By Timothy Scott
Incentives for Buyers in Panama
Panama has plenty of incentives in place to lure residents from other countries. If you can demonstrate a monthly income of at least $1,000 per month (even lower if you purchase real estate above a certain price point), you qualify for Panama’s pensionada program, which is one of the most attractive in the world. Here are some of the goodies you get if you qualify:
• 50% off entertainment—such as movies, theaters, concerts, and sporting events
anywhere in the country
• 30% off bus, boat, and train fares
• 25% off airline tickets
• 50% off hotel stays from Monday through Thursday
• 25% off at restaurants
• 10% off prescription medicines
• 20% off medical consultations
• 50% off closing costs for home loans
• A one-time exemption from duties on the importation of household goods (up to $10,000)
For many real estate transactions, you pay no property tax for 20 years. In addition, if you choose to invest in a business in Panama, a whole other set of incentives comes into play, making this one of the best, if not the best, countries for foreigners to start a tourism business. You can qualify for as little as $50,000 invested. Then there is the Colon Free Zone, which is an attractive base for import/export, with an exemption on all taxes, duties, and tariffs for exports.
©Photo by Timothy Scott
Besides all that, and the country’s renowned banking system, residents here enjoy a vibrant city with year-round swimming pool weather, with a cost of living that is far lower than other major capitals. The local currency is the U.S. dollar, so there’s no need to monitor exchange rates or change money. Hiring a driver, maid, nanny, or cook is not a financial strain.
It's easy to get here and get away if you have a second home or are retired: Copa Airlines flies to 26 countries from their hub in Panama City, including 10 airports in North America.
Panama Pacifico: a Planned City
Panama’s government is thinking big, with a $5 billion Panama Canal expansion underway right now that will accommodate large container ships. Another huge project is next to it: Panama Pacifico. Going up on land that was once the U.S. Howard Air Force base just outside of the capital, this planned community will eventually be a city unto itself, with walkable residential villages containing thousands of homes, plus retail stores, office complexes, a golf course, an airport, and hotels. At the mouth of the Panama Canal, it’s s strategic spot for world trade, plus locating here means getting the advantage of—you guessed it—more tax incentives.
The project is still in progress (here’s a progress timeline), but with $750 million committed from the developer and the national government behind it in a big way, those who get in early should reap huge benefits down the line. Plus the thousands of people working in the area have little to choose from in terms of services right now, so those with experience setting up service businesses could see a quick return on investment.
Future Growth in Panama
A real estate investment in Panama City is no longer an act of buying in a place nobody is thinking about. The time to beat the crowd is over. Now it’s a bet on future growth, which is looking like a more solid bet all the time. As Jeff Duda of Panama Casa Realty says, “Panama is one of the cities that are geographically pinned in, with the national park that serves as a vital watershed for the canal on one side and the ocean on the other. This leads to high demand in a small area. Panama City is embracing it’s roll as a major international business center and is one of the fastest grown regions in the world: Latin America. Copa Airlines added seven more direct flights to Panama this year.”
Roger Khafif of K Group adds that European airlines are also adding new flights from that continent. “Plus every time I get on a Copa flight it’s full. All the good restaurants are full. Some days are already fully booked at the hotel part of Trump Ocean Club and they haven’t even opened yet.”
“Much of Latin America is where the U.S. was 50 years ago,” adds Donald Trump, Jr. “There are decades of major growth ahead and Panama will benefit in a big way.”
© Timothy Scott
Panama’s economy is clearly on a roll. Year-over-year vehicle sales are up 28% this year. In mid-2011 the economy was growing more than 9% over the previous year. It’s easier to find reasons why this will continue than not. As the whole tide of Latin America rises (apart from a few exceptions like Venezuela), Panama is the country best positioned to ride the wave and the skyscraper city that is its capital will continue to be the nerve center.
In times of crisis, the cream rises to the top. While the entire Pedasí area may not be able to claim crème de la crème status, the Azueros project with its eye on conserving beauty, promoting tourism and developing infrastructure can. If the area is able to grow with a united front behind Azueros’ high standards, it will attract people with similar values and interests.
Story by Timothy Scott, July 2011. Photos courtesy of the developers and agents except where indicated.