting the Panamanian economy. This is the largest infrastructure project in Latin America with a price tag of $5.2 billion. This week, five major multinational agencies are expected to agree on a $2.3 billion, 20-year long-term financing. The project is already pumping money into the local service-based economy, which should easily reach the 7%-8% International Monetary Fund growth projections for next year,

Third, the economy of the Colon Free Trade Zone represents almost 8% of the entire Panamanian economy and another potential contributor to growth. Last year, trade between the U.S. and Panama amounted to $4 billion in goods. If the U.S. ratifies the U.S.-Panama Free Trade Agreement, tariffs on 80% of the industrial and consumer goods imported from the U.S. should be eliminated. Lower tariffs will make it easier for U.S. companies like Caterpillar (nyse: CAT) to compete for much-needed earth-moving equipment sales.

Panama Canal 'Open to All,' Including Russian Warships

2008-12-06T08:09:00.000-08:00

Panama said its canal is open to all, including a Russian warship sailing through the transoceanic waterway on Friday.

The destroyer Admiral Chabanenko is the first Soviet or Russian military ship to traverse the 50-mile waterway since World War II.

The U.S. government has shown little concern about the destroyer's trip through a canal that was off limits to the Soviet Union during the Cold War.

Click here for photos.

The destroyer's journey to the Western Hemisphere, however, reflects Russia's growing influence and anger with the U.S. for using warships to deliver aid to Georgia after its August war with Russia.

Panamanian Foreign Minister Samuel Lewis portrayed the Russian canal crossing as business as usual.

"Here there is no other message than that the canal is open to all of the world's ships," he said.

The warship is part of a fleet that is the first Russian navy deployment to the Western Hemisphere since the Cold War. Before arriving at the canal, it took part in joint exercises with Venezuela's navy.

Also on Friday, Russia said it was sending its sole aircraft carrier and several accompanying ships for combat training in the Atlantic and the Mediterranean.

The destroyer entered the canal Friday night and was expected to take eight hours to reach the Pacific. Following its passage, the Admiral Chabanenko will dock at what was once the base for all U.S. naval activities in South America.

The U.S. government handed over the Rodman Naval Station and the canal to Panama nearly a decade ago, and the waterway has since become a symbol of Panama's true independence.

When it opened in 1914, the canal was a symbol of America's growing global reach and became a major U.S. military outpost for generations. The 10-mile-wide (16-kilometer-wide), 50-mile-long strip along the canal was considered U.S. territory -- a fact that allowed Canal Zone native John McCain to run for the U.S. presidency.

Lewis said the canal maintains a neutral policy in world politics. He pointed out that the ship's passage came just a few days before U.S. Secretary of State Condoleezza Rice is scheduled to visit Panama.

Architects Head to Latin America to Weather the Economic Storm

2008-12-02T09:34:00.000-08:00

Even as financial troubles mount around the world, some architects are betting on Central and South America

In recent years, as many major U.S. architecture firms expanded internationally, they often bypassed Latin America in favor of Europe, China, and the Middle East. Gradually, though, that may be starting to change, as architects open offices and enlist for projects in Central and South American countries, where population and economic growth have been strong in recent years.

Even as financial troubles mount around the world, and increasingly put some Latin nations at risk, there's a sense that much of the region, which has been buffeted by severe recessions before, can weather the current crisis. At least that's what some architects believe.

"I'm continually surprised how much of a need there is for development," says Stephen Forneris, AIA, who heads the 10-employee office that Perkins Eastman opened in Guayaquil, Ecuador, in October. The city, which is Ecuador's largest and a busy port for shipments of chocolate, bananas, shrimp, and cement, has mushroomed from 300,000 people in 1970 to 3.5 million today, Forneris says.

Now cropping up there are stores selling luxury foreign goods, the kinds of watches and handbags purchased by big spenders on Miami shopping trips. More significantly, a growing middle-class in Ecuador, as well as in Peru and Colombia, is spurring the construction of discount stores, adds Forneris, who recently completed a 12-story mixed-use project in downtown Guayaquil. Among its tenants will be a new outpost of Juan Eljuri, an Ecuadorian-type Wal-Mart that sells clothes, housewares, and electronics. The building will house both the 45,000-square-foot store and the company's corporate offices, in addition to other tenants.

While the global credit freeze could theoretically curtail shopping habits, the overall effects "won't be as severe here," Forneris predicts. "Money has been hard to come by for years, so I don't know how much more credit can shrink for them."

The foreign influence on Costa Rica, meanwhile, is predominantly from U.S.-based personal-care products and technology companies looking to outsource jobs, says Joe Brancato, a managing principal with San Francisco-based Gensler, which opened an office in Escazu, Costa Rica, in 2006.

To accommodate clients, it helps to have local connections: all 22 employees in Brancato's office are native Costa Ricans, because they're familiar with the country's intricate building codes, he says. Plus, residents are often better equipped than transplants for the delicate task of convincing local contractors to start projects after construction plans are finalized, not before, as is often the case in Costa Rica. "You need to understand and embrace that this is a different culture, that they do things differently," Brancato says.

Another driver of Latin America's building boom is tourism. Despite a global drop in travel due to the economic downturn, Bryan Algeo, AIA, principal of WATG, an Irvine, California-based firm, says the Latin American tourism industry shouldn't be as badly affected as other parts of the world because the region's still relatively affordable compared with other destinations.

Plus, with demand for hotel rooms there far outstripping supply—there are just 500 luxury hotel rooms in all of Costa Rica, he says—developer interest should remain high. That's just one of the reasons his firm, which has designed hotels in 150 countries since its founding in 1946, is seeking more commissions in Latin America. "We go where the action is, and we see activity moving south," Algeo says.

In Panama, he adds, developers can't usually secure loans until they have pre-leased 75 percent of a project, insuring that the kinds of speculative buildings that can worsen downturns aren't constructed. His firm currently is working on Panama City Center, a $60 million project whose twin 22-story glass towers rise from a four-story podium that includes a casino and spa. Excavations are underway for the project, which is on track to open in 2010, according to Algeo.

Latin America's stabilizing political landscape is also fueling its appeal, says Alberto Aranda of Giancarlo Mazzanti Architects, a 12-year-old Bogota, Colombia, firm specializing in schools, libraries and stadiums and other state-sponsored commissions. He adds, however, that a gold-rush mentality may never totally catch on, as South American clients still typically pay far less than their American counterparts.

"There's a still a gap, and that gap makes us less competitive than the rest of the world," Aranda says. "It's not always attractive, economically speaking, for an American to come work here."

Source: BusinessWeek, C.J. Hughes

West Coast ports face struggle to maintain relevance

2008-11-28T09:51:00.000-08:00

The global financial slowdown has already slashed traffic, and a major Panama Canal expansion will bring new competition.

By Ronald D. White

November 28, 2008

The slowdown in international trade has left the docks at the nation's biggest seaport complex quieter than they've been in years.

Some workers, particularly non-union "casuals," at the Los Angeles and Long Beach ports wait for shifts that never come. Automobiles and other merchandise pile up as consumers dig in for a long economic winter.

But the problems at the twin ports, along with smaller West Coast harbors, extend beyond the nation's economic woes, maritime experts say, and changes on the horizon could leave the seaports struggling to keep customers.

That's the assessment of a recent report by London-based Drewry Supply Chain Consultants, a maritime industry research firm that has about 3,000 clients in more than 100 countries. West Coast ports will see increased competition from the Panama Canal, which is undergoing a bigger-than-expected expansion due to be completed in 2014, Drewry said. In addition, rising Chinese labor costs will push some manufacturing back to Mexico and South America.

Even if global trade returns to its formerly robust pace, Drewry said, "any new trade will probably pass the West Coast by. Volumes are unlikely to decline, but the days of strong growth on the Pacific Coast are behind us."

The implications are potentially enormous.

The ports of Los Angeles and Long Beach are directly or indirectly responsible for 886,000 jobs in California, according to a 2007 study by the Alameda Corridor Transportation Authority. The $256 billion in U.S. trade that moved through the ports that year, including $62.5 billion in California cargo, was also responsible for $6.7 billion in state and local tax revenues, the study said.

But times change, Drewry and other maritime experts say, and future economic conditions will shine a more favorable light on the all-water routes to East Coast and Gulf Coast ports by way of the Panama and Suez canals.

Some of that trend can be seen already.

A.P. Moller Maersk, the world's biggest shipping line, this year reduced its business from Asia to the U.S. West Coast in favor of stronger Asia-to-Europe trade. This month, the Denmark-based giant announced more changes.

Maersk said it would join with the world's third-largest shipping line, France's CMA CGM, and cut back its Asia-to-U.S. business by an additional 8% with new routes through the Panama and Suez canals.

The new business partnerships come at a time when the maritime industry is reeling from the global economic slowdown and credit crisis, delaying delivery of new vessels and killing deals considered too much of a revenue risk. Those pressures, Drewry says, will result in changes that will be difficult to unravel even as global trade eventually recovers.

Officials at West Coast ports say that they are doing what they can to remain competitive. But Drewry and other authorities say the ports suffer from a number of problems, including a lack of land for expansion and rail capacity that is significantly lower than in the past, despite billions of dollars in investments.

The two largest ports -- Los Angeles and Long Beach -- also face steep and costly environmental hurdles to expansion projects that had slowed to a crawl until this year. Some of those plans face serious legal challenges from trucking and trade groups.

In the meantime, the Panama Canal expansion project has come a long way from something that generated amused smirks from the maritime community when it was first announced in 2006.

As a sign of the new esteem with which the project is now regarded, Panama Canal Authority Administrator and Chief Executive Alberto Aleman Zubieta was honored Monday with an excellence award at the Asia-Pacific Economic Cooperation Summit in Lima, Peru, for "successfully moving the canal from a profit-neutral utility to a business-oriented enterprise."

Now, Drewry says, West Coast market share is about to take a serious hit, "possibly forever," from a "rejuvenated, aggressive and soon-to-be widened Panama Canal" that will have locks capable of handling cargo ships carrying as many as 13,000 containers -- much larger than the 8,000-container ships it was originally expected to accommodate.

Drewry isn't the only one who thinks so.

"With the ability to handle most of the world's largest ships, the Panama Canal will begin to enjoy better economies of scale than its primary competitor, which is the transpacific intermodal route from Asia to the West Coast and to the rest of the U.S. by rail," said Asaf Ashar, head of the Washington office of the University of New Orleans' National Ports and Waterways Institute.

"It's cheaper to move cargo by ship than it is to transfer it to rail and go overland," Ashar said. "The logical conclusion is that market share will be lost."

Meanwhile, East Coast ports are frantically working to be prepared once the Panama Canal expansion is complete.

The American Assn. of Port Authorities, which represents most of the Western Hemisphere's major harbors, is devoting the current issue of its Seaport Magazine and an upcoming seminar in January to the shifting international trade routes and the Panama Canal expansion.

"It's become a very big deal," said Aaron Ellis, a spokesman for the trade group.

Port of Los Angeles Executive Director Geraldine Knatz said the port's willingness to address environmental concerns ended a logjam of expansion projects this year.

Saying that the port "should be investing $1 million a day in its capital spending plan" to increase efficiency and reduce pollution, Knatz said the facility was on pace to award $383 million in construction contracts this year.

Knatz said port officials were fully aware of the threat posed by projects such as the Panama Canal expansion, but she said the local ports had no choice in the way they must proceed.

"We're aware that some cargo has been diverted because of what we are trying to accomplish here," Knatz said, "but there is no way we would have been able to move forward at all with these construction projects if not for the steps we are taking to reduce pollution."

Latin America Combats Credit Crunch

2008-11-17T12:04:00.000-08:00

The global financial crisis is taking a toll on Latin American economies and their financial systems that will lead to a sharp reduction in lending for the remainder of this year and in 2009. In a bid to reduce the negative impact on economies and banks as much as possible, governments, central banks and multilateral entities have been very active in providing liquidity and financing for banks and companies.

Central Banks to the Rescue?
Central banks in many Latin American countries have acted swiftly to inject of liquidity into financial systems to ensure credit does not dry up as a result of the global crisis.

Central bankers, finance ministers and the Latin American Banking Federation have repeatedly assured companies and the public that the region is better prepared than ever to face this sort of crisis, thanks to sound macroeconomic fundamentals and large foreign reserves.

Central banks in the largest countries have agreed to work more closely with one another through technical cooperation and information sharing, but interest rate decisions are still made at the national level, not coordinated among countries.

The Role of State Banks
Governments in several nations have also aggressively used public-sector banks to provide credit and other types of financing to particularly vulnerable to the crisis or those that are important for economic growth.

Brazilian federal banks Banco do Brasil and Caixa Economica Federal and Sao Paulo state bank Nossa Caixa have together made several billion dollars worth of financing available for various industries, among them the country's important export and automotive sectors.

Chile's government acted to increase the available capital of the country's only state bank, BancoEstado, by 50%, to the tune of some $500 million. This is to ensure financing for small and medium-sized companies and mortgage lending at favorable rates for the middle class.

State-owned Mexican development banks Nafin, Bancomext and Sociedad Hipotecaria Federal put up close to $7 billion to support the local capital markets, real estate financing and debt issued by non-bank financial institutions and residential mortgage-backed securities.

Multilateral Moves
Several multilateral entities have also pledged billions of dollars in liquidity for Latin America's financial system, as well as increasing regional credit lines and lending volumes.

The Andean Development Corporation (CAF), Inter-American Development Bank (IDB) and Latin American Reserve Fund together promised $9.3 billion in liquidity to aid the region's financial systems.

The CAF raised its credit lines for financial institutions in its 17 member countries from $1.5 billion to $2 billion.The IDB is speeding up loan issues and expects to lend a record $12 billion in 2009, and also pledged a $20 million financing facility for the region's 600 microfinance institutions and their 8 million clients.

Outlook
High inflation, rapidly falling commodity prices and deteriorating consumer confidence are all contributing to the more adverse outlook for the region's banks. Mexico's banking sector is especially troubled, with the possibility of bad loans increasing to more than 10% of total loans in 2009.

But Latin American banks are well-capitalized in general and have reasonable access to liquidity. In contrast to the gloomy economic outlook for developed economies, the region’s banking sector will continue to attract investments from some international banks and private equity investors in the near term.

IMF and World Bank paint a bright future for Panama

2008-11-11T09:11:00.000-08:00

Contributed by Sam Taliaferro - Panama Guide

It does not come as a surprise that the Multi-national banks are touting Panama's strong financial position as they are also committing billions of dollars to the canal expansion project. At a recent meeting in Washington, Augusto de la Torre, chief World Bank economist for Latin America and the Caribbean, predicted that Panama would stand out as the fastest growing country in Latin America in spite of the impact of the financial crisis. The only cautious statement was "Estimates by the two financial institutions varied somewhat by the magnitude of the impact the global financial slowdown would have on Central America, as well as the effect recessions within the economies of key trading partners may have on the local economy."

We often hear about these banking entities being involved in high level projects in various countries but we don't know much more than what is put out by their press releases or the news media. So what really are these world banks and what is their purpose? I found an article from this week put out by the Global Policy forum, who's stated mission is to monitor policy making at the United Nations, promote accountability of global decisions, educate and mobilize for global citizen participation, and advocate on vital issues of international peace and justice.

It is interesting to note that both these financial institutions came about In 1944, as the end of World War II was coming into view and in the aftermath of financial disorder following the Great Depression, the two Bretton Woods institutions, the World Bank and the International Monetary Fund (IMF), were created. Interestingly, in the next week Brenton Woods III will take place because a similar economic situation is facing the U.S.. The report shines an unflatering light on the organiszations their continued failure to follow their mandates.

Here are some interesting excerpts from the article:

Both institutions have also played havoc with the development process of many developing countries, pushing them deep into debt and economic decline for a number of years."

However, over the years, both institutions deviated significantly from their respective mandates to become politicized, over-ambitious and grasping all decision-making in countries that fell in dire need of their resources.

At the same time, the management of these institutions is dominated by the US, a handful of European countries and Japan. While the institutions preach good governance and management, they have been unable to adapt themselves.

Panama: Boom or Bust?

2008-11-11T08:58:00.000-08:00

By Michael Manville for nuwireinvestor.com - While most of the world faces downward-sliding real estate markets and a global credit crunch, it is easy to assume that Panama's real estate market will follow. On the other hand, perhaps a speculative real estate boom has coincided with a variety of real geopolitical events that enhance the intrinsic value of Panama's real estate market in the wake of new trends related to globalization. Boom potential: Panama has been posed to grow exponentially in terms of tourism and real estate, particularly with baby boomers and other retirees and expatriates looking for affordable alternatives to well-established markets such as the Caribbean, Mexico and Costa Rica. Over the last several years, Panama has emerged as one of the hottest international destinations for tourism, real estate and business investment. Panama City hotels have doubled their rates and still there is almost no vacancy. Million- and billion-dollar projects are scheduled throughout the country, and real estate agencies have sprouted up on every corner. (more)

source: Panama Guide

One More Reason to Consider Retiring in Panama

2008-11-05T19:41:00.000-08:00

"The rich are looking to get their money out of the U.S."

2008-10-21T17:15:00.000-07:00

As a sign of the times this article from International Herald Tribune blog is about the high end of the real estate market slowing dramatically. Many falsely believed that those with money would still spend it as if nothing had happened to the economy. The truth is that the rich are like everyone else when it comes to money. When they see more going out than coming in they get concerned and pull back on spending.

As the U.S. is forced to become an even more socialist country many will be doing what is quoted at the end of the article. Sharon Simms, a luxury specialist in St. Petersburg, Florida, has also noticed a bump in international business, but with a twist. “For the first time I’m seeing U.S. citizens looking to get a percentage of their assets outside the United States,”.

This may well be the benefit that Panama will see from the economic shock and oncoming plan to redistribute wealth in the U.S. and Europe. No matter what the politicians promise about taxes, the fact is that somebody is going to have to pay for the mistakes that were made and those that have it will be the ones that have to pay. Unfortunately it won't be the bankers and rich politicians that got us into this mess that will pay. It will be those who through prudence, providence and hard work accumulated wealth and did not live beyond their means. But as this article points out, the rich will be looking at getting their assets and their asses out of harms way and Panama is poised with plenty of property and banks to take care of them. Read the story here.

Panama Sees $1.1 Billion in Foreign Direct Investment in First Six Months of 2008

2008-10-21T17:08:00.000-07:00

By Marianela Palacios Ramsbott for La Prensa - Foreign Direct Investment (FDI) entering Panama in the first semester of 2008 reached $1.1 billion dollars, representing an increase of 32.8% when compared to the same period of 2007, according to a report published by the General Comptroller of the Republic. The increases are primarily due to investments by banks and utilities of general license operating in the country. Other areas that have attracted great volumes of foreign investment during the past year are construction, the expansions of port facilities, the entrance of new cell telephone companies into the Panamanian market, as well as projects to increase the generation of electricity. And, according to the economic consulting firm Indesa, everything seems to indicate the flow of FDI will continue to grow strongly in the mid term, unless a strong recession in the United States and the global economic deceleration contracts international investments. “In order to expand the installed electrical generation capacity of 993 megawatts, as is predicted, will require an additional investment of $1.2 billion dollars in hydroelectric facilities over the next five years," said Indesa. And “for the period 2010-2011, $2.8 billion dollars or 53% of the total cost of the expansion of the Panama Canal will already have been invested." Between 2005 and 2007, foreign direct investment represented an average of 17.5% of the gross domestic product. But, according to estimations from Indesa, that indicator will jump to 52.3% in 2011. On the other hand, the United Nations Conference on Trade and Development (UNCTAD) anticipated recently that, in spite of the crisis in the United States, foreign direct investment in Latin America will continue growing this year and that Panama will not be the exception of that rule.

Editor's Comment: These are the kinds of numbers that cause economists to lose control of their bodily functions. Did you see the line about the expectation of seeing a level of foreign direct investment equal to 52% of the GDP in 2011? I mean, holy friggin' cow. Money is just pouring into this place in buckets. History will see this period as the golden times of an unprecedented expansion in Panama's relatively tiny national economy. Panama has had the fasting growing economy in Latin America for two years running. Sure, the crash in the US is going to have an impact, especially with regards to access to credit for large and ambitious construction projects, but overall I still think foreign investors will see Panama as a relative safe haven with attractive potentials for significant near to mid-term growth.

source: Panama-Guide.com

Construction Up 52% Compared To Last Year

2008-10-21T17:07:00.000-07:00

By GILBERTO PÉREZ for La Estrella - From January to August 2008 investment in construction rose 52%, from $726.2 million to $1.143 billion dollars compared to the same time period of the previous year, according to the primary monthly economic indicators of the General Comptroller of the Republic. Numbers reported by the Direction of Statistics and Census reveal that in the district of Arraiján growth was 133.2%, increasing from $21.3 million to $49.7 million dollars. In Colón growth was 84.2%, increasing from $19.2 million to $35.4 million dollars. And in Panama the increase was 54.3%. In addition in the areas of David, Bugaba, Chitré, Aguadulce and

Panama's annual GDP for the entire nation is just over $9 billion dollars, annual. This report says that in the first eight months of 2008 already more than $1.1 billion dollars has been spent on construction. That's an amazing number considering the tiny size of Panama's economy.

content compliements Panama-Guide.com

In Panama, a Home in the Mountains

2007-11-30T08:44:00.000-08:00

December 2, 2007

By KEVIN BRASS

ALTOS DE CERRO AZUL, Panama
The terrace of Rachelle and Ben Smith’s home is one of the few places on earth with views of both the Pacific and Atlantic oceans. On clear days, they sit there and watch the ships line up to enter the Panama Canal.

The area is also something of a bird paradise. Ornithologists regularly lead tours through the valleys, hoping for glimpses of the toucans, migratory birds and rare hummingbirds that regularly visit the treetops in the Smiths’ backyard. “The rope across there is for the monkeys,” Mr. Smith said, pointing to ropes strung through the tall pines around the house, near platforms covered with sliced bananas and bird feed.

The couple paid $150,000 in March 2006 for their three-bedroom, three-bath home. The house is situated on two acres of land, and it is a little more than an hour’s drive from Panama City.
In 2003, after Mr. Smith — who goes by “Smitty” — sold his plumbing business in Jacksonville, Fla., the couple spent three years living on a 38-foot sailboat called the Seawolf. But two years ago, while they were visiting relatives in the United States, their boat was destroyed by Hurricane Wilma.

Their initial search for a new home focused on the Caribbean and Costa Rica. But then they met Marie Farrell, a Panama native and an agent with ReMax in the Jacksonville area.

Fast-growing Panama is generally considered an easy place for foreigners to buy property, compared with other countries. English is commonly spoken, the United States dollar is the accepted currency, there are no restrictions on owning land in most areas and the government offers a long list of friendly discounts for pensionados, expatriates who have settled in Panama.
For the Smiths, Panama had an extra appeal — no hurricanes. “We were sick and tired of running from hurricanes,” said Mrs. Smith, 52.

Read the whole story here

Hard Rock International comes to Panama

2007-11-29T15:41:00.000-08:00

This is great news for Panama tourism. And guess what, there is a residential component (condo/hotel) to the project. Thanks to Martin Sosa for sending me this release.
"The Seminole Tribe of Florida and Seminole Hard Rock Entertainment, are very proud to announce the first Hard Rock Hotel in Central America," says Jim Allen, Chairman of Seminole Hard Rock Entertainment. "Panama, known as 'the Bridge of the World,' will continue Hard Rock's ongoing commitment for international expansion in interesting and strategic locations."
Hard Rock International and Lagomar Resort Announce Development of Hard Rock Hotel Panama Vibrant Resort Property to Offer a Four-Star, Luxury Environment Combined with Unique Rock Vibe 27 November 2007
ORLANDO, Fla., Hard Rock International and Lagomar Resort, S.A. announced today plans to develop a Hard Rock Hotel in Farallon, Panama. Hard Rock Hotel Panama will be situated along Playa Blanca Beach in Farallon. The newest location will be reflective of the luxurious brand, as well as Hard Rock's ongoing strategy to accelerate expansion of their properties worldwide.
With broad views of the Pacific Ocean, the resort will provide outstanding oceanfront views along 1,200 feet of Panama's coast. The tropical location, combined with Hard Rock's renowned, luxurious quality standard, offers another unique destination resort for one of the world's most globally recognized brands. This is Hard Rock's first hotel property in Latin America.
"The Hard Rock brand continues to expand to locations that offer key attractions including climate, beaches and natural beauty," said Hamish Dodds, president and CEO, Hard Rock International. "We feel this ideal Latin America location will be of interest to our growing clientele, and foresee this as a strategic business adventure reflective of Panama's developing tourism sector."
Hard Rock Hotel Panama will offer 445 luxurious guestrooms that range in size from 530 square feet, to 1,910 square foot 'rock-star suites' -- a signature trademark of the Hard Rock brand.
"We are excited to bring the Hard Rock Hotel experience to these pristine Pacific beaches," says Wayne Bryan, CEO of Lagomar Resort, S.A. "It's the right place to invest, with perfect weather and a forward-thinking government. Additionally, Hard Rock's blend of luxury and lifestyle provide an unparalleled visitor experience."
The surrounding natural landscape, including miles of sparkling white sand beaches, towering palms, and flowering plants indigenous to Latin America will undoubtedly serve as a complimentary backdrop for the hotel property and its amenities.
Several food and beverage outlets are planned for the resort, which will include a lobby bar/lounge and three unique restaurants inside the hotel. A luxury health spa will be open for guests, offering incomparable spa treatments exclusive to Hard Rock for visitors to unwind. Additionally, a business and conference center will be available, providing 25,000 square feet to accommodate large meetings. A smaller ballroom will also be on-site for more private, intimate affairs.
"The Seminole Tribe of Florida and Seminole Hard Rock Entertainment, are very proud to announce the first Hard Rock Hotel in Central America," says Jim Allen, Chairman of Seminole Hard Rock Entertainment. "Panama, known as 'the Bridge of the World,' will continue Hard Rock's ongoing commitment for international expansion in interesting and strategic locations."
Currently experiencing a real estate boom, properties in Panama are rapidly increasing in price and turning the country into a seemingly excellent destination for investments. Spectacular wildlife, scenic clouds forests, and beautiful beaches provide a wealth of options for travelers interested in water sports and leisure, or relaxation.About Hard Rock International With 121 high-energy Hard Rock Cafes and nine Hotels/Casinos in 47 countries, Hard Rock International is one of the world's most globally recognized brands. Beginning with an Eric Clapton guitar, Hard Rock owns the world's greatest collection of music memorabilia, which is displayed at its locations around the globe. Hard Rock is also known for its collectible fashion and music-related merchandise, Hard Rock Live performance venues and an award-winning website. In addition to the two flagship Seminole Hard Rock Hotels and Casinos in Tampa and Hollywood, Fla., Hard Rock Hotels/Casinos are located in Las Vegas, Biloxi, Orlando, Chicago, San Diego, Pattaya and Bali. Additional hotel and casino projects have been announced in Macau and Penang, both scheduled to open in 2009; Palm Springs and Atlanta, both scheduled to open in 2010; and Dubai, scheduled to open in 2011. Hard Rock International, Inc. is owned by Seminole Hard Rock Entertainment, Inc. For more information on Hard Rock, visit www.hardrock.com.About Lagomar Resorts, S.A. From the rain forests of Costa Rica to the desert oasis of Las Vegas, the Lagomar team brings a wealth of experience in envisioning and building world-class lifestyle destinations. Lagomar resorts boast everything from trend-setting design and environmentally-friendly construction to innovative financing in an effort to create a rewarding experience for everyone from guests to investors. For the past two years the team has been focused exclusively on the Panama project, covering thousands of miles of coastline to find the ideal place for a luxury resort destination. Together with the Hard Rock Hotel, Lagomar Resorts are committed to bringing an unequalled, ecologically conscious vacation experience to visitors from around the world. For more information on Lagomar visit www.lagomarpanama.com.

Investment propels a real estate boom for Panama

2007-11-27T07:35:00.000-08:00

Stability and a steady growth rate are helping to transform this regional hub.
By Sara Miller Llana Staff writer of The Christian Science Monitor

November 26, 2007

Panama City - The hilltop view overlooking the former Howard US Air Force Base in Panama says it all. The vacant barracks will be the site of a $10 billion minicity slated to be the size of Central London. Just beyond the hills, the Panama Canal is undergoing a $5 billion expansion, and in the background cranes hang over new skyscrapers that seem to rise every week.
Panama, it seems, is in its prime.

Once overlooked as nothing but a canal, this tiny Central American nation of 3 million is attracting residents, businesses, and investors the world over. Some are seeking a haven from political situations in the region. Others are jumping on what they see as one of the best investments around. But as the government markets itself as the Latin American lodestone, many caution that the city is growing too quickly out of its own infrastructure.

"We are the geographic hub of the Americas," says Ivan Carlucci, the president of the Panamanian Association of Real Estate Brokers and Developers, adding that 11,000 new units will come online this year. He boasts that 99 percent have already sold. Some say that speculators have fueled the boom, but Mr. Carlucci says he expects the real-estate market to maintain its momentum because of other large infrastructure and industrial projects throughout the country. "We will be sustained by all the other aspects."

See the whole story here

A day in Panama City— brand-new skyscrapers, and a colonial quarter

2007-11-15T15:05:00.000-08:00

Nov. 13, 2007, 12:56PM
By ARTHUR FROMMER King Features

Still reeling from the fact that our Panama City hotel had a full-scale casino of roulette wheels, blackjack dealers, craps tables and slots (nothing had prepared us for Panama's Las Vegas-style gambling), Roberta and I headed for our first morning in town to the city's outstanding quarter of colonial gems, the Casco Viejo district of 17th-century Spanish charm.

Preserved as the conquistadors left it, Casco Viejo vies with Old Havana and Old San Juan in authenticity — but it is beginning to leave the others behind with the restored beauty of its courtyards, and the sparkling tiles and marble that line many of the cafes, restaurants and shops that occupy these historic structures. Just as Panama City's downtown across the bay is transforming itself into a totally unexpected, skyscraper-packed Hong Kong, Casco Viejo is in the process of being restored into the most tastefully attractive area of the city.

Here the district is studded with fun gift shops (potholders and eyeglass containers in the strongly colorful designs — "molas" — of Panama's indigenous Indians, dolls in the ruffled long skirts of Panama's 19th-century women, feather-light Panama hats), the cafes and restaurants are gracious and courtly, the sight of the city's skyline across the water is stunning, the Presidential Palace (currently housing the Honorable Martin Torrijos) is the center of power and is surrounded by military — but friendly — guards, and the chief sightseeing attraction is the Museo del Canal Interoceanico (the museum that relates the history of the Panama Canal — although its inscriptions are in Spanish only, its many visual aids and movies are understood easily). The Canal museum is an indispensable stop, a necessary prelude to your visit to the Miraflores Locks later in the day.

After a $30 lunch for the two of us (including appetizers, main course, two Panama beers and dessert) at the elegant Mostaza Restaurant, we took a cab to the Miraflores Visitors' Center on the outskirts of town for a look at the actual workings of the canal. As we stood on a high outdoor balcony overlooking the Miraflores Locks, an announcer speaking over a loudspeaker in Spanish, English and French explained the intricate workings that lifts these giant vessels to different levels of the artificial waterway. Asian sailors stood on the deck of one enormous container ship, looking up at us tourists as we gazed at them and their ship.

From Miraflores, we visited not one but two successive marketplaces of Panama City, and bought gifts for relatives back home at prices that were a quarter the levels charged in the lobby gift shop of our hotel. The tourism of Panama is centered not simply in Panama City, but to a far greater extent in the picture-perfect, uncrowded beaches (with several large resorts) just outside Panama City, and in the renowned San Blas Islands, Pearl Islands and Bocas del Toro offshore islands, as well as on the Gulf of Chiriqui. It's found in the mountain stretches of Boquete, housing rain forests, coffee plantations, and Embera and Kuna Indians — a superb setting for tourism.

Just as Americans began flocking to Costa Rica a decade ago, they're now going to what might become the new hot spot of Central America, Panama. You should consider a trip.

Engineering giants vie for $5bn Panama Canal deal

2007-11-15T14:48:00.000-08:00

Published: 14 November 2007

Teddy Roosevelt called the construction of the Panama Canal "by far the most important action I took in foreign affairs during the time I was president." Yet it was also one of the most bruising. His detractors derided the massive project as the worst brand of America's buccaneering, gun-boat, diplomacy. The New York Times labelled it "an act of sordid conquest."

Yet nearly a century after it stirred such controversy, the 50-mile passage cut through the isthmus of Panama to connect the Pacific and Atlantic oceans – one of the world's most ambitious engineering feats ever undertaken – is is need of a makeover.

A clutch of European and Asian construction and engineering giants, including Ferrovial, the owner of Heathrow airport, are putting the finishing touches on proposals to be submitted this week to the Panama Canal Authority (ACP) to cut a new third lane running alongside the two existing channels that are now too narrow to accommodate the world's largest ships. Interested bidders must provide detailed information proving their financial and technical capabilities by tomorrow to be able to enter the formal auction process for the $5.25bn (£2.54bn) project. The proposals are the first stage of the bidding process. Because of its sheer magnitude, companies are required to partner up in consortia.

The Spanish construction giants FCC and ACS have teamed up to put together a bid, while Italy's Impregilo has joined with Sacyr Vallehermoso of Spain, the Dutch giant Jan de Nul, and the Panamanian group Cusa to form a rival group. Ferrovial is examining the project, as is the domestic rival Acciona, but is still undecided whether it will enter the auction.

The project will be paid back through an increase in the fees paid by ships passing through the channel, which last year generated a total of $1.7bn for the ACP. Today, the canal handles 5 per cent of global shipping traffic with more than 14,000 ships passing through its locks, but it is rapidly reaching capacity. Fed by increasing demand from the east coast of the United States for cheap Asian goods, it will reach its maximum traffic load, on current trends, by 2012, raising the spectre of a bottleneck of freighters queuing up on either side of the isthmus.

The canal is no longer able to handle the newest generation of super-freighters, which have become too wide and heavy to pass through its locks. Under the project, a third lane will be dredged up alongside the two now in operation, doubling capacity. There will be a new set of locks fitted on either end to accommodate today's larger ships. Freighters were once built especially to fit through the canal. Called "Panamax" ships, they were designed to fit within the dimensions of the locks – 33.5 metres wide and 320 metres long. In recent years, however, an increasing number of super-freighters, not surprisingly labelled "post-Panamax", have been built. The new locks will be 55 metres wide and have a length of 427 metres.

"World commerce is dependent on the canal. And as we continue to stay the course on our expansion plans, we foresee the new lane of traffic along the waterway influencing the future of shipping," Dani Kuzniecky, chairman of the ACP, told the Panama state news agency. "We are fully committed to this project and believe that expansion will fuel growth in the logistics and transportation sectors throughout the region – and the benefits will be felt all over the world."

Companies and port authorities are already gearing up for the increase in traffic that the expansion will allow, especially in Florida, which is where many ships from Asia unload their goods. Yet as demand for commodities and other goods being fed by China and India continues to grow, even larger ships are now being built that are already beyond the canal's new spruced-up dimensions. The expansion is slated to be completed by 2014, marking 100 years since the French crane boat Alexander La Valley, tiny by today's standards, became the first vessel to sputter through the newly cut passageway.

Paulson repeats world economy strongest he's seen, calls for increased trade

2007-09-15T16:00:00.000-07:00

Paulson repeats world economy strongest he's seen, calls for increased trade
Friday, September 14 2007 @ 01:56 PM ESTContributed by: Don Winner

Treasury Secretary Henry Paulson CHICAGO (Thomson Financial) - Treasury Secretary Henry Paulson today repeated that the world has the strongest economy he's seen in his business lifetime, but warned that this strength can fade if the US and other countries fail to embrace increased trade and investment. 'In order to keep our economy healthy and extend this sixth year of economic expansion, we need to focus on areas that are vital to maintain our economic leadership,' he said after touring a Chicago company that produces and exports weather simulation equipment. 'It is ironic that protectionism is rising at a time when the global economy is so strong.' (more)
Paulson said that while he is 'impatient' with the pace of China's effort to open its market further to US goods and services, legislation that would impose tariffs against imports from China 'isn't the answer'.
'I don't want to start a trade war,' he said. 'Punitive trade legislation could have enormous repercussions, especially when we are working to extend our economic expansion and get through a turbulent time in our markets.'
Several members of Congress have introduced bills that could lead to tariffs against Chinese imports unless China revalues its currency. Many US companies believe the undervalued yuan creates a competitive advantage for China.
Rather than legislation, Paulson called for continued engagement with China on trade in an effort to get China to increase the pace of reforms.
More broadly on trade, Paulson said the US needs to keep expanding its markets through trade with other countries.
'Globalization is here to stay and it is important that we continue to benefit from it rather than retreat into isolationism,' he said.
One way to advance trade would be to have Congress approve pending free trade agreements with four countries.
'The Peru Agreement will be the first Congress considers -- but it shouldn't be the last,' he said. 'Colombia should follow quickly. And then we need to press for Panama and South Korea, too.'
Listing the countries in that order is a sign that the administration still wants to get the Colombia deal approved before moving on to Panama, even though Democrats have said they can approve the Panama deal but oppose the Colombia agreement. Sources have said in recent days that it is unclear whether the administration would relent in the face of this pressure and allow the Panama deal to move forward without first considering Colombia.

Time asks, Is Panama the Americas' Hong Kong?

2007-09-03T18:01:00.000-07:00

Today there will be a ground breaking celebration of the expansion of the canal and CNN/Time have produced this piece about the canal and the positive activities going on in the country. Read the article here....

Excerpt; The groundbreaking at the Panama Canal on Sept. 3 won't involve the usual golden shovels; instead, dignitaries of the order of Organization of American States Secretary General Jose Miguel Insulza and former U.S. President Jimmy Carter will be treated to a large explosion. And while the detonation is officially meant to kick off a $5.25 billion expansion of the Canal that will include a third, larger set of locks, to many Panamanians the moment will symbolize the demolition of their nation's century-old image as a U.S.-created banana republic. "This may even transform Panama into a First World country," boasts maritime worker Juan Carlos Croston.

Another Huge Project Planned for Panama

2007-08-27T16:43:00.000-07:00

Panama builds on its Economic Boom

von Richard Lapper and Adam Thomson (FTD.de - (Panama City) -

A $10bn project outside the capital is the latest sign of US and Canadian hunger to invest in residential property developments. President Martín Torrijos of Panama last month unveiled what could become one of the biggest investment projects in the country's history, with a value of up to $10bn. The creation of an urban centre the size of central London on the outskirts of Panama City is the latest sign of an economic boom that has invited comparisons between Panama and bigger international business centres, such as Dubai. A specially created government agency will provide residents with streamlined regulation and there will be tax incentives for selected industries. London & Regional, the UK-based company that will develop the site, said the project, on the former Howard US air force base, would reinforce Panama's attractions as a centre of international business. Ian Livingstone, of London & Regional, said it would combine industrial, retail and residential properties and its value could be worth up to $10bn. (more)

Editor's Comments: Add $10 billion for the development of Howard. If forgot about this one. Man, who can keep track of all of the money that's going to be pouring in...

Mr Torrijos's administration, which took office in 2004, is poised to award the first contract for breaking ground in an ambitious $5.25bn plan to expand the canal, which connects the Atlantic and Pacific oceans and is one of the world's most important waterways.
Panama took full control of the canal in 1999 and the investment in three new locks and physical widening will facilitate the passage of huge cargo ships, known as post-Panamax vessels.
International and local companies are pouring billions of dollars into Panamanian residential property developments, in large part to capitalise on the peak of interest shown by US and Canadian retired people and second-home buyers. In addition, deals worth $14.5bn have been agreed recently to build two oil refineries and the US Congress is expected to approve a trade agreement soon between the two countries.

Mr Torrijos said recently that the refineries, canal expansion and trade pact are the three motors that could propel Panama towards developed country status. Panama's economy, which is fully dollarised, grew 8.1 per cent in 2006, and economists believe it could grow more than 10 per cent this year. Inflation, meanwhile, is subdued and lending rates are among the most competitive in the western hemisphere. However, some analysts suggest that the government must do more to reduce poverty, especially in rural areas, if development goals are to be achieved.

"Wealth is being concentrated more and more. This is very bad news," said Guillermo Chapman, an analyst at the Indesa consultancy in Panama City.
The London & Regional project hopes to attract businesses from neighbouring countries that do not enjoy the sort of stability that Panama offers. Panama has begun to attract higher numbers of investors from Colombia and Venezuela than in previous years, and analysts expect that trend to continue.

Although London & Regional has yet to present the government with a master plan of the 1,800-hectare site, the plans are known to include a golf course, flats, schools and a hospital.
"It will have an urban feel, with town-centre-type shops, public open spaces, condominiums ... We are going to build a sustainable community," said Mr Livingstone. "In terms of logistics, it's a no-brainer,'' he said.

In addition to an initial $405m minimum investment over the next eight years by London & Regional and local partners, Mr Livingstone has committed another $300m over the remainder of the 40-year concession.

(contrubited by Don Winner of http://www.panama-guide.com/)

Is it Still Safe to Invest in Panama?

2007-08-14T15:02:00.000-07:00

Here's a GREAT Article by Don Winner of Panama-Guide.com

Question: I am looking at Panama as a potential investment. I don't own anything in Panama yet. At this point I am just trying to figure out it it's safe to invest there.

Answer: Ah, the ultimate $64 Billion Dollar question. The question being asked by everyone, every day, all over Panama and around the world. How long will the construction boom last? Will the bubble burst? Can I safely invest my money in Panama or will I lose money if I do? In reality the only thing you can do is follow the news and trends, keep your ear to the ground and make your own personal decisions as to the relative safety or risk of investing in this market.

Date Of Information: 14 August 2007

Moving Target Alert: This subject is always a moving target as the situation on the ground changes, develops, and matures. There are factors and influences both large and small that tend to push the day-to-day perceptions this way or that, and to make the market look more or less attractive. But remember that the market Panama is Titanic-like - it simply can not turn on a dime. There will be warning signs, things like barking dogs and other "canaries in the coal mine" that will probably telegraph the impending sea-change when it eventually comes. There are a lot of people diligently standing watch on the lookout for icebergs who will sound the alarm.

The Chicken Little Distraction: - The problem is that some people are so risk-averse that they are sounding the alarm now when there's no real fundamental reason to do so. Sorting through the traffic and selecting the message over the noise will be the challenge. Take the time to analyze the messengers and consider the potential for bias. Someone who has decided to sell and leave Panama for personal reasons, for example, might sound like a "Chicken Little" on Panama when in reality they are simply justifying their own personal reasons or decisions not to invest.

Speculators Still Hanging It Out There: The only people exposed to high levels risk in this real estate market are the investment speculators, those who are pumping money into real estate investments with the intent to sell them later for a significant profit. Consider the following --

End Users Are Relatively Safe: Those who are planning to buy and move here as end users don’t really care all that much about short term market fluctuations because they will buy and hold for a long time. If you're buying your retirement home, who cares if the paper value of that property goes up or down while you own it and are using it. Market fluctuations only really matter to those who want to buy or sell. Owners just ride out the bumps.

Builders and Promoters Are Covered: Builders, construction companies, and sub-contractors exposed to very little risk in this market. In this category I lump everyone who has anything to do with the actual physical creation of the building, tower, development, or structure - the construction companies, sub-contractors, concrete and material suppliers, heavy equipment rental companies, architects, and all of the other service providers who create the "real" thing that is to be sold. They have almost no risk because they generally get paid when they do the work and are not performing any services for a promise of future payment. They get paid today, and if the bubble bursts tomorrow, then they will talk about it while they are spending their money on holiday in Greece. As long as the market keeps going they just build one building, sell it, and move on to the next. Worst case scenario is that they get stuck with some inventory that they will have to dump at a discount. The good news is that cement doesn't rot.

What About The Banks: (Not Tyra Banks, the other kind...) Banks live in a world of risk management. Banks simply make the money available, financing the projects that will be built. They protect themselves extensively with tight performance contracts and they watch over the projects they are financing like a hawk. They don't just hand over the money in one big check but rather dole it out as needed, according to the advances made on the ground at the construction site. And before they agree to finance or back a project the promoter usually has to show a stack of signed contracts for a good percentage of the building sold at pre-construction prices. The profit break even is usually about 50% of the apartments or space, meaning that a builder has to sell half of their project before they can get financing to build because that's what they need to sell in order to break even. The other half of the project is pure profit for the builder. That's why you can get lower prices on pre-construction deals - they need your money in order to build the building. Once it's up in the air, they jack the prices on the rest of the units and rake the profits into their bank accounts. In any case, the banks are not exposed to a whole lot of risk because in the end of the day their investment is backed by the property that's under construction and the stack of pre-construction contracts held by the promoter.

Real Estate Agents: The first guys to whine loudly about the cancellation of the Ice Tower project on Balboa Avenue was the Tribaldos real estate agency. They got hurt because they promoted and sold that project heavily and have a lot of time and effort invested in the sales and customers they brought in. Now that the project has been "restructured" they are not going to be collecting on all of those sales commissions they thought they were going to be making. Ouch. Double ouch. All of the real estate companies I talk to daily tell me "thank God we were not promoting that project" because their businesses and reputations would be put at risk. They have to pick and choose what they promote because if they sell the wrong stuff they could get hurt.

Individual Big Investors: One guy who got hurt was a Spaniard (forget his name) that invested millions of dollars in the Palacio de la Bahia project, which was cancelled last year. He poured a lot of money into the project and the last I heard he was threatening to sue for damages. I don't know what became of that, but the lesson learned for the rest of us is to spread your risk around. If one building gets cancelled, then you can only get hurt so bad. If that same Spaniard had spread his millions of dollars around to twenty different projects then he would only be worried about one. Well, two if he had a unit in the Ice Tower, but if that was the case he would already have a refund check in his hand. This is the "all your eggs in one basket" risk management scenario.

Individual Focused Service Providers: Chu Diaz was the architect for the Palacio de la Bahia project. His firm spend thousands of man hours on that project and as far as I know they are still in mediation/arbitration with the promoter, trying to get paid for the work they did on the building. Eventually he will probably get paid, but there has been damage to his reputation and business, so he was exposed to some risk.

Back To The Speculators: So, speculators are really the only ones left. In order for a speculator to lose money (actually register a loss on the books) they must find themselves in a position where they are forced to sell a property for less than what they paid for it. If they only make $20,000 when they hoped to make $100,000 they might be disappointed with the performance of their investment, but they still registered a gain. If they sell their property for exactly what they paid for it then there is no gain or loss, and the only actual loss is the time value of money which could have been more constructively invested elsewhere. So, even the speculators have to be stuck holding large positions in a falling market, and not have the capability of riding it out. Again, forced to sell for less as the definition of a capital loss. Not a little more, not the same (break even), less.

Who's Gotten Hurt So Far? Believe it or not there were people trading the contracts they held on properties in the Ice Tower almost like stocks. The first investor bought his option at $1,500 per meter. The next guy comes along and buys it from him at $2,000 per meter. The third guy buys it at $2,500 per meter, and then the project gets cancelled. The third guy is only getting $1,500 per meter refunded, so he's out (actual loss) of $1,000 per meter. But guess what? It's a zero-sum game. The other two guys who made the profit by flipping the contract probably dumped it back into some other project, hoping to repeat their success, so the overall market does not suffer. The one guy who was speculating and who was caught holding the bag when the rug got pulled was the only one who really took a loss. And I know, it sucks to be the guy who spent two years waiting for the Ice Tower to get built, but they got a refund and their tangible loss comes down to missed opportunities. Bad call on your part to pick that project in the first place. Maybe one of the other 400+ projects would have been a better call. Lesson learned - stay away from very tall buildings.

The Bottom Line Remains The Same: If you're going to invest money in the Panamanian real estate market as a speculator then it's up to you, each individual investor, to do their due diligence, asses the risk, evaluate the trends, and then put the money in play (or not.) Almost everyone else is on pretty solid ground.

Is There Too Much Construction? Part of the analysis of this market requires the consideration of what you can see - there are currently more than 400 projects in some state of construction, approval, planning, or development. There are more than 40,000 overall units in the market. So, is that too much, just right, or not enough?

Where Are The Buyers Coming From? Answer - all over the world. Recently I learned that the most active buyers in this market are from Venezuela (#1), Colombia (#2), and Spain (#3.) One real estate agent told me that "the Venezuelans are coming in family units - they don't just buy one apartment but rather they buy three or four or five, one for their brother, cousin, or other family members." Many Venezuelans are quite simply bailing out of their home country because of Hugo Chavez. They don't like the way things are going and Panama is the most logical alternative. Colombians see Panama as a much safer alternative, removed from the drug-fueled violence in their home country. In Spain, the Germans are buying up the country so the Spaniards are taking their profits and moving to Panama. Oh yeah, there are gringos buying here, too.

The Baby Boom Isn't Going Away: There are 175 million people who are going to retire in the next ten years in the United States, Canada, and Europe. Many of them are empty-nesters with money who like the idea of moving to Panama to spend a warm and happy retirement. Panama is attractive to them for lots of reasons, full or part-time.
What About the Locals? How much of the construction is being purchased by Panamanians? Most of the real estate agents I talk to tell me that the current ratio is about 55% - 45%, foreigners to locals. So with some 40,000 units coming on line 22,000 of them will go to foreigners and the rest to Panamanians. That ratio has held pretty steady through the boom so far.

Will The Boom Continue? Logic dictates that there is more demand than supply so prices continue to rise. Ask yourself a few simple questions –

Are prices going up or down? If they are going up then there is more demand than supply. Prices don't rise in an over saturated market.
Are Interest Rates Stable? As long as there is a steady supply of money and credit and the banks are willing to lend for construction and end user purchases, then the market will remain relatively stable.
Outside Factors: This is the biggest wild card on the Panamanian real estate scene - those things which have profound impact on the economy and indirect impact on the real estate market:
The expansion of the Panama Canal ($5.25 billion), a project that will take at least ten years to complete.

Large scale exploitation of mineral resources and mining such as the Petaquilla gold and cooper mines, which could eventually pump $10 billion dollars into the Panamanian economy and run for twenty years or more.

Refinery Construction: Oxy and Dubai are going to build at least one refinery worth $8 billion dollars in Puerto Armuelles in Chiriqui.

Spending on Nation-Wide Infrastructure Improvements: Panama is going on a spending spree of infrastructure upgrades and improvements worth probably another $3 billion at least, which will include projects such as the "Coastal Strip" expansion of Ave. Balboa, the extension of the Northern Corridor to Colon, and dozens of other highway building projects all over the country, large and small.

The Cleanup of the Bay of Panama: This is another major project that will cost about $500 million dollars that will be spent over the next five years, which will result in a significant reduction in the pollution of the Bay of Panama close to Panama City.
The Mega-Port: Talk has died off a little about the mega-port project that was going to be built near Farfan. But even if that project does not go, direct foreign investment in existing ports will continue at a good clip.

The Pipeline Project: A Spanish group is proposing to spend some $40 billion dollars to build refineries, pipelines, and petrochemical facilities in Panama, pumping oil and products from the Colon side over to Taboga island. Yes, that's a $40 billion dollar project being proposed, or eight times the value of the expansion of the Panama Canal.

No Pain, No Gain: There is no reward without some degree of risk. Everyone is doing exactly what you are doing – trying to decide if it’s safe to jump in the water and take a risk. Recognize that the primary factors driving the Panamanian economy are coming from heavy duty industrial foreign direct investment on infrastructure projects. The construction boom is a significant element of the Panamanian economy, but (believe it or not) the real estate market is not driving the train. Tourism certainly isn't, either. Watch the Foreign Direct Investment and money being poured into this economy, and as long as that keeps up then the real estate market will remain on relatively stable footing.

Mexican Port Plan Could be Sunk

2007-08-03T09:40:00.000-07:00

Panama Canal Expansion a Threat, Experts Say

By Diane Lindquist
UNION-TRIBUNE STAFF WRITER
August 2, 2007

Some experts say plans to build a megaport at Punta Colonet are threatened by improving the Panama Canal to handle more cargo headed to the East Coast.
An expansion of the Panama Canal to allow passage for a new generation of megaships may be threatening plans to build a new port at Punta Colonet, 150 miles south of San Diego.

The Mexican and Panamanian projects are envisioned as gateways for an increasing amount of Asian goods bound for the populous East Coast of the United States. Both would relieve growing congestion at West Coast ports, such as Long Beach and Los Angeles, Seattle and Oakland.
But some experts are saying that Mexico's chance to offer a new trade route has passed.
“The expansion of the Panama Canal almost single-handedly kills Punta Colonet,” Joseph P. Ritzman, project development manager of SSA Marine's terminal operations in Mexico, told The San Diego Union-Tribune this week at a Long Beach ports conference.
SSA has been considered a possible bidder for a Mexican government concession to develop the Colonet project, at an estimated cost of $9 billion. Mexican government officials have said they would like to start the bidding process this year for the port and rail line to the U.S.-Mexico border.
Ritzman joins other industry executives and transportation experts who say retailers in the American heartland would be more efficiently served by ships from China and other Asian countries transiting the Panama Canal and sailing directly to Gulf Coast and East Coast ports.
“Then, you can avoid this whole question of intermodal transport,” he said, citing the practice of transferring cargo containers from ships to rail or truck for delivery to their final destinations.
Container cargo destined for the West Coast of the United States is expected to increase at the Port of Los Angeles despite expansion of the Panama Canal.

Ships crossed the Pacific end of the Panama Canal, where expansion plans could negate the need for a planned megaport at Punta Colonet, Mexico, some experts say.
While Mexican officials and shipping executives hope Colonet will be processing Asian containers by 2011, Greg Watkins, president of Watkins/Baile and Associates, a development firm with a stake in expansion of competing Mexican ports, said Colonet will not be operational until 2028.
“I have my doubts about Colonet. There is nothing there,” he said.
Although there has been a slowdown in trans-Pacific shipping this year, due largely to the downturn in the housing industry, trade is expected to double over the next 10 years and triple by 2025.

With the new generation of megaships carrying 8,000 to 10,000 TEUs – the standard measure of containerized cargo – West Coast ports are unlikely to be able to handle the load, despite expansion projects in the works everywhere from Prince Rupert in Canada to the giant Los Angeles-Long Beach complex that processes two-thirds of Asian shipments into the United States.

“There's already congestion. We're doing everything possible to address these issues,” said Mario Cordero, president of the Port of Long Beach's Harbor Commission.
Cargo volume at the two ports jumped 66 percent between 2000 and 2006, largely because of the increase in goods from Asia.

The shipping industry has become preoccupied with the problem, but the Panama Canal project promises some relief. The $5.25 billion overhaul will double the canal's capacity by adding a third set of locks that are 40 percent longer and 60 percent wider than current ones.
“We'll have a comparative advantage – location, location, location – as long as you have capacity, capacity, capacity,” said Rodolfo Sabonge, the Panama Canal Authority's director of corporate planning and marketing.

The authority probably will be raising rates to pay for the expansion, he told the Union-Tribune at a terminal operators conference in Acapulco last year. The overhaul, which began this month with the awarding of a construction contract, is the greatest modernization since the United States built the canal in 1914. It is expected to be finished by 2018.

“What the Panamanian people are doing is a necessity for the continent as a whole,” said Cordero of the Port of Long Beach. Cordero, among industry insiders who believe there still is a need for Colonet, said he gets more inquiries about the Mexican project than any other. “Trade is growing at an unbelievable pace, and everybody needs to do whatever they can to accommodate that, whether the expansion of the canal or the development of a port,” he said.

Mexican President Felipe Calderón gave the Punta Colonet project a high priority in his plan to invest $234 billion in the country's infrastructure over the next five years through partnerships with the private sector. His strategy is to use improvements in the transportation infrastructure as a lever to raise Mexico into a central role in North American supply chains.
The project, initiated under the Vicente Fox administration, should have been in the works but has been stalled by a mineral group's claims to precious metals in the seabed where the port is envisioned.

SSA Marine, which manages Manzanillo, Mexico's largest container port operation, aligned itself with the group, Grupo Mineros Lobos, in a deal that would ensure that it would build at least one of Colonet's terminal operations.

“We have distanced ourselves from Grupo Lobos. We are no longer involved with them,” said Ritzman, the SSA project development manager.
The company plans to significantly expand capacity of its operations at Manzanillo, he said. Ritzman did not rule out SSA bidding to develop facilities at Colonet.
“We'll look at that project on a project-by-project basis,” he said.
Steven G. Lautsch, executive vice president of MTC Holdings, an Oakland terminal operator company that also has expressed interest in the Colonet port, said he thinks the project will attract numerous bidders.

While the Panama Canal project will be able to accommodate larger ships, he noted, there are few if any ports on the East Coast that can accept the megaships.
“They have to have a destination somewhere,” Lautsch said.
He said shipping patterns favor the larger vessels from Asia entering a West Coast port and transferring cargo at an intermodal facility for delivery by rail or truck to consumers in the far reaches of the United States.

“And where better than Colonet?” he asked.

Panama - Glitter and Graft

2007-07-19T20:27:00.000-07:00

Jul 19th 2007 PANAMA CITYFrom The Economist print edition

A country revamped as a service hub grows at Chinese rates

COMMUTER traffic crawls along Avenida Balboa, the coastal road that is the spine of Panama City, slowed by thousands of new cars. In the city's wealthier districts restaurants are packed, and it is hard to find a street without a skyscraper under construction. While some of its neighbours in Central America struggle with commodity-based economies, Panama is busy reinventing itself as a regional logistics and services hub.

That was a position it enjoyed in the 1970s, when an offshore financial industry briefly flourished. Then came the dark years of Manuel Noriega, a thuggish strongman toppled by an American invasion in 1989. Several undistinguished governments followed.

Several things have now come together to produce an extraordinary boom in Panama. The economy will expand by 11% this year and by over 9% in both 2008 and 2009, according to a forecast by LatinSource, a consultancy. That is faster than anywhere else in Latin America.
The first was the transfer of sovereignty over the Panama Canal in 1999. Since then, the canal has been run as a Panamanian business, rather than a branch of the United States' federal bureaucracy. President Martín Torrijos, who took office in 2004 (and whose father, a military ruler, negotiated the canal handover in the 1970s), pushed through a referendum last year which approved a $5.2 billion plan to expand the canal, doubling its capacity and enabling it to take much bigger ships. Work is due to start in August.

Other big projects are planned in the wake of the canal expansion. Occidental Petroleum, in partnership with Qatar Petroleum, plans an oil refinery, costing $7 billion, at Puerto Armuelles. A consortium led by Hutchison Whampoa, a Hong Kong company, plans to turn Balboa into the largest port in Latin America. China's government-owned shipping operator, COSCO, is competing to build a second mega-port, this one on the Caribbean coast—even though Panama recognises Taiwan. Copa, a local airline, aspires to turn Panama into an alternative regional hub for travellers deterred by the security hassles of Miami airport.

The second factor is that Mr Torrijos's government has been rather more effective than its predecessors. He has cleaned up the public finances, pushing through an unpopular reform of social security. He actively courts foreign investors. He has negotiated a free-trade agreement with the United States, which Panama hopes will soon be ratified by the American Congress. But he also has close ties to other regional leaders, including Cuba's Raúl Castro.
This week Spain's prime minister, José Luis Rodríguez Zapatero, was the latest foreign leader to drop by, with a coterie of businessmen in tow. New foreign direct investment more than doubled in 2006 compared with the previous year, accounting for 16% of GDP—a share that is twice as big as in any other country in the region, according to the UN Economic Commission for Latin America and the Caribbean.

The government has finally got around to developing the prime land once occupied by American military bases in the former Canal Zone. The UN is moving its regional headquarters into one; another will become a technology park. Last week the government signed a contract with London & Regional, a British property company, which plans to build housing and industrial units at the former Howard Air Force base. Some of the new housing is aimed at American retirees, who are flocking to Panama. Donald Trump, an American property developer, is planning a 68-storey hotel and resort.

But as the developers pile in, not everyone is cheering. Some worry that the property bubble will soon burst. Others note that a weak education system does not produce enough engineers or skilled workers. Contractors are likely to import skilled labour from abroad. But with 40% of Panamanians still living in poverty, and unemployment at 8.6% last year (though falling), that will not be popular.

A handful of families continue to control much of the country's wealth and benefit from cosy ties to government while most Panamanians struggle to make ends meet. Mr Torrijos proposes to increase the minimum wage of $300 a month. American diplomats worry that if the benefits of growth don't filter down, the resulting sense of injustice could fuel political radicalisation.
A bigger, related, worry is corruption. Foreign firms are beginning to complain that they are hampered by the informal links between government and local business oligarchs. Sam Taliaferro, an American who runs a property business catering to foreign retirees in Boquete, a hill resort, says that corruption threatens to choke off foreign investment. With three-dozen other investors, he has formed a group to campaign against what he sees as the gouging of foreign firms.

Though Mr Torrijos's government has a cleaner record than its predecessors, it has not been scandal-free. An uncle of the president controversially acquired vacant land, and went on to destroy protected mangrove swamp without the necessary permit. It is hard to judge how deep corruption goes, or how much of an impact it may have on foreign investment. But if Panama's boom is to propel it swiftly to developed-country status over the next decade or so, it would help if it rested on a stronger institutional foundation.

Latin America's real estate Panamania

2007-07-05T16:04:00.000-07:00

Latin America's real estate Panamania
Once a sleepy Latin American capital, Panama City has become one of the world's hottest real estate markets. How long can the fever last?

By Eliza Barclay, Fortune Magazine
July 5 2007: 11:41 AM EDT

(Fortune Magazine) -- Off in the distance, where Panama Bay becomes the Pacific, container ships loaded with merchandise bound for the U.S. bob in the haze. Closer in, a flock of construction cranes hovers over densely clustered high-rises. Fourteen stories below, on Balboa Avenue, cars inch along, their windows sealed tight against the sweltering heat.
The view belongs to Jim and Imogene Buckley, a retired couple from Greensboro, Ga., who purchased their one-bedroom condo a few years ago, before it was built, for $140,000. The apartment, which they'll use every other winter month, alternating with another couple from Wyoming, gives them a ringside seat overlooking one of the world's hottest real estate markets.

"Panama looked like a good investment and a place to have a good time," says Jim Buckley, 76, a former U.S. Air Guard pilot, while admiring the view. "You don't need a lot of sense to see that it will increase in property value."

Panama City is in the midst of an unprecedented real estate boom that is transforming the skyline of this once-sleepy Latin American capital. More than 30,000 units worth about $5.7 billion have come on the market since last July, according to Paul McBride, CEO of Prima Panama, a real estate marketing company.
That's a lot of condos in a country where the total economy measured $16.2 billion last year. And the boom shows no sign of abating: Among the showiest of the new projects is the Iron Tower, a 78-story luxury apartment building and Hilton Hotel complex that will be one of the tallest buildings in Latin America when it is completed. Even Donald Trump has a project on the boards.

Part of what's driving growth in Panama City, where the median apartment price recently surpassed the median home price in the U.S., is a wave of retirees from North America, like the Buckleys, looking for a place in the sun. So far, few Americans have moved permanently, but many are buying second homes or just plain speculating. Europeans are here too, and there's plenty of new wealth in Latin America, in places like Venezuela and Colombia, looking for a safe haven.
Call it Panamania. Is it a bubble in the making, or the rise of a new Miami? Despite the abundance of cranes around Panama City, only about 10 percent of the projects being sold are under construction, says McBride. "We're not even seeing the construction boom in Panama yet," he says. "This place will look like Manhattan if all these projects come to fruition."

Certainly the decision to spend $5.2 billion to double the width of the Panama Canal, the country's biggest source of revenue, is a sign of Panama's prosperity. The addition of a new lane and a new set of locks will allow post-Panamax container ships, the world's largest, to pass through the canal. "The expansion of the canal has woken up the curiosity of a lot of people," says Saul Faskha, the local developer of the Iron Tower and one of Panama's biggest boosters.

Panama's economy has been growing at breakneck speed - 8.1 percent last year, compared with 6.4 percent in 2005 - and the government finished the year with a surplus of $576 million. Exports from Panama's free-trade zone, the second largest in the world after Hong Kong's, have helped fuel the growth. The U.S. Congress is expected to sign a free-trade agreement with Panama sometime this year, which should boost exports even further. And several multinational corporations have moved or are moving their Latin American headquarters to Panama City, including Caterpillar, Sanofi-Aventis and Samsung.

Consumer spending has also swelled, the banking sector is strong, and 40,000 new jobs were created last year. All that is good news for the government of Martín Torrijos, son of former strongman Omar Torrijos, who ruled Panama from 1968 to 1981. Unlike his father, the younger Torrijos came to power in a fair election in 2004. And unlike his father, Torrijos doesn't have to deal with a U.S.-occupied Canal Zone: Panama took control of the canal in 1999 and has proved adept at running it. Gone, too, are the U.S. troops that toppled another dictator, Manuel Noriega, a corrupt former general who is nearing the end of a 17-year U.S. prison term for cocaine trafficking.

Rumors that Noriega might want to return to Panama have cast a cloud over an otherwise bright mood. But the country, 36 percent of whose population lives in poverty, has other problems to deal with. For one thing, says Torrijos, during a recent trip to a small mountain town, "there is a huge demand now for a skilled workforce."

Indeed, a labor shortage has already helped slow construction activity in Panama City, and developers are concerned that other factors may hinder the completion of projects. Materials and equipment are in high demand, from rebar to cement to earthmovers. The construction frenzy has also put a strain on the city's infrastructure, and the government is struggling to build enough roads, water-treatment facilities and other projects.

One big problem: All of Panama City's sewage is dumped into the bay, and a treatment plant won't be completed until 2009. "Panama has grown very, very fast - we didn't anticipate this," says Ubaldino Real, Minister of the Presidency. "The government has had to take out more money to be able to act much faster to build roads."

But that hasn't dampened the enthusiasm of people like José Manuel Bern, director of sales and projects for Empresas Bern, one of Panama City's oldest and largest developers. The company's Bayfront Tower, completed in April, is among the first buildings designed for foreigners - distinct from those built for locals because they have balconies but no maid's rooms. Bern says that he sold nearly all the apartments in the tower four years ago, and that units that originally went for $130,000 now sell for $330,000. "We used to be very focused on the local market," he says, "but now I sell to a foreigner every other day."

Prima Panama's McBride and others are worried that the building boom is ultimately going to exceed demand. "I do not think there will be sufficient buyers to absorb capacity, if in fact capacity is delivered," McBride says. "When you see prices going up, driven by speculative investors, that points to a bubble."

Try telling that to Adolfo Olloqui, a Spanish developer whose company, Grupo Olloqui, is building what will be one of the tallest luxury towers in downtown Panama City, the 77-story Palacio de la Bahia. "Panama is the Miami of the future," he says. "With the visa problems in the U.S., South Americans, Central Americans and North Americans will want to come here to do business and to live."

Or try telling it to the Buckleys, who at least have a splendid view from their new Panama perch.
From the July 9, 2007 issue

Forget Florida; Central America the New Hot Spot for Retirees

2007-07-02T13:22:00.000-07:00

Forget Florida; Central America the New Hot Spot for RetireesBy Travis AltmanTheStreet.com Ratings Reporter6/28/2007 12:31 PM EDTURL:

http://www.thestreet.com/funds/toponepercent/10364262.html

If you travel regularly, it happens eventually. You'll be in another country, lying on a white, sandy beach or strolling through some charming village, when you turn to your significant other and say, "I could stay here for the rest of my life." The idea seems tantalizingly exotic, an elaborate scheme to be hatched over dinner while on vacation -- only to be discarded and forgotten upon return to the workday world. However, the dream may not be unrealistic at all. In fact, many Central American countries are betting U.S. baby boomers will be the generation that globalizes retirement.

They're gearing up by offering financial incentives that could make retiring internationally a smart financial move for some individuals.

The same advances that allow companies to do business across borders are making it possible for people to live out their golden years in another country. "Technology and travel developments have put us in the position to do more with our lives while still staying in touch," says Susan Black, director of financial planning for eMoney Advisor.

If you retire in Panama, for instance, you can talk to your children and grandchildren via phone or email every day if you want to, fly home a few times each year, and probably even get a satellite dish to keep up with your favorite TV programs. Still, that doesn't mean things are the same as they were at home.

Making Adjustments
Jim and Donna Hawley found this out the hard way three years ago when they moved from Minneapolis to an apartment they bought in Panama City.

When they arrived, they discovered that not only were appliances not included, but there were no lights, air conditioner, water, or even a bathtub! "It never crossed our minds to ask about that," Jim says.

Paul McBride, an American expatriate who offers free advice on relocating to Panama though his company Prima Panama, says many retirees don't ask enough questions or fail to use common sense when relocating to a new country.

Recently, he met a businessman from New York who was ready to buy property from the cab driver who picked him up at the airport. "Don't leave your brains at the border," McBride cautions. "You have to be very careful." That said, he believes Panama is on the verge of something big, and expects as many as 30,000 Americans to move there in the next 15 years -- a major development in a country of around 3 million people.

They'll be drawn by Panama's pleasant climate, lower cost of living and stable dollar-based economy. Many will also appreciate the generous incentive package the Panamanian government has put together: Retirees on pensionado visas get import exemptions on their household goods and cars, may not have to pay property taxes for up to 15 years and even receive special discounts such as 10% off prescription drugs, 25% off domestic airfares and 50% off movie tickets.

The Hawleys say it was the low cost of health care that motivated them to move. They pay $130 apiece for what they call a "Cadillac" insurance policy. As for the quality of Panamanian health care, "a lot of the doctors in Panama are U.S.-trained," Jim says.

Southern Comforts
Anticipation of the boomers' arrival is fueling wild speculation on real estate in and around Panama City.

It is also spurring the development of retirement communities all over the country such as Valle Escondido, a gated development in the mountains with its own sewage and water systems, paved roads, 24/7 security, a golf course and Internet access. Home construction costs typically run about $55 to $60 per square foot.

Throughout Central America, countries are jockeying for position, trying to attract flocks of North American retirees they believe will be willing to settle a bit farther south than Florida or Arizona for the right price.

Countries such as Costa Rica, Belize, Nicaragua and Honduras all offer retirement incentive packages similar to Panama's. Generally, the rule of thumb is the less developed the country, the lower the cost of living and the better the enticements.
And this is not to say that your retirement experience in these areas will be an unpleasant one. Ray Auxillou says he and his wife are living much better in mainland Belize than they would have if they had stayed in Florida. "In the U.S., we would currently be homeless or upper poverty class," Auxillou says.

Instead, they own their own hostel catering to backpackers and enjoy luxuries such as two pickup trucks, cable television, a nursery and maid service. The price tag? Around $700 a month.

Concerns about crime and political unrest are part of what keeps costs down for retirees in countries such as Belize and Nicaragua. However, Auxillou feels those fears are overblown. "Nothing happens here that hasn't happened in Miami," he says, "and usually [there's] much less of it."

Still, retiring to another country is definitely not for everyone, and Central America will never turn into Florida Lite.

In many areas, you need at least a bit of Spanish to get by. Routine chores that can be handled online in the U.S., such as paying the electric bill, may require you to stand in line for hours. And of course you'll have to give up some comforts of home if you want to live frugally somewhere else.

"If you have to have your Kraft macaroni and cheese in Nicaragua, it's going to cost you more than in the U.S.," says Lief Simon, who covers the Central American real estate market for International Living.

Black says the best candidates for retiring abroad have flexible personalities. Many in the expatriate community are people who traveled heavily in their former careers or who immigrated to the U.S. from another country in the first place.

"You have to ask yourself," Black says, "do you feel comfortable treated as a foreigner every day for the rest of your life?" If so, then it may be time to start looking toward Central America for your golden years.

United States and Panama Sign Trade Promotion Agreement

2007-06-29T19:46:00.000-07:00

WASHINGTON, D.C. – U.S. Trade Representative Susan C. Schwab and Panamanian Minister of Commerce and Industry Alejandro Ferrer today signed the United States – Panama Trade Promotion Agreement, a comprehensive trade agreement that will eliminate tariffs and other barriers to the trade in goods and services between the United States and Panama. “Today’s signing marks the beginning of a new era in the long-standing, yet still evolving commercial partnership between the United States and Panama. This is an historic agreement between two countries that for over a century have been joined by bonds of shared values, community, and friendship,” said Ambassador Schwab. “This agreement includes important commitments on market access as well as ground-breaking labor and environment provisions, a result of the bipartisan agreement between the Bush Administration and Congressional leadership. This agreement will promote increased economic growth and prosperity for both of our nations and will generate significant economic opportunities for U.S. workers, consumers, manufacturers, farmers and ranchers by leveling the playing field for U.S. exports to Panama. In turn, the agreement will serve as a catalyst to further develop and diversify Panama’s economy and promote investment between the two countries.” (more) (Photo: Ambassador Susan C. Schwab, United States Trade Representative)
Minister Ferrer stated, “This agreement reinforces the shared vision of both countries that trade can become a major tool for economic and social growth.” He continued by saying, “This is really a partnership for growth and we are confident it will create significant opportunities, and new jobs, especially for small and medium Panamanian companies and in our rural areas; as well as promote entrepreneurship, innovation, and competition necessary to succeed in the 21st century economy.”
“This agreement with Panama is instrumental in our strategy to advance democracy, the rule of law, security, and market-based development within our hemisphere,” Ambassador Schwab continued. “Panama is a valued partner of the United States on many fronts – from counternarcotics to antiterrorism – and we will work with Panama to enhance its role as a commercial and financial crossroads in today’s global economy. We look forward to continuing to build bipartisan support for the United States – Panama Trade Promotion Agreement in the U.S. Congress in order to quickly approve this agreement.”
Background
The United States and Panama launched negotiations on a free trade agreement in April 2004 and have incorporated amendments derived from the bipartisan trade agreement between the Bush Administration and Congressional leadership. The United States had a goods trade surplus with Panama of $2.3 billion in 2006, and is Panama’s largest trading partner. Total goods trade between the United States and Panama was $3.1 billion in 2006. Panama is a growing market for U.S. products. U.S. goods exports to Panama increased 25 percent from 2005 to 2006.
Panama is predominantly a services-based economy, with services accounting for about 80 percent of economic activity. The Panama Canal is the focal point of Panama’s economy, with much of the country’s economic activity tied to the canal’s infrastructure and to the logistics and financing of international shipping. The trade agreement will provide U.S. exporters significant opportunities to participate in the $5.25 billion expansion plan for the Panama Canal, which is due to begin in 2008 and is expected to be completed by 2014.
Like many other developing countries, Panama already enjoys broad duty-free access to the U.S. market through various trade preference programs designed to promote economic development, such as the Caribbean Basin Initiative (CBI) and the Generalized System of Preferences (GSP). In 2006, 96 percent of U.S. goods imports from Panama entered the U.S. duty-free under current preference programs and our most-favored nation duty-free rates. Meanwhile, only 25 percent of U.S. industrial exports and 34 percent of U.S. agricultural exports entered Panama duty-free. The trade agreement will eliminate tariffs on U.S. exports to Panama and secure permanent duty-free access for exports from Panama to the United States. In addition, the agreement will help support democratic and economic reforms undertaken by Panama’s leaders and spur additional reforms of Panama’s domestic legal and business environment that are important to encourage investment, enhance regulatory transparency, and strengthen protections for workers and the environment.

If You Build it They Will Come...

2007-06-12T17:48:00.000-07:00

Panama Canal expansion to begin August - official
BALBOA, Panama, June 6 (Reuters) -

The first stage of a $5.25 billion expansion of the Panama Canal should begin ahead of schedule by the end of August, a top canal official said on Wednesday. Dredging works at the southern mouth of the canal on the Pacific will start in August instead of October as previously announced, Panama Canal Authority deputy administrator Jose Barrios said. The first onshore excavation works are scheduled to begin before the end of calendar 2007, Barrios told Reuters in an interview. Panama is aiming to build a third lane of locks to increase the canal's capacity and allow larger ships to travel between the Pacific and Caribbean. It hopes to have the third lane operational in time for the canal's centennial in 2014. The bidding specifications for the dredging would be ready next month, slightly late, Barrios said, but the bidding process would be short. "Even if we don't get (the specifications) on time we are going to get ahead of schedule," he said. He said bidding terms for the excavation work had been published and that more firms than expected had expressed an interest in the tender.

The excavation project involves removing 8 million cubic meters of soil and rock where a the new lane will skirt around the current Miraflores and Pedro Miguel locks at 24 meters above sea level.

That work will begin after Panama's fiscal new year in October.
Barrios forecast strong growth in the canal's cargo tonnage, but smaller growth in the number of ships passing through.

For fiscal 2007, Barrios estimated the waterway would carry 320 million tonnes of cargo, an increase of 10.3 percent from earlier estimates.

Northbound container traffic from Asia is seen as the main thrust behind the rise in tonnage, although an increase in southbound grain cargo has also been noticed, Barrios said.
For fiscal 2008, he said the canal's "conservative" projection is for cargo flows to increase 6 million tonnes or 1.9 percent.

Rice Hails Strong U.S. Relationship with Panama

2007-06-12T17:39:00.000-07:00

05 June 2007
Rice Hails Strong U.S. Relationship with Panama
Secretary deplores repression in Venezuela, Cuba
By Eric GreenUSINFO Staff Writer

Secretary of State Condoleezza Rice shakes hands with Panama's President Martin Torrijos in Panama City, Panama, June 4. (© AP Images)
Washington – The Panama Canal, now being widened to make the waterway even more competitive in the global market, is a prime example “of how friendly states can make potential sources of conflict a source of cooperation,” according to U.S. Secretary of State Condoleezza Rice.

In hailing the excellent U.S.-Panama relationship June 4, Rice said the Panama Canal Treaty has been a “great success” for commerce in the Western Hemisphere and around the world. That treaty, signed in September 1977, transferred control of the canal from the United States to Panama in 2000.

Rice told the 37th General Assembly meeting of the Organization of American States (OAS) in Panama City, Panama, that the Central American nation has provided “excellent administration” of the canal since 2000.

In October 2006, Panamanian voters approved the largest modernization project in the canal's 93-year history. The multibillion-dollar expansion will allow the world's largest ships to fit through the passageway, which links the Atlantic and Pacific oceans. The expansion is scheduled to be completed in 2014. (See related article.)
Speaking prior to her meeting with Panamanian President Martin Torrijos, Rice said she hoped the U.S. Congress would ratify a free-trade pact with Panama that will put the two countries’ bilateral relationship “on an even more sound footing.” (See related article.)

Transcripts of Rice’s interview with CNN Espanol, her remarks with Torrijos and remarks en route to Panama are on the State Department Web site.

Despit Real Estate Slowdown, Vacation Homes are still Hot - Inman News Features -

2007-06-07T16:20:00.000-07:00

Wednesday, June 06, 2007

Nearly every day, we read about the increasing popularity of second homes in a remote Mexican seaside town, or the lure of buying a Tuscan villa or the exotic real estate possibilities in Panama. But how many North Americans are actually rolling the dice and choosing to purchase a second home outside the U.S.?

Accurate, tangible data on Americans buying abroad is nearly impossible to find, and the recent National Association of Realtors' annual Investment and Vacation Home Buyers Survey did nothing to help consumers who seek international second-home statistics. While the survey revealed that domestic vacation-home sales increased 4.7 percent in 2006 to a record 1.07 million, the poll did not contain any questions targeting international purchases.
While NAR indicated that it was possible that some of the 1,412 respondents surveyed in April purchased outside of U.S. borders, "the size of the survey wouldn't have provided enough meaningful responses."

According to the U.S. State Department, more than 4 million Americans live abroad, excluding military and government personnel. Mexico is by and far the largest with 25 percent, or 1 million American transplants, followed by Canada with more than 688,000. Central America is not far behind. In fact, an Urban Land Institute study on tourism developments estimated that up to 100,000 Americans live in Costa Rica alone.

However, international Realtors, residential developers and others providing second-home market services now say those numbers are outdated because of the torrid purchasing activity over the past 18 months.

Amada Sturges, director of Escapehomes.com, an online marketplace for buyers and sellers of second homes and resort properties, said the number of Americans interested in purchasing second homes in foreign countries jumped considerably on the site last year.
"More than ever people are looking for better value and natural beauty, both of which are often difficult to find in the U.S.," Sturges said. "Many international countries, such as Mexico and Nicaragua, are great alternatives and are now making it easier for foreigners to buy and live within their borders."

Austin, Texas-based HomeAway Inc., an online company specializing in vacation rentals, said its revenue from owner listings was up 50 percent domestically the past year and about 40 percent in Europe. About 18 percent of buyers of vacation homes who participated in the survey stated that they wanted to rent their property to others. That number was up from 13 percent in 2005, according to the NAR report.

"The vacation-home market has been extraordinarily robust here in the States and in Europe over the past four to five years," said Brian Sharples, founder and CEO of HomeAway. "We thought there would be more of a downturn because the appreciation had not been as high in early 2006 as in previous years, but people are still buying and building."
HomeAway, which raised a record $160 million last year for acquisitions and marketing, predicts the number of second homes available as vacation rentals will continue to grow rapidly. The company's portfolio of vacation rental sites includes HomeAway.com, VRBO.com, CyberRentals.com, A1Vacations.com and GreatRentals.com in the U.S., plus Europe's Holiday-Rentals.co.uk (UK), HolidayRentals.fr (France), Abritel.fr (France), FeWo-direkt.de (Germany) and HomeAway.es (Spain).

"The demographics for second homes are really in the sweet spot for the next few years," Sharples said. "The boomers' ages are in the area where they are hitting the top of their incomes and they have been enjoying considerable gains on these types of properties the past few years."
The NAR survey showed that the typical vacation-home buyer in 2006 was 44 years old, had a median household income of $102,200, and purchased a property that was a median of 215 miles from his or her primary residence. About 42 percent of U.S. vacation homes were closer than 100 miles, and 32 percent were 500 miles or further.

"The NAR survey also did not touch on the number of U.S. vacation homes and resorts that are purchased by Europeans," Sharples said. "We are seeing a phenomenal number of people from the UK and Germany buying in Florida and in other areas of the East Coast. The demographics are very similar to the age and income brackets in the states.
"However, while we might be thinking our resort prices are expensive, Europeans are looking at us as a bargain. Their pound is now worth close to two bucks. If you can get close to double your money in real estate here, you start to understand that it makes a lot of sense."
That's true even if the information is anecdotal. Real estate data that charts purchases by foreigners -- anywhere -- simply is difficult to find.

Ten New Hotels Will Be Built In Panama - 3,000 Room Increase

2007-05-21T15:16:00.000-07:00

By Roberto Quelne for La Estrella -

According to estimates from the Panamanian Association of Hotels (APATEL) and the Panamanian Board of Tourism, between eight to ten new hotels will be constructed in Panama within the next three to five years, adding an additional 3,000 new rooms to the market. The hotel and hospitality sector is preparing to serve the growing number of tourists who are visiting Panama every year. In the first three months of 2007 (January to March), 389,258 tourists visited Panama, or 8.7% more than in the same period last year according to statistics from the Panamanian Institute of Tourism (IPAT). The numbers reflect only tourist hotels in Panama City which reflected an overall occupancy rate of 53.3% and an overall increase of 11.4% over 2006, and the numbers reflected were 65% from high-end hotels and 34% from secondary hotels. Jaime Campuzano, President of the Panama's Tourism Board, said the country should implement an advertising campaign to promote the country as soon as possible to promote tourism in Panama.

GDP Outlook 2008: Venezuela Worst, Panama Best

2007-04-20T11:24:00.000-07:00

PANAMA BEST

.....Panama, which will likely expand its GDP by 6.8 percent next year, which is higher than any other economy in Latin America. That follows four years of solid growth, averaging 7.3 percent per year, according to our analysis.

Read the entire story here

Panama's New Urban Plan

2007-04-20T11:11:00.000-07:00

ADVANTAGES OF THE URBAN DESIGN - Integra the Avenue existing Balboa to the road project - It has 12 tracks -5 of 1 via of going -5 of 1 via of return -2 exclusive tracks for bus in inferior level - Designed for average speed (60 Km./h) without traffic lights - the transit Increases to vehicular of 70.000 to 140.000 newspapers - mts Extends the sidewalk of the buildings in 5. - In the going tracks it includes a marginal street of 2 routes for use of taxis and access to existing streets Coastal tape Panama, Vista 1 - it does not have high ambles - it produces all the interchanges at level of the Avenue Balboa - It raises in 1 TM. the wall of the levee, to preveer increase of the tides by defrosting anticipated with global heating - the space for the parallel collector passage of lines for the cleaning of the Bay Leaves predicted - m2 Creates integrated and continuous a recreational park of 280.000, with recreational areas, paths, thematic forests and sport fields - space for 8.000 parking under ceiling Creates 3.500 public and 4.500 by concession - Intercomunica the sidewalk of the Avenue Balboa with the Park and the parking through galleries underneath the Avenue Balboa, with accesses without barriers (inclines and/or elevators) - It creates 4 commercial areas with the small premises for the complementary use of the park in the plant inferior - ciclovia of 3,5 kilometers Creates one from the Market of the Seafood to the Italy Route - a continuous sidewalk Creates from the Matasnillo to San Felipe - the exit of the Italy Route in Paitilla End Solves as opposed to with a bridge Multicentro - a enter the inner plant Eliminates the passage of the buses by the Avenue Balboa when producing for exclusive track of the public transport - It connects the North and South Runners through a circuit in streets 43 and 45, interconnecting them with the bridge of the Insipid Martín - Balboa to the Bridge of the Américas through Avenue 3 of November Connects the Avenue, and Avenue of the Martyrs - it gives to the district of San Felipe a worthy entrance Him through the Embankment - the Central Avenue with the Park through a great peatonal in Ecuador Avenue Connects - Balboa without visual obstructions Maintains all along the Panoramic Vista of the Avenue - the use of existing navy Solves allowing to maintain them and to extend them - a space of 2 hectares for a great Civic Center Creates - its own electricity (photovoltaic) for all the electrical consumption of the project Generates - Balboa Eliminates the existing layings of high tension in Avenue, when installing them under earth

ADVANTAGES IN THE CONSTRUCTIVE PART - it is possible to be constructed in 2 stages - the first stage is constructed from the sea, that consists of a parallel marine bridge to the Avenue Balboa of 3,2 kilometers to solve the road problem, without dependency with the filling and creating immediate constructive obstacles with the parallel sanitary line of the cleaning of the Bay - the second stage is constructed after finished marine bridge, that consists of the construction of the parking, parks, the commercial premises, ciclovias and Coastal tape Panama, Vista 2 exclusive tracks for bus - the second stage allows to construct the parallel sanitary line, if simultaneously outside necessary - it does not affect the operation nor the transit of the Avenue Balboa during the two constructive stages - the wall of the levee is designed like a wall wall supported in the structure of the building of parking, which makes but economic ADVANTAGES IN THE FINANCIAL PART - the project is autofinanciable through the concessions of the parking, the commercial premises and private infrastructure passages - It generates necessary bottoms for the maintenance of project - the first stage finances with the contribution of the investment of state and the valuation of the area benefitted by the project

New Towers Announced in Panama City - No Slowdown Seen

2007-04-13T13:15:00.000-07:00

Check out these new projects...just when you might have thought things were taking a little breather.

The World Gallery-528 units-3 buildings, 50 floors -Obarrio

Exuma-90 floors-Punta Pacifica

Skyline 80 floors Costa del Este

Panama vs. Miami, part II

2007-04-11T16:51:00.000-07:00

Continued from Part I of Know your Competition: Panama City; where Miami and Panama City are compared as candidates for the FTAA secretariat.

Parallels:

Panama City is a force to be reckoned with. Currently, there are plans to build approximately 107 residential properties (20 floors and up) valued at $3.5 billion. It is definitely Latin America’s boomtown. Two of the proposed projects are vying to be the tallest in the southern half of the hemisphere. Many of the projects are extremely impressive but I have to admit not altogether original. The Trump Ocean Club International Hotel and Tower looks like a replica of Dubai’s Burj al Arab.

The Faros del Panama development has a similar architectural concept to Riyadh’s Al Faisal Tower: the difference is that instead of a sphere at the pinnacle there is cube. In a parallel to Miami’s boom, some of the project names are the same: Platinum, Ice, Acualina, and Ocean One. Surely this was not intended but it is ironic nevertheless. Panama City, after all, has its sights set on countering Miami’s trade influence in the hemisphere.

Anatomy of a Boom

PC is booming, but it is not clear whether there has been a catalyst to this surge or if momentum has been gradually building over time. In Miami, the city was racked with hurricanes, immigration crises, riots, and political corruption during the decades preceding the current boom. Despite the many obstacles Miami faced, the city resiliently moved forward into the future. The immigration crisis subsided and led to the establishment of a Spanish-speaking foundation, which serves as the basis for Miami’s status as the Gateway to the Americas. The riots and political corruption resulted in changes in the political establishment that created more adequate representation among the minorities. This led to stability, security, and economic success. Panama City, much older than Miami, has seen destructive pirates, revolution, foreign invasion, a dictator deposed, drug cartels, and yadiyadiya! So,why then is PC booming? The answer might be simple: the Panama Canal. Duh. Certainly, long term security and aid provided by the U.S. helped. And, last, its central geographic location: where two continents meet.

Pros:
Today, many Caribbean nations rely heavily on Miami for material support and trade facilitation. Latin American nations consider the city the logical entry point into the U.S. market. However, Panama City is actively reaching out to mitigate Miami’s importance. To bolster Panama City’s hemispheric economic stance, the Panama Canal is undergoing a 5.2 billion dollar expansion that will further expand the critical waterway’s trade role during the new millennium. Tocumen International Airport, Central America’s busiest, just recently underwent major renovations and has flights to almost every major city in the hemisphere.

More Pros:
Panama City has a long history of U.S. intervention. Panama declared independence from Colombia in 1903 with American support; the main condition was that the U.S. would be the controlling interest in a new trans-oceanic canal that was to be built. Although the U.S. government has long since relinquished control of the canal, Panama remains a dollar based economy. Many Panamanians speak English. U.S. citizens compose two-thirds of all foreign visas issued. To some, the quality of life and health care system rivals that of the United States without the high cost. American expatriates feel at home there and make up a big chunk of the buyers market for PC real estate, and it sits right smack in the middle of the Western Hemisphere.

Cons:
The city has its pit falls. It is over 400 years old and still lacks a decent and modern transit system. The public buses look like they were vandalized by Rastafarian loons. Untreated sewage is still pumped out into Panama Bay. Certain poor neighborhoods on the fringes of the capital lack easy access to drinking water. The government has pledged to do more regarding the environment and public transit but the promises remain, well, promises. Familiar? Miami suffers from its own infrastructure improvement lag, but for the most part, the funding is in place and the plans for improvement, in many cases, have already begun. Miami’s public bus and monorail system eclipses what Panama City has for transit at this time—this is no compliment for Miami.

More Cons:
Panama City is also a hot bed of drug trafficking. As infamous as Miami’s drug past and present is, Panama City is at a different level. Recently, Panamanian and U.S. authorities seized a ship with a record breaking 11.5 metric tons of cocaine only to get that record broken by a 19.4 metric ton cocaine bust off of the same Panamanian coast. Much of the drugs that go through Mexico across the U.S. border, at one point or another, went through Panama first. This has resulted in heavy gang violence and involvement in the lucrative drug trade coming from nearby Peru and Colombia. The Panamanian police engage in routine anti-gang sweeps where hundreds get arrested. Drug traffickers have been known to possess machine guns and RPG’s. Panama City in many respects is susceptible to the instability that spills over from neighboring South and Central American countries. The result has been an increase in violent youth gang activity.

Last Glance
When broadly considering the facts, it still remains true that Panama is surging towards a more positive future than just about any other Central American metropolis and arguably South American too. The boom in Panama City is, by far, more speculative than the one in Miami. As much as Panama City impresses one with its English speaking population, it pales in comparison to Miami, which is considered to be the hemisphere’s foremost bilingual metropolis (with the largest presence of foreign born residents in the world). Panama City’s main airport, although recently renovated, does not compare to the massive expansion of Miami International Airport. Also, the city’s lack of a modern transit system, lack of environmental friendliness, heavy drug trafficking, substantial gang violence, and proximity to unstable neighbors, leaves it a questionable FTAA secretariat candidate compared to Miami. This is not to say that Panama City cannot get their act together in time.

Note: Panama City’s construction boom is valued at approximately $3.5 billion. This is chump change when considering Miami’s construction boom, which according to the latest City of Miami large scale development report, is valued at approximately $29 billion.
Entry Filed under:

Panama vs. Miami, part I

2007-04-10T16:45:00.000-07:00

It is argued that Miami is the Gateway to the Americas. Many claim that there is no better place to do business with Latin America. The numerous major corporations that have set up Latin American headquarters in the city testify to this. Miami is in the international limelight. Of that, there can be little doubt. Yet, the lime light does not shine on the Magic City alone. Right now, the high level of new construction in Panama City is beginning to pull attention away from Miami; particularly with South and Central Americans. This is crucial to consider when realizing that Panama City is also vying to be home to the FTAA’s prestigious secretariat.

The FTAA, with all of its drama, confusion, bickering, and madness, seems to have drifted out of the media’s radar screen. The idea is an idealistic vision for the future of our global community: a 34 nation trade-bloc that comprises a unified democratic hemispheric federation. The Americas, however, is fractured by Socialism, Communism, poverty, civil war, drug wars, and corruption. How can the FTAA form under such erratic political and economic conditions? Entertaining this question is a matter best suited for a later post. Still, for the sake of giving our side of the globe the benefit of the doubt, let us assume that all 34 nations will eventually come to an agreement. Should this monumentally important event come to be, then where shall its official home reside? Lots of folks have different ideas. Although the idea of the FTAA was first officially announced in the 1994 Summit of the Americas in the local Biltmore hotel, Miami is not the undisputed secretariat candidate. No, some categorically oppose Miami’s candidacy; i.e.: Venezuela.

There are over a dozen cities vying for the secretariat position (in the U.S.: Atlanta and Houston to name two ), but it is no longer a pressing matter as to who gets nominations right now; considering that FTAA negotiations have stalled since 2003. Florida FTAA, a group of local business and political leaders, are aggressively promoting Miami’s bid to leaders throughout the Caribbean and Americas as well as increasing awareness about Miami’s unique economic advantages. However, since the FTAA talks have stalled, their activity has decreased and popular interest has waned. This is not to say that lobbying efforts have halted, but they are no longer as consistent and aggressive as before. Meanwhile, Panama City continues to boom—lending credibility to its economic powerhouse claim. The FTAA talks, although stalled, will undoubtedly continue. The Western Hemisphere’s best chance of mitigating the economic influence of the EU, India, and China is through the formation of the FTAA. Its formation will take time, but according to international trade experts, it’s almost inevitable. By the time matters begin to come to fruition, Panama City’s secretariat-seeking position vis-à-vis Miami, might be stronger than ever.

Panama City is a strong FTAA secretariat candidate. The Central American city is near the vital Panama Canal. In terms of geography, it is more centrally located than Miami. It has a large English-speaking population, well-established international banking institutions, and a heavy American influence. Importantly, at a time when many Latin Americans feel skeptical of U.S. interests due to weak and/or inconsistent foreign policy initiatives, they are liable to start looking to Panama City as a viable alternative to Miami. After all, if the popular perception is that the United States doesn’t care about Latin America, then why should Latin American officials nominate an American city to be home to the secretariat? Panama City poses a considerable threat to Miami in this respect. More so than any other city in the hemisphere.

Panama’s capital is seeing major construction activity. This activity is a reflection of high levels of foreign investment, a stabilization of the economy, and organization of the government. There are plans for two 1000+ ft. towers along with several other impressive skyscrapers. Many of the buildings are proposed and not yet under construction and the level of construction does not yet approach that of Miami, but many of the projects have ambitious plans and there is enough activity to earn wide respect.
With the FTAA secretariat in mind, it is BoB: Miami’s objective to focus on the strengths and weaknesses of Miami’s claim to be the most desirable secretariat candidate compared to Panama City. Panama City will be scrutinized as will Miami. BoB will present both cases and you will see how the Central American city stacks up to the United States’ southernmost metropolis.

To be continued…

Panama: The Prospect of More Business for American Manufacturers

2007-04-03T14:39:00.000-07:00

The President has notified Congress that he intends to sign a free trade agreement (FTA) with Panama. This is good news for America's manufacturers, as the more trade agreements we have, the more markets we open for US-made goods. Exports are growing much faster than imports in part because we are opening new markets through trade deals.
Recall that in only one year after CAFTA, we went from a $1 billion trade deficit with CAFTA countries to a $1 billion trade surplus. Doesn't take a trade expert to figure out that CAFTA opened markets, helped drive exports to those countries.

Here's a link to our press release, hailing this most recent good news. You'll see our new trade policy director Doug Goudie quoted as saying that our trade with FTA countries accounts for half of our overall trade but only six percent of our trade deficit. Let's hope we have more FTA's.
UPDATE (By Carter Wood, 9:40 a.m.): Want to help the economic revival of post-Katrina New Orleans? Support the U.S.-Panama FTA, allowing U.S. manufacturers and businesses to take full advantage of the $5.5 billion Panama Canal expansion.

From Time Magazine:
The plan calls for adding a third set of locks, wide enough to serve the supersize, post-Panamax vessels--those carrying more than 5,000 20-ft.-long containers--that many consider the future of commercial-cargo shipping. The canal's Old World competitor, Egypt's Suez Canal, can already accommodate the bigger vessels. A resized Panama Canal could be a boon to U.S. ports on the Gulf and East coasts, which currently handle post-Panamax cargo directly to and from Asia only via the lengthier Suez route. Says Gary LaGrange, CEO of the Port of New Orleans: "This will be monumental for maritime trade on the Gulf Coast."

Credit Suisse on Panama, March 2007

2007-03-29T11:30:00.000-07:00

March 16 2007

Ba1/BBThis week, the International Monetary Fund (IMF) released its Public Information Notice for theArticle IV consultations with Panama which concluded last month. The assessment was quitepositive as the Fund applauded the work the Panamanian authorities have done for their soundmacroeconomic management, which have produced an average real GDP growth of 7.2% in the2004–06 period, coupled with low levels of inflation (albeit high oil prices) and a decliningunemployment rate.

The Fund’s staff supported the governance given so far to the Panama Canalexpansion project and welcomed the safeguards and monitoring put in place to avoid thedevelopment of economic imbalances. Specifically, the IMF praised the authorities’ intention tomonitor expenditures and borrowing strategies. Regarding the all-important public-debt-to-GDPratio, which is currently around 63%, the staff suggested to the Panamanian authorities to anchortheir medium-term to long-term economic policies with a target fiscal deficit of 1% of GDP after2009. With this target and the expected high levels of economic growth rates, the debt-to-GDP ratiowill likely trend downward and become better aligned with average BB-rated credits. The Fund alsorecommended that such a criterion should be part of the Fiscal Responsibility Law currently underpreparation. In other news, Alejandro Ferrer, Panama’s Minister of Commerce, stated on Thursdaythat Panama is working towards having the free-trade agreement with the United States signed onJune of this year. Negotiations concluded last December, and currently Panamanian authorities arelobbying to get the agreement approved by the U.S. Congress. We reiterate our underperformrecommendation on Panama based on valuations. (CR/FU/EM)
Credit Suisse

Fatal Attraction-Building and Infrastructure

2007-03-27T07:20:00.000-07:00

Panama, Sunday 25 of March of 2007

Panama will attract thousands of Latin investors in the next years.The metamorphosis of the city the real estate development raises a new urgent challenge of urban ordering for the authorities. For the next years it will have to invest about 2 billion dollars in improvements to the infrastructure. Víctor D. Torres vdagoberto@prensa.com

All species of the planet have a special relation with its immediate habitat. From the evolution of the cities, the human beings have identified themselves with their metropolitan surroundings, developing a complex symbiosis in which the city molds its inhabitants as much as they themselves change the large city. A booming real estate sector, Panama faces the challenges simultaneously to improve the territorial ordering that it looks for to solve the deficient road infrastructure and of basic services.

"We must define the city of the future towards year 2019 and that we cannot obtain it if there is no consensus between all the sectors", Juan Carlos Navarro, mayor of the district of Panama, during the forum "Panama 500" that was celebrated last week. But pretensions of country to turn city cosmopolitan as the emergent large cities of Singapur or Dubai are threatened the measurement that continues the rate of disordered growth, with streets in badly shape, a chaotic and obsolete massive transport. "We must take advantage of the experiences other countries and to make of Panama a city with much development, ordered for people", said the minister of House (MIVI) Balbina Herrera.

Boom without precedent In the last years, the real estate impact in Panama has been accelerated. In 2006, the construction registered the highest growth of any economic segment of the internal sector, raising 17,4% 665,7 million dollars. According to the Panamanian Association of Brokers and Promoters of Real estate, the real estate investment went off 25% to 2 thousand 775 million dollars. "the real estate development does not have precedents and the foreign and local investment will continue growing in the next years", assured architect Ignacio Mallol, who does not share the opinion of which the city has grown in disorder. "All my life have constructed with an urban planning of the Ministry of House". But all do not agree. Alliance Pro City was founded on 2006 indeed to express the citizen frustrations by the excesses of the construction. "quality of life with the dangerous saturation of our cities is destroyed", wrote one of its founders, architect Rodrigo Mejía-Andrión.

At least 100 buildings of more than 20 floors are programmed to be constructed in the next years in different points from the city and some already they are in execution, according to the company Prima Panama. Almost 11 thousand apartments will be available, mainly in Balboa Ave., Costa del Este and Punta Pacifica. The hundreds of projects of residential houses are added that are constructed in beach and mountain areas.

Fatal Attraction
The political problems in Venezuela, Colombia, Peru and Ecuador continue favoring immigration towards Panama. In next the four years it is hoped that thousands of Latin American buy more properties in the country, added to thousands of baby boomers of approximately 80 million that will look for second residences in the region. The migratory restrictions imposed by the United States for foreigners also have overturned the glance towards the country, fortified with the regional connections of hub of the Américas de Copa Airlines.

Poor infrastructure But, according to the MIVI, in the next years at least 2 billion dollars will be needed to renovate the systems of sewage system, potable water and electricity. "the State is not removing the greater benefit from the investment", said Raisa Banfield, member of Alliance Pro City. "it is leaving investors use as the existing infrastructure that was designed and planned in the ´50s". Banfield indicates the changes allowed in the zonifications, the gift of the land capital gain and the lack of reinvestment of the gain of the proprietors in infrastructure improvements.

Jaime Salas, municipal engineer of the district of Panama, thinks that it is the best moment to solve the infrastructure problem, which are backdated. There are samples of what the govt have been doing. The projects of cleaning of the bay of Panama, the coastal tape, the urban transport, the Panama-Colon highway and the systems of potable water conduction, are passages in the correct direction.

Panama is Paradise for Retirees

2007-03-25T11:49:00.000-07:00

Panama is paradise for retirees

Cheap real estate, a low cost of living, fabulous scenery and relaxed pace should put this gem at the top of the list for Americans on a fixed income.

Panama is one of the best places in the world for retirees today, combining a low cost of living, near-perfect weather and one of the world's best discount programs for retirees, with up to 50% off everything from public transport to movies, mortgage rates, doctor's visits, electricity, restaurants and airfares.

When you compare Panama with its neighbors, you'll see that it has more amenities than traditional retirement spots such as Mexico and Costa Rica, with lower costs and crime rates. In Panama, you'll encounter less red tape and less interference from local authorities.
To encourage long-term foreign investment, Panama requires no special authorizations, permits or prior registration for foreign investors. The Investment Stability Law, passed in 1998, protects foreign investors from any change in tax, customs, municipal and labor rules for a period of 10 years after an investment is registered. Major companies doing business in Panama include Federal Express, DHL, Sears, Price Costco, BellSouth, Kansas City Southern Railways, Continental and American Airlines, Warranty Company of the Americas and Hutchison Whampoa. Plus, you'll find just about every American franchise you can imagine on the streets of Panama City.

And there are other incentives for foreigners to spend time here, invest here … or retire here. For example:
Newcomers who buy or build a new house won't owe any property taxes for 20 years.
Residents pay no taxes on foreign-earned income.
Tourism investments have 20-year exemptions from import duties, fees for construction materials and equipment, and income, real estate and other taxes.
The U.S. dollar is legal tender in Panama, which insulates its economy from global shocks. During the Asian monetary crisis of 1998, Panama became one of the healthiest economies in Latin America.

Panama's pensionado program Once you become a resident "pensioner" of Panama under the Tourist Pensionado Visa, you are eligible for the most appealing program of benefits for retirees available anywhere in the world right now.
Now, you may be thinking: "Pensioner? Retiree? That leaves me out."
Not necessarily. The rules for becoming a "pensioner" and qualifying for this visa program in Panama are probably not what you'd expect.
In fact, anyone over the age of 18 may apply and can qualify as a pensionado in Panama. All you need is a guaranteed pension income of $500 per month ($600 for a couple). It must be a pension from a government agency (e.g. Social Security, disability, armed forces, etc.) or a defined-benefit pension from a private company. Sorry, but an immediate, fixed annuity doesn't qualify.

As a qualified pensioner in Panama, you would be entitled to:
50% off entertainment anywhere in the country (movies, theaters, concerts, sporting events, etc.)
30% off bus, boat, and train fares
25% off airline tickets
50% off hotel stays Monday through Thursday, 30% off Friday through Sunday
25% off restaurant meals
15% off at fast-food restaurants
15% off hospital bills (if no insurance applies)
10% off prescription medicines
20% off doctors' consultations
15% off dental and eye exams
20% off professional and technical services
50% off closing costs for home loans and more

Crossroads of the Americas Panama is also perhaps the most accessible retirement haven for Americans.

There is a frequent nonstop service to Panama City's Tocumen International Airport. It's a 2½-hour flight from Miami on American Airlines and COPA, Panama's national airline, which also flies from Los Angeles and Orlando, Fla. Continental flies from Houston, and Delta flies from Atlanta. Aeroperlas and Mapiex Aero are two domestic carriers that offer daily flights throughout Panama.

Beware, however, that as accessible as Panama is to the U.S., it's still a foreign country. There are certain cultural differences that you can either accept and embrace . . . or try to ignore and become miserable and frustrated.

Time moves at a more leisurely pace in Panama. A one-hour wait might mean two, and a simple meal out with friends can turn into dancing "tipico" at a local disco until five in the morning. It takes a certain disposition not to lose your cool when, for example -- and this happened to a friend living in Panama City -- the computer repair man phones to say he is estoy llegando (on his way over to your house), only to arrive two days later without explanation . . . but ready to work.

Cost of living Panama has one of the lowest costs of living in all Central and South America:

A U.S.-style home can be built for about $40 per square foot; unskilled labor costs $6.40 per day; a full-time live-in maid costs $120 to $160 a month; a beer at a bar costs 35 cents; a cup of coffee, 30 cents; a haircut and shave can cost as little as $2; an afternoon at a beauty salon is $8; electricity is about 10 cents per kilowatt-hour; water bills are $18 per year; telephone service costs roughly $30 a month; Internet access is $14 a month; wireless is available for a bit more; cellular-telephone service costs about $30 a month plus a per-minute charge of around 22 cents; and cable TV will cost you about $30 a month.

As a foreign resident, if you buy or build a new house, you won't pay property taxes for 20 years, nor will you pay taxes on foreign-earned income. Personal income tax is based on a sliding scale from a minimum of 4% to a maximum of 30%. A Value Added Tax of 5% to 10% is charged on most products and services. Transfer taxes on real estate are paid by the seller, and there is no inheritance tax or gift tax.
Mountains, beaches or the big city? The three best places to buy real estate in Panama are: the mountains of Boquete, the beaches of the Pearl Islands, and the First World metropolis of Panama City.

Boquete: Boquete sits in Panama's mountainous Chiriqui region at an elevation of about 3,500 feet. It's quiet, unspoiled, uncrowded. Mountains, rivers, waterfalls. Lush green hills and great masses of red and purple flowers. This is coffee country, and in harvest season the Indians come down from the hills to find work. The men call and sing to each other as they pick. Their children run through the fields and play in the streams.
The climate in Boquete is ideal, spring like year-round with reasonable daytime temperatures, cool breezes, and chilly nights. Beachfront living is nice, but the mountains of Boquete are hard to beat. If you like Colorado, you'll love Boquete. Three-bedroom custom-built houses start at $138,000 and ocean-view lots are under $30,000.

Pearl Islands: If you're searching for sand and sun, Panama has that in abundance.
The island of Contadora, the seventh biggest of the 90 named islands in the Pearl Islands archipelago, is in the Bay of Panama, just off the coast of Panama City.
This is the stuff of travel-magazine cover photos: turquoise waters, 13 white-sand beaches, secluded coves, bright red and yellow fishing boats, swaying palm and cashew trees, giant coral reefs, coconuts, mangoes, parrots, hummingbirds, pelicans, sea turtles and bright tropical flowers . . . with occasional sightings of gray and orca whales just off the island's shores.
Today the island is a closely guarded secret playground for wealthy and famous political leaders, writers, entertainers and businessmen -- not just from Panama but from all over the world.
Renovated beachfront villas start at $160,000.

Panama City: Panama City is probably the least expensive place in the world to live in a First World city. Here you'll find world-class restaurants, every imaginable luxury, hundreds of multinational businesses . . . all at about half the price you'd pay in Miami, or any other U.S. city for that matter.

Furnished studios start at less than $60,000, beachfront condos from $77,000. A two-bedroom, 1,300-square-foot apartment in the banking district in a building with a pool and gym costs around $150,000. A two-bedroom apartment with views of the bay and maid's quarters costs $160,000 (and rents for $1,100 per month).

By Kathleen Peddicord, International Living

Top 5 overlooked luxury vacation destinations of 2007

2007-03-20T18:07:00.000-07:00

According to the gourmet-related travel site foodvacation.com, the most overlooked luxury vacation destinations are:

Canada’s Atlantic provinces (including Nova Scotia, P.E.I., and New Brunswick)

Bordeaux, France

Granada, Spain

San Sebastian, Spain

Bocas del Toro, an archipelago of Caribbean isles in Panama

The list considers factors such as the location’s scenic beauty, availability of luxury-level accommodations and gastronomic-style dining, and general ability to offer an extremely high-quality vacation experience. It is based on proprietary research and editorial staff travel during 2006.

Bookmark this post on: del.icio.us - Digg it - Furl - Yahoo! MyWeb - thank you! Filed under: Regions, Central America, Panama, Europe, Western Europe, France, Spain, North America, Canada

Panama's native Indians may hold the secret to good health

2007-03-20T06:44:00.000-07:00

Cocoa ingredient 'rivals penicillin' By Roger Highfield

Last Updated: 2:19am GMT 12/03/2007

The health benefits of one ingredient of cocoa are so striking that it "may rival penicillin and anaesthesia in terms of importance to public health".
The ingredient - epicatechin - can reduce the risk from diseases such as stroke and heart failure, Norman Hollenberg, professor of medicine at Harvard Medical School, told the journal Chemistry & Industry.
Prof Hollenberg has spent years studying the benefits of cocoa drinking on the Kuna people on the San Blas islands off the coast of Panama. They drink up to 40 cups of cocoa a week. Among the Kuna, he found that the risk of stroke, heart failure, cancer and diabetes was reduced to less than 10 per cent.
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"Epicatechin could potentially get rid of four of the five most common diseases in the western world," Prof Hollenberg told the journal.
The cocoa that the Kuna drink is homemade and very rich in chemicals called -flavanols, notably epicatechin, which is known to have cardio-vascular benefits.
Flavanols are removed from commercial cocoas because they tend to have a bitter taste.

2007-03-19T13:30:00.000-07:00

Check out The

ABC Video on The Retirement Boom hitting Panama's real Estate Market!

Newsweek International Blurb on Panama

2007-03-13T07:09:00.000-07:00

Newsweek International
Updated: 7:03 p.m. ET March 10, 2007

March 19, 2007 issue - The capital of Panama may be best known for its canal, but there's plenty more to see, from its Spanish colonial heritage to its sleek modern skyscrapers.

STROLL through theCasco Viejo neighborhood of colonial buildings, cobblestone streets and 18th-century churches. Visit the dungeons at the Plaza de Francia, once used by the Spanish and later the Colombians, now a French jazz café.
EAT at Manolo Caracol, where local art brightens the walls and the Spanish chef serves grilled local fish and roasted vegetables (Avenida Central and Calle 3 Oeste, Casco Viejo).
GAZE at the cargo ships passing through the canal from the open-air restaurant at Miraflores Locks. Visit the four-story multimedia museum charting the history of the canal (pancanal.com).
SHOP for handmade baskets and locally embroidered dresses at the Artisans' National Market in Panamá Vieja.

February Trip Photos

2007-03-09T09:44:00.000-08:00

Here's the link to the scenic photos from Last month's trip.

http://www.ptyinvestments.com/febtrip

US Firm White & Case bags Panama Canal Development

2007-03-07T18:29:00.000-08:00

US giant White & Case has bagged a lead role advising the Republic of Panama on the redevelopment of the Howard Air Force Base next to the Panama Canal.

The $700m (£357m) project covers 2,750 acres of land and is expected to create around 20,000 jobs. The scheme, known as the Howard Project, will redevelop a 1.7 mile airstrip built by the US but largely abandoned since its forces left the country eight years ago.
Leading UK developer London & Regional Properties has secured initial rights to build a new ‘mini city’ on the banks of the Panama Canal.
The project is expected to be ratified by the Government of Panama in a matter of weeks.
The team at White & Case was led by Miami real estate partner William Walker.
Walker commented: “About 60% of the trade in and out of the US passes through the Panama Canal. When you combine thousands of new homes, hotels, a science park and a golf course, with the proximity to the world’s busiest trade canal, you can see why the global investment community is taking note of this project.”The flagship project will also spark a race among UK advisers to secure the coveted lead counsel role to London & Regional. Herbert Smith, a regular adviser to the developer, has been cited as a leading candidate, although the firm declined to comment.

A Booming Panama City - Wall Street Journal

2007-03-07T11:31:00.000-08:00

Good times are expected to keep rolling: The country's famous canal is about to get a multibillion-dollar makeover, and a chunk of its down-and-out colonial city center is getting a facelift.

read the entire article here

PANAMA: Tax Deferred Investing in Panama

2007-03-07T10:25:00.000-08:00

PANAMA: Tax Deferred Investing in Panama

Baby Boomers Move to New Places to Kick-Start Their Lives- ABC NEWS

2007-03-06T15:16:00.000-08:00

Baby Boomers Move to New Places to Kick-Start Their Lives
From Beach Houses to Mountain Towns, Americans Find New Beginning

March 5, 2007 — - As American baby boomers grow older, many are considering moves and asking themselves where they should go. The answer? Anywhere.
"There are very few times in your life when you can move. … And this is one of them," said Sara Davidson, author of "Leap! What Will We Do With the Rest of Our Lives?"
"When you suddenly have no children in school, you may not have a job and you are free to think, 'Where would I really go just for me?'"
Davidson left her life in Los Angeles to replant herself in Boulder, Colo.
"I was sitting by myself in my house with no work, no kids, nothing on my calendar and I thought. … 'Maybe it's time to move,'" she said.
Joe Urby and his wife went to a convention in Panama to explore their options.
Relocation conventions are often held in Panama City, Panama, to instruct foreigners on how they can take advantage of the latest hot spot, where Americans can enjoy a sun-filled life at an affordable price.
"I personally don't want to work until I'm 65 or 70 years old," Urby said. "I'd rather work to be 50 years old and reinvent myself in a different type of business or enterprise in a Latin American country and only need half as much income to live off of."
Another trend is co-housing developments like one in Ann Arbor, Mich. The idea behind co-housing is to create a community -- residents own their own homes but share common gardens, dining halls and parking areas.
"The great thing about this time in your life is that you are not stuck," Davidson said. "So if it doesn't work out. … You go somewhere else."
What Areas Are Popular Today?
There are three hot places to relocate right now, according to Wall Street Journal editor Wendy Bounds.
San Juan, Puerto Rico, is a U.S. territory with an average home price between $250,000 to $300,000. While the property taxes are less than in the United States, the benefits -- like Medicare -- are the same.
Like San Juan, the coastal town of Beaufort, S.C., has homes priced on average between $200,000 and $300,000. The area has a small-town feel with ice cream shops, libraries and theaters, and it's located right on the beach.
The average home price in Loveland, Colo., known for having some of the best skiing and snowboarding in that state, is just $195,000. The city is surrounded by mountain views, and downtown Loveland has tons of restaurants and art galleries.
Bounds said it's important for people to consider what their taxes will be in any new city, as well as what kind of expenses, such as medical care, they may need before making the move.
Copyright © 2007 ABC News Internet Ventures

PANAMA PANORAMA - NEW YORK POST

2007-03-06T15:04:00.000-08:00

BENEATH THE TOWERS OF THE CAPITAL LIES A HISTORIC NABE THAT'S GROWING BY LEAPS AND BOUNDS, DAVID APPELL

March 6, 2007 -- DON'T know about you, but when I think "stunning colonial architecture," Central America doesn't even crack the five that come to mind. And Panama? Isn't that the place with the big canal, some rainforests, and skyscrapers? Yep.
Everybody's talking about Manuel Noriega getting out of the slammer, the expansion of the canal, and don't forget the $220 million "Ocean Club" complex The Donald's planning to plop amid the Hong Kong-esque skyline down here by 2009.
But what grabbed me more than any of that on a recent visit is something that's not on many radar screens, but sure will be soon.
On a promontory jutting out 100 acres into the Pacific, Panama City's 17th-century Casco Viejo or Casco Antiguo (old quarter, also known as San Felipe) is as ravishing as any colonial cityscape in the Americas - gracious, glorious shades of Old San Juan, Old Havana and Colombia's Cartagena. El presidente presides along these red-brick streets in a handsome white manse, and the minister of tourism, salsa legend Ruben Blades, lives several blocks away.
The elegant National Theater is here, as are several handsome churches (including the Iglesia San José with its eye-popping gold altar) and great museums covering religious art and the history of the country and canal. And you can stroll on the waterfront promenade and buy a colorful cloth mola from Kuna Indians straight from the pages of National Geographic.
click here to read the full article

Tax Deferred Investing in Panama

2007-03-06T12:19:00.000-08:00

No CGT, Says IRS
Saturday, March 3, 2007

Several readers wanted me to clarify the position of the IRS re: Section 1031 of the Internal Revenue Code, also known as "like-kind exchanges."
Here's the scoop: This incredibly powerful wealth-building strategy has been around since 1921 and is still used by the country's most savvy real estate investors. Remarkably, the IRS made this tax deferral possible.
Through like-kind exchanges, property owners responsible for paying taxes to the U.S. government from the sale of either U.S.-based or foreign-based properties can defer payment of the capital gains taxes.
Perhaps most important, like-kind exchanges allow you to use the funds that would have otherwise gone into the government's coffers to significantly increase the net worth of your real estate portfolio.
It's simple to take advantage of, can be used on several properties at once (even between family members), and is an excellent estate-planning tool...but timing is critical, and the IRS is immovable when if comes to granting extensions.
You can also defer capital gains tax on foreign property through Section 1031. Your accountant may tell you otherwise; that exchanges can only be made within the U.S. and that a change to the law in the 1980s ruled out the participation of foreign properties. Technically, he's correct, but he's not telling you the full story.
Here's the important part: It has to be a LIKE-KIND exchange, i.e. you can sell a foreign property and defer the capital gains tax if you buy another foreign property (both properties don't have to be in the same country…but they both have to be outside the U.S.).
You CANNOT sell a U.S. property and defer the capital gains tax from that sale by buying a foreign property.