Panama Equity in Shanghai

Attendance at the 2017 Luxury Property Show (LPS) in Shanghai was — in the words of the organizers and literally all of the repeat presenters I spoke with — better than it had been in years. The takeaway: Chinese investors want to get their money and their families out of China and appreciated having over 50 countries to choose from.

The question on my mind, of course, was: how does Panama fit in to the Chinese picture?

We’re a small, mostly Spanish speaking country literally on the other side of the world. Sure, we’re a dollarized economy, sure, we’ve just established formal diplomatic relations with China, and, sure, Panama has nearly 200,000 Chinese already living here. But how would that resonate with Chinese in Shanghai?

12 days in China doesn’t make me an expert, but I can honestly say that I’ve learned a lot and feel very optimistic about the future of Panama-China relations and the potential wave of new capital and interest from China to Panama. I’m going back to Panama with two handfuls of business cards and more than two dozen very serious groups to follow up with.

Here’s what I learned.

Over the last five-ten years, wealthy Chinese have preferred to emigrate to countries like Australia, the UK, Canada and the USA. They’ve been keen on permanent residency, good schools, stable currencies, and the hedge of a property investment in a foreign market. But each one of these destinations has seen some big changes over the last 12 months, presenting a solid case for plan B options like Portugal, Dubai, Thailand and, you guessed it, Panama.

In an interest to cool off property prices (driven up by Chinese buyers), Australia and Canada have put up foreign-investor taxes to the tune of 10-15%. According to some of the Chinese at the show, Australia is also coming out with some new policies that are complicating the visa process. In addition, the uncertainty of Brexit and the fact that an EB-5 visa (the go-to visa option for Chinese investors looking at the US) can take up to eight years to obtain today, have all been good news for anyone offering an alternative. Say, Panama.

The biggest demographic of attendees at the show were the super-rich millennials, many of whom have tons of money thanks to their parents being in the right place (China) in the right industry (pretty much anything) at the right time (the last ten years). Schools and lifestyle are more of a factor than value — and, at $300,000, the Panama property-purchase visa was one of the cheapest at the show. Panama did not really resonate for this group, since they were more focused on jet-set, flashy first-world cities like London and Vancouver.

The second biggest sector represented were immigration agencies; basically companies hired by Chinese investors to devise an immigration strategy. They present a menu of countries (almost always the four mentioned above, plus alternatives like Malaysia, Thailand and Japan) and advise their clients on which country best suits them.

This group was very interested in Panama, not so much as a final destination but as a means to an end: buy a property in Panama (or opt for the five-year instant passport at a cost of $300,000) and parlay that into an EB2 Visa for the USA or the Canadian equivalent. This group has the potential to present Panama to thousands of Chinese looking to get out, and we made some great agency contacts. Now it’s just a matter of educating them enough to feel comfortable adding Panama to their list of vetted options.

Another well represented group were large companies looking to get in to Latin America. I was actually amazed that they would attend these types of shows. But, sure enough, we were approached by hotel chains, logistics companies, builders, and massive consortiums with fingers in literally hundreds of industries all under one holding company. The scale of some of these holding companies was mind-blowing for anyone unfamiliar with the scope of Chinese businesses.

Many of these companies knew that Panama was going to be represented at the show and sought us out specifically. Surprisingly, they didn’t have any other channels of communication open with local reps yet, so we picked up lots of cards across lots of industries. I’m optimistic that there could be some big deals spawned as a result.
And, finally, there were the family office, wealth advisory, private equity folks who are always looking for new markets and new opportunities. These guys also sought us out at the show, which was a surprise and quite exciting in terms of how much they already knew about Panama. Groups out of Hong Kong, Vietnam, Dubai and mainland China were keen to tie into a Panama deal pipeline and were very keen on USD-based investments in real estate, M&A opportunities, and opportunities in the travel and tourism sector broadly.

I’m glad I left a few days before and after the show to meet with several groups that I had been introduced to prior to my China trip (introductions are key in China). The idea was to put a face to a name, present some local coffee and chocolate as gifts (a big hit!), and pitch Panama one-on-one in an intimate setting, planting the seeds of a relationship in person, with their new Panama contact (yours truly).

I did not come away from the trip with any sales contracts, but I wasn’t expecting to. Panama is just too new on the Chinese radar, and I’ve learned that Chinese are extremely cautious and like to study things thoroughly before moving forward. But, when they move, they move in a big way, with hundreds of people and in some cases hundreds of millions of dollars behind them.

Based on the number of individuals and groups who sought out “the Panama booth”, I think that the Panama seeds have been planted and planted well. Now it’s just a matter of watering and tending to the garden.