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"Boom Potential in Panama"

Have you ever wondered what causes development booms? Some regions seem to creep along, while land prices in other regions can skyrocket. Finding the next hot spot requires a mix of research, courage, and good fortune. The following report outlines several key characteristics about Panama that make a strong argument for its "Boom Potential".

Today's Panamanian Government

Until 1989, Panama was ruled by Manuel Noriega with an iron fist. Panamanian citizens were controlled by the military with fear tactics and unfair rights violations. During Noriega's reign, Panama was not considered an attractive place to invest. Panama's offshore banking center holds a substantial amount of the world's money, but very little of it was ever distributed into the local Panamanian economy.

Today, the democratic Panamanian government is headed by Mireya Moscoso, Latin America's only female president. Moscoso's government is working toward improving the image of Panama as an enjoyable place to visit and a safe place to invest.

Moscoso's governement has made several changes to encourage foreign investment. Moscoso emphasizes Law 8, which can qualify investors in tourism for tax breaks. Panama has increased the annual promotional budget for international trade shows and advertising campaigns to $14 million. In December 2000, the maximum stay for a tourist was increased from 90 days to 180 days.

Foreign individuals earning a pension of at least $500 per month can qualify for retirement status which grants permanent residency and discounts on hotels, airfare and meals. The new Panamanian government hopes to attract the growing population of aging Canadians, Americans and Europeans looking for a paradise to retire.

The Canal Zone Opens for Tourism

It was nothing more than a news bulletin for most people. On January 1, 2000, the United States officially returned the Canal Zone to Panamanian control. The Canal Zone was formerly occupied by thousands of U.S. military and Canal administration personnel. Now there are entire hospitals, community centers, and airports sitting vacant. Some visitors have described the Zone as a ghost town, with "for rent" and "for sale" signs decorating the neighborhoods in and around Panama City.

Many investors see the Canal Zone as a land of opportunity. The Panamanian government has been marketing the Canal Zone as a prime opportunity for projects in tourism by emphasizing its tropical climate and rich bio-diversity. "The Golden Zone" is printed on promotional magazines to identify the Canal Zone as an investment opportunity, and so far the results of the promotional efforts have been promising.

The Gamboa Rainforest Resort, one of Panama's newest five-star destinations, is a renovated residential complex formerly occupied by Canal Zone residents. Gamboa Rainforest Resort provides educational tours and features a tram which glides through the jungle of exotic plants and wildlife. Another project in the Zone has transformed a military watchtower into the Canopy Bird Watching Tower, a luxury bird watching facility where bird enthusiasts can spot any of 700 bird species found in the region.

In addition to nature lovers, Panama aims to please the enormous market of cruise vacationers. More than 200 cruise ships passed through the Canal every year without stopping. Today, the Colon 2000 mega shopping and tourist facility on the Caribbean port of the Panama Canal is completed and receives more than 100 cruise ships per year. The new facility has already served thousands of cruising visitors.

On the Pacific side at Amador, a small peninsula at the Pacific entrance of the Canal, agreements are in place to invest $500 million over the next six years to complete a massive resort and amusement complex. New restaurants and a marina have already opened at Amador. Such a dramatic influx of investment capital is one indication of Panama's boom potential.

Costa Rica Levels Off

Costa Rica realized its boom potential during the early 1990's when the number of visitors increased from 376,000 in 1989 to 710,000 in 1993. By 1994, tourism passed agriculture as the number one industry of the country. Costa Rica's success clearly indicates the potential demand for ecological tourism and vacation homes in Central America. In addition to hotel and tour billboards, now there are Century 21 and Remax Realty signs along the highways that lead to popular tourist zones. Many undeveloped regions started with a growth in tourism and were followed by an increased demand to buy property in the area. Land prices in some regions of Costa Rica have quadrupled in value due to increased construction of vacation and retirement homes.

Recently tourism in Costa Rica has suffered after several instances of violent crime against tourists and a general overcrowding at popular destinations. Some foreign home owners in Costa Rica are packing up and looking for a place less discovered. Many are headed east of the border to Panama where the rural crime rate is very low.

Bocas Del Toro is Hot

The Caribbean islands of Bocas Del Toro, Panama, have seen tremendous growth in tourism and property values. New construction is underway at a furious pace as new investors try to keep up with increasing volumes of tourists. Much of the exposure for Bocas has come from visitors slipping across the border from Costa Rica, which is just a couple hours away by road. Islands that were completely undeveloped for tourism now have eco-lodges and bed and breakfasts. With the new airport that was installed on Isla Colon, Bocas Town is just a one hour flight from Panama City or San Jose, Costa Rica.

Land prices in Bocas Del Toro have already shot up. The age when beach front lots were available for $1000.00 per hectare have long since passed. Still, prime beach front lots are available for under $50,000, which is far lower than most tropical islands in the Caribbean. Bocas Del Toro, more than 500 kilometers from the Canal, is like new found territory ripe for development.

Boquete is Another Good Bet

Nestled in the narrow mountain range across from Bocas Del Toro, Boquete is also developing for tourism and retirement living. Investors from the United States have opened two new restaurants and a new luxury bed and breakfast in the past year alone. A new retirement community has been developed within a 50 hectare valley near the Boquete town center. The community features dozens of residential townhomes, a commercial center, outdoor auditorium, and leisure sports such as horseback riding and trout fishing.

Boquete has an established base of foreign residents and recent promotions are aiming to attract more visitors. Boquete is surrounded by spectacular mountain countryside and is just a 1 hour drive from the city of David. Many of the properties available have an excellent view of the Boquete valley and to the Pacific Ocean, which is about 60 kilometers away.

Can Boom Potential Work For You?

Before your visit, do your own research about which areas suit you the most.

If you are considering an investment, contact a good Panamanian lawyer and ask questions. Lawyers can vary widely in the costs and services they offer. Try to get a referral from your national embassy, or visit a few offices before committing to any contracts. The only way to discover if an investment in Panama is right for you is to make a visit.

Note that there is a big difference in the climate and culture of each region and major differences between Caribbean and Pacific coast environments. For the best chance to tap the boom potential, bank on the areas with an existing base of tourism as these are the properties most likely to increase in value.

Investors should be sensitive to Panama's delicate ecological balance and respect the diverse range of native cultures by operating in an environmentally sensitive manner. The sincerity and generosity of the Panamanian people make for a peaceful adjustment which is another reason Panama is so inviting for visitors. Enjoy your stay!

By Michael Manville

("Investors Guide", Autoridad de la Region Interoceanica, 1997)

(Lonely Planet Central America, 1997)

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Business and Trade Organizations in Panama

Contact information for Panama's leading business and trade organizations.

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