December 12th, 2011
The impending holiday season in Panama marks what will probably go down as one of the most successful growth years in Panama’s history. In this month’s newsletter, we take a look at the massive amounts of money coming in to Panama, including insider data about Panama’s top neighborhoods, and when you might realistically be swimming in the Bay of Panama!
Whether you are still planning your first trip to Panama or are a long time resident looking to sell, our agency can help. From Bocas to Boquete, and Pedasi to Panama City, we’re here to help you make it happen in Panama!
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Record Canal Profits and Continued Infrastructure Progress
This month’s economic update
Of the twelve years following the handover of the Canal to Panama, this year marks the highest ever in total contribution to the government coffers: $1.043 billion dollars. This astronomical number, one billion dollars in profit, will be used in a country of just over 3 million people! That’s a lot of money that is going to be used to expand infrastructure, continue the Bay cleanup, and increase the overall quality of life for anyone living in or visiting Panama. In related canal news, the amplification has added 19,221 new jobs to date, the vast majority of which have been related to the design and construction of the third set of locks plus archeology and paleontology services.
Third quarter GDP numbers were published yesterday, showing overall gross domestic product of 10.8%, including a tremendous July increase of over 38% compared to July of the previous year. Experts are forecasting 11% GDP growth for fiscal year 2011. 11 percent! Compare this with paltry figures like those of the US and many European countries which haven’t seen growth rates approaching the double digits in years. Panama continues to be the shining star in a region that is quickly catching up to the rest of the world.
Other good news this past week is that the Panama Bay clean up project is now over 70% completed! The project, started in 2006 had the chief aim of improving water treatment facilities, namely the installation of state of the art facilities to collect and clean the sewage that had been previously dumped directly into the bay. The Martinelli administration has also planned a $200 million budgetary increase for the second phase treatment plant, increasing total capacity to 4.4 cubic tons per second. According to the Health Minister Franklin Vergara, the waste water treatment will be fully operational by 2015.
Anyone that’s walked along the MultiCentro end of Balboa Avenue knows that, if the wind is just right, you still get a very stinky waft of air coming off of the bay. I for one have noticed the frequency of those days diminishing over the last 12 months, and look forward to the day that we can take a swim in the Bay. This day, according to experts, may be a long time coming however, as the plans currently only call for treatment at the source (untreated dumping) as opposed to a direct cleanup of the bay. The idea is that, once we stop dumping sewage into the bay, natural tidal flows will gradually clean out the water…We’ll see how well that theory works, but it’s certainly a step in the right direction!
Aggressive Lobbying Starting to Bear Fruit
2011 was the year of the Multinational Corp in Panama
Large corporations continue to move into Panama. This month, we can add to the list the Brazilian manufacturer Britanite, Orica Mining out of Australia, and the Swiss tool and equipment designer Atlas Copco. The list is approaching 100 multinationals, thanks in part to a number of factors including tax benefits, strategic regional positioning, and of course the ongoing operation and amplification of the Panama Canal. This is in undeniably a sharp contrast to other countries that are seeing exactly the opposite trend. Yet again, Panama coming out ahead in terms of courting new business and incentivizing growth and investment.
Last year, 12,466 foreign works applied for work permits, of which 10,244 were approved. According to a report published by the business journal Capital Financiero this past week, six out of every 10 workers in Panama’s multinational corporations are foreigners. That’s a trend I would never have expected to see from otherwise protectionist Panama, where unions and special interests have had a strong foothold on past administrations. Looks like Marinelli is loosening policies to finally fill a few glaring gaps.
Take, for example, two of the largest multinationals operating in Panama. Proctor and Gamble reported that over 87% of their Panama based personnel were non-Panamanians. They’ve been moving in planeloads of well paid analysts, brand managers, and management staff from places like Canada, Venezuela, and Chile. This in contrast to Dell Panama, who started with only 500 employees in 2003 and now has plans to reach 3000 by the end of 2012. Dell employs 95% Panamanians in their workforce, many of whom are making a healthy salary by Panamanian standards (over $1,000/month).
Our agents have seen tremendous rental demand this past year from the likes of LG, Caterpillar, Hyundai, Oberecht, and BMW, all of whom have relocated hundreds of mid and high level executives. Generally, they are looking for nicely furnished two or three bedroom condos in areas like Balboa Avenue, Punta Pacifica, and in some cases Costa del Este. Proctor and Gamble employees generally tend to be younger and gravitate to some of the modern one bedroom condos in places like Balboa Avenue and also Costa del Este.
Look for increased trade coming from both Canada and the United States in Panama this year, as recently ratified free trade agreements start to take effect. Yet another factor to fuel Panama’s robust growth.
Our 2012 Panama real Estate trends and predictions
Contact us for a sneak preview of the report
2011 has been a very active year for us as a company and our success reflects the generally dynamic market that is real estate in Panama. We’ve been tracking some important sales metrics in popular expatriate areas like Coronado, Pedasi, and certain pockets of the city including San Francisco, El Cangrejo, Punta Pacifica, and Balboa Avenue.
In general, price movement was relatively flat for the first six months of the year, however we’ve noticed a small pricing correction that started around the middle of the year and has continued up through December. We’ve also noticed a handful of areas, both within Panama City and outside of the city, that are poised for explosive growth next year.
While we generally take an optimistic and positive tone in our newsletters, exposés such as Blood on the Streets and our industry recognized market reports hold true to our core value of providing transparent information on the real estate market and general economic climate of Panama. If you would like to receive a copy of our 2012 Panama Real Estate report, please send me an email and we’ll get you on the list to receive the report, which will be completed before the new year.
Taboga Island Master Plan
Highlights and insights from the Shamah Interview
In a country of only 3.2 million people, 2 million tourists per year is a big deal, especially considering tourism accounts for over 10% of Panamanian GDP.
Salomon Shamah is head of the Tourism Authority in Panama and many say the creative mind responsible for getting Ricardo Martinelli elected as president. He also has one of the most important positions in government when it comes to coming up with and ultimately approving new and innovative tourism campaigns. His 2013 goal of bringing in 2 million tourists annually has the possibility of being achieved this year, two years ahead of schedule.
Many claim that Shamah is too closely connected with the powerful Panamanian Hotel association, but why wouldn’t he be? According to people that know him, Mr. Shamah is also one of the hardest working figures in the Martinelli administration, and I for one think he’s doing a very good job promoting Panama. He has hit some speed bumps but generally ends up making the right decision in the end.
In a recently published interview, Mr. Shamah says his biggest goal continues to be courting the lucrative convention market, and according to him, there are already 130 conventions booked between now and the end of 2012. This booked convention traffic alone will equate to 200,000 occupied hotel units, and I think that this is just the tip of the iceberg as Panama remains relatively obsqure to major convention planners and associations. Mr. Shamah has also fully committed to improve tourist safety, citing the positive impact already seen from the collaboration of the hotel association and the national police.
When people visit Panama City, they always end up doing one of about five things: Visiting the Canal, Casco Viejo, Ancon Hill, Shopping at Albrook, and one or two other small day trips like Gamboa or Coronado. To add a new feature to this list, the government has committed six million dollars towards a campaign focusing on the island of Taboga, an eclectic island community just 45 minutes from Panama City via ferry. Three of the six million dollars has been earmarked to beautify the island, plant flowers, paint everything, fix the streets, and install a new desalinization system. The lynchpin of the Taboga plan will the installation of a high speed, three million dollar ferry that can make a round trip to Taboga every 30 minutes.
That means tourists no longer have to clamour for seats on the current ferry, which leaves at inconvenient times and is often very crowded and poorly marketed. I for one love Taboga, and would definitely visit more frequently if we had this type of ferry accessible.
According to Shamah, the idea is not to develop Taboga as a overnight location but rather beautify it and make it more accessible and visible to tourists staying in the city (and add at least one more night to their hotel booking).
December special for Panama Equity Clients
SMA offering free storage now thru 2012
Interested in other ways to diversify your assets and move wealth offshore? Ever since we featured them on our newsletter three months ago, our clients continue to give us positive feedback on SMA, a company with offices in Panama and storage in Switzerland that specializes in rare industrial metals; the types of which are getting used in production of such ubiquitous products as cell phones, LCD screens, and hybrid autos. **The reason that we think this asset class may be worth a look is that it only just recently opened up to private investors in 2009. Prior to then, only industrial metals traders were allowed to manage transactions.
If you are even considering getting into metals, this is a niche that’s new and proving to be lucrative. And if they didn’t come so highly recommended, we wouldn’t be mentioning them. I’ve been dialoguing with a manger at the company, and they have decided to give our clients an offer of five years free metal storage valid now until January 1st, 2012.
Click here for more information
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Last but not least! If you like the information in this newsletter, I’d be honored for you to pass it on to anyone who might benefit from the research we do every month to put it together.
Thanks for your business! We believe that real estate is 24/7 and if you have a question, you know how to find us. All the Best,
Kent Davis
