Listen to this article
Panama’s niche as a shipping and logistics centre continues to bolster growth in its capital city. The $5.25bn Panama Canal expansion project, due to be completed in early 2015, is predicted to double the amount of traffic passing through this Central American isthmus. Meanwhile, increasing numbers from the US, Europe and Latin America are being drawn to Panama City by employment and investment opportunities – as well as the lifestyle.
Two years ago, Procter & Gamble brought more than 500 international employees to Panama City, prompted by the country’s favourable tax system and location. According to a survey in June by the daily Panamanian national La Prensa, 39 multinationals out of a total of 165 different companies are based in the new Panama Pacifico mixed use development alone, a project that only began in 2007 and sits impressively on the western bank of the canal.
The UN regional offices will be the latest addition to the expat pack when it is completed in 2015, providing a base for more than 700 staff from at least 14 different UN organisations. This will generate a high demand for property – and the international baccalaureate schools. It is believed P&G financed the expansion of one of the schools so it could cope with the demand for English-speaking teachers and education facilities.
The new UN building, with 17,500 sq metres of office space, will be based within Clayton, a suburb originally inhabited by US troops and their families during the construction of the Panama Canal, and now popular with foreign and Panamanian residents.
“Having previously lived in Casco Viejo, Balboa Avenue and the Pacific beach areas, I believe this is one of the nicer projects and locations for a family,” says Wayne Stanley, an English fund manager who first came to Panama in 2005.
Interest in Clayton was reignited when the US embassy announced in 2006 its move to the leafy district. Land prices doubled almost overnight and construction began that year on five new residential projects, ranging from gated communities to smaller apartment complexes.
A five-bedroom property with spacious garden, formerly a US military home, is on the market with Panama Equity Real Estate for $665,000. It is the closest residential property to the new UN hub, two miles from the gated Clayton Village development and 20 minutes from downtown Panama City. A three-bedroom apartment in the nearby Embassy Club development is on the market for $500,000 through Encuentra24.com.
Infrastructure projects in the capital are vast as the country builds its economic muscle. GDP grew by 10.6 per cent last year and the number of hotel rooms in the city has risen since 1997 from 1,400 to more than 15,000, according to STR Global, a London-based hotel market agency. The canal expansion project is set to generate so much revenue that Panama has set up a sovereign wealth fund to manage excess income.
The first of a four-part underground metro plan is due to be completed at the end of this year, with a further four train lines projected over the next five years, connecting the downtown business district to the suburbs. It will be Central America’s first subway, funded by $1.45bn of investment.
Meanwhile, the old buses, known as “Red Devils”, have been replaced with modern coaches in recent years, which charge just $0.25 to travel on multiple routes over a one-hour period. A single journey on the metro will cost five times as much.
“From a macroeconomic perspective Panama is in a privileged position; the canal and financial centre have brought low unemployment rates and attracted an international skilled labour force,” says Silvia Pavoni, economics editor of The Banker. “[But] income distribution and transport are still key issues in Panama, just as they are in other emerging markets in the region.”
High-rise living is a growing trend, although the market has suffered from an oversupply of apartments in recent years. Paitilla, adjacent to the downtown district of Balboa Avenue, is one of the original hotspots. Situated on a peninsular, the area was transformed into a forest of glass towers in the early 1990s, with the Intercontinental Hotel built in 1994. Buyers in this established neighbourhood benefit from good value resales and generous floor plans.
A spacious four-bedroom serviced apartment in one of Paitilla’s tallest residential condos, The Point, is being marketed at $1.4m by Panama Equity Real Estate. A similar junior penthouse apartment in the slightly newer area of Costa del Este is being sold by Tribaldos Real Estate for $1.2m. The 70-storey Trump Ocean Club International Hotel and Tower, which opened in 2011, has several apartments for sale and includes access to all of the hotel’s facilities such as a private beach, marina, fitness centre and four swimming pools. A 151 sq metre apartment here is on offer for $472,000 through Panama Equity.
Panama City is one of the safest cities in the region. While the rate of theft has steadily increased since 2007, with smartphones being a particular target, murder rates have fallen in recent years and are considered “relatively low” for the region by the US state department.
It seems the main concern for residents is the lack of integrated planning within the city. The government changed the building code in the downtown Balboa district in the late 1980s, gradually extending across the different sub-markets in the past decade to allow 30-storey apartment blocks on lots where a single family home once stood.
There is no doubt the projects under way have been rapid and impressive and it may take some time before Panama City sees the cement dust settle.
● Twenty-year tax exemption on new buildings built before December 2011 (not including the land)
● Low crime rate for the region, with 34.3 reported assaults per 100,000 people, compared with 203.4 in Mexico and 316.9 in Nicaragua
● More than 90 international banks have operations in Panama, making it one of the largest financial centres in the Americas after New York
What you can buy for . . .
$500,000 A two-bedroom apartment in the Trump Ocean Club, with access to all facilities
$700,000 A five-bedroom, two-storey family home with spacious garden in Clayton
$1m A four-bedroom junior penthouse apartment in Costa del Este, with four parking spaces, balcony and 24-hour security service