PANAMA’S POWER PLAY

 

 A SMALL ISTHMUS NATION UNDERGOES A BIG TRANSFORMATION

BY INDIRA A.R. LAKSHMANAN
BOSTON GLOBE

PANAMA CITY- Long a freewheeling shipping hub and offshore banking center for the Americas, Panama is enjoying a building boom on a scale unmatched since the construction of its famous canal 92 years ago.
The country is luring investors and expatriates worldwide, with interest boosted by the recent approval of a 55.2 billion plan that will double the canal’s capacity.
A real estate frenzy fueled by easy credit from Panamian banks, government incentives, and a satured ·U.S.  housing market for retirees has attracted speculators and prospective retiree has attracted speculators and prospective residents from California to Dubai. They are snapping up preconstruction bay-front apartments, highland villas, and the latest luxury development from Donald Trump- a $220 million residential, office and hotel complex called Trump Ocean Club, with towers shaped like a yacht sail. Two rival Spanish projects are vying to build the tallest skyscraper in Latin America at about 100 stories.
Construction moguls and estate agents say Panama City is a sure bet for investors, offering discount prices for quality of life and healthcare rivaling the United States, more than 100 international banks, tax breaks, and stunning Atlantic and Pacific coastlines.
But urban planners and longtime residents warn that overbuilding could ultimately strain Panama’s roads, water supply, and other infrastructure to the breaking point with devastating consequences.
Almost no one seems to be heeding those alarms.
Cranes, building sites, glitzy sales offices, and real estate package tours aimed at foreigners are everywhere, from Avenida Balboa in downtown Panama City to suburban Punta del Este. Laundered drug money from neighboring Colombia built  some of the early mirrored high-rises in the 1980’s , but  todays buyers included fixed-income senior  citizens from the United States searching for a less expensive place to retire as well as billionaires from Monaco and Cannes.
David Btesh, a partner in Pacific Point, a high-end condominium project under construction on a landfill in downtown Panama City with ranging from $300,000 to $1.1 million, said foreigners are looking for a haven from a world they perceive as unsafe because of crime at home and global terrorism.

PARADISE FOUND

“They’re not going to Europe because it’s too expensive, Canada’s too cold, and Mexico’s only Spanish-speaking”, while many Panamians speak English, Btesh said.
“Panama is a dollar economy with a democratic government. There’s every kind of food, a modern airport with about 54 flights a day, and the second-largest free-trade zone in thee world after Hong Kong”, he said.
U: S: citizens represent two-thirds of foreign resident visas issued in Panama in recent years, officials say, with at least 1,379 Americans moving to the country since 2003. Celebrities including mick jagger and Bono have reportedly purchased property in resort areas outside the capital.
The canal, central to the country’s history, also looms large in the current boom. The United States supported Panama’s declaration of independence from Colombia in 1903 in exchange for U.S. control of a canal connecting the Atlantic and Pacific oceans. In 1914, the U.S.-built canal was completed, and the zone remained under U:S. control until 2000.
In October, a majority of Panamians voted to finance the construction of a third canal lock over the next decade that will allow the 50-mile lock and lake system to accommodate bigger ships and double toll revenues within 20 years, according to government estimates. Ricaurte Vasquez, minister for canal affairs, said the referendum “is a vote of confidence” that has raised interest in Panama as an investment destination.
About 107 residential building projects of at least 20 stories, valued at $3.2 billion, are under construction in metropolitan Panama City, according a survey by Prima Panama, a real estate promotion company. That construction activity accounted for one-fifth of Panama’s annual gross domestic product.

REESIDENTIAL BOOM

The report also found that about 11,000 apartments are scheduled for completion within four years. The average price of a new condo in Panama is $289,111. The cost has raised concerns about who will be able to afford to live in Panama.
Some will be the jet-set buyers targeted by the Trump complex; which is selling preconstruction condos from $400,000 to $8.7 million. The K Group, local developers of the project, says Americans including Trump top the list of buyers at about 40 percent, followed by Canadians, Europeans, and Latin Americans including Trump top the list of buyers at about 40 percent, followed by Canadians, Europeans, and Latin Americans.
Other buyers are expected to the baby boomers from the United states seeking more value for their retirement money. Modern maturity magazine ranked the town of Boquete, in Panama’s highlands, as one of the world’s top retirement destinations.
But a question nagging even the bullish is whether public services and demand can keep up with rising supply and prices.
Already the capital suffers from traffic jams and fumes from untreated sewage dumped into panama Bay. Public transport is sorely lacking, and the water supply is insufficient in poor neighborhoods.