I had to pinch myself.
Was I in Miami or Central America?
Weaving through the streets of picturesque Bella Vista in downtown Panama City, Elias Mizrachi of Procasa Realty was chatting me up about ocean views and tax benefits… I was staring out the window in the back of his BMW sedan at a city that seemed to have grown up since I was last there.
What a fantastic time to buy in Panama City. Two weeks before I had been bit by the bug again…. so I booked my flight, contacted some developers, and headed down for a long weekend. I kept quiet this time; I hate getting the obvious question - “Why are you going there?” I made a tentative itinerary to meet with two developers of new condo projects and another developer who specializes in the renovation of colonial quarter residences…. fairly ambitious for a short trip, but worth the rush.
My first meeting was with Procasa, a family-owned, vertically integrated development company that’s been around since the 1970s. Elias, the founder’s son and heir-apparent, had a driver pick me up from the airport and take me to his office. Sensing my time crunch, he immediately began showing me several completed projects so I could get a feel for their quality of work. Elias’ father Isaac, the President and founder, is an architect by trade and has designed some of the more exquisite buildings in the city. The family had a gold-mine in the 80s: Isaac designed and constructed a high-quality residence building just in time for the American invasion. In the subsequent military occupation that spanned two decades, Isaac rented his units at tremendous profit to American officers who did not reside in military quarters. After the Army left, the family converted the building into condominiums.
Impressed with their work quality and corporate staying power, Elias and I jumped in the car and drove to the site of their newest project in Bella Vista called “44th & Park.” For those of you who have not been to Panama, Bella Vista is a quaint, bohemian-esque barrio of the city. The 20-floor project is scheduled to break ground in April with ocean views on a quiet street. The pre-construction sales were moving fast; the highest floor he had available with an ocean view was on the 13th…. bad luck for me. One thousand square foot condos with two bedrooms were starting at $66,000. The three bed two bath 1,350 square foot condo on the 13th floor with ocean view was fetching $93,500. Elias told us he could secure financing for us with 30% down at about 6%; that works out to be under $400/month with less than $30,000 down.
Elias was a great friend on my short stay; he took me to dinner that evening with several of his friends, a virtual who’s who of the young Panamanian entrepreneurial class. His kindness and hospitality were indicative of the generosity and sincerity of these wonderful people. We dined at a wonderful 5-star restaurant and had drinks at a trendy club; this guy seemed to know everyone, and everyone respected him.
My next meeting was with Habitats Realty, a company with several new projects for sale in the more upscale areas. I met with a beautiful young advisor, Rosie Guindi, who first showed me the new “View” project in the growing barrio of San Francisco. This project is meant to be the finest luxury of any Panamanian condo project, though the units start at $157,000 and range up to the 300s. Pass. For $300,000, I could stay in Dallas… I was looking for something under $200,000. Another upcoming project, “Pacific Sky”, offered a great balance. Located in trendy Punta Paitilla, Pacific Sky was about one block away from the ocean with panoramic city and ocean views, bordering a national park and an established wealthy residential neighborhood. Pacific Sky offers roughly 100 units on 25 floors, each internet ready, guarded by 24-hour security, with pool, gym, parking. She had a penthouse duplex available that I slapped a deposit on — 2,700 square feet, 3 bedrooms, 2 bathroom, separate 1/1 maid quarters, ocean view, city view, huge terrace…. $160,000. For an added bonus, Rosie indicated that she may be able to get me into a financing deal with 10% down and 5% interest for 30-years. That’s about $835/month for oceanfront paradise on the 26th floor with $16,000 down. Another unit she had available was a 1200 square foot 3 bedroom 2 bathroom for $85,000 - also ocean view. It seemed like such a ridiculous price to pay, I put a deposit down on that one as well; maybe I could convince one of my friends and family to move down there as well…. But first we had another meeting with San Felipe.
Ah, San Felipe…. Probably the most picturesque views in Panama City. Several years ago, this colonial old-town barrio was a slum, and no sensible individual would be caught dead there after dark. Then a group of savvy investors pumped capital, initiative, and vision into the neighborhood, and over time, it has become an absolute gem. San Felipe, also known as Casco Viejo, overlooks the bay and the searing downtown skyline of Panama City. What were formerly condemned structures about to collapse are now loft apartments and streetside cafes. The whole neighborhood has come alive with street music, concert halls, restaurants, and tranquil parks. Home to the Presidential palace, many of Panama’s elite choose to make their homes in San Felipe. While the neighborhood still has a few years left to improve, it is an absolutely gorgeous place…. and the developers know it. While Punta Paitilla real estate sells for $700 - $1,000 per square meter, San Felipe is selling for around $2,000 per square meter. For example, a small (1,000 square foot) 2-bedroom/1-bath apartment with ocean/city views was selling for well-over $200,000. Many small properties are fetching in the 300s and 400s. For someone seeking haven from a high cost of living in the United States, $300,000 is prohibitive.
It was a choice between modern and rustic, between contemporary and classic. San Felipe is certainly more quaint, historic, and picturesque, but for my money, I felt more comfortable with a more spacious, cutting edge high-rise. I chose Pacifica. (*note- Rosie recently told me that they only have four units left in Pacifica, but other high-rises are in the works).
Real estate is booming in Panama. Rich Latin Americans as well as baby boomers from the States are buying up condos in Panama City. Like all cities, Panama is running out of land to develop within the city limits. Moreover, the Panamanian government passed a favorable tax law that exempts owners from paying property taxes for 20-years if they purchase a development constructed in 2005. Consequently, every major developer in the city is trying to squeeze a condo project anywhere they can find space.
Panama City is a growing town; it has been about a year and a half since I’ve been. The new casino business is booming; the banking sector is as strong as ever; the Canal is, as it always has been, a tremendous revenue source; tourism is on the way up; foreign capital is flowing into the country. I saw far more Americans on this trip than the last; one couple from Florida seemed to be mirroring my visits. Panama is entering the mainstream. As baby boomers retire and seek to extend the purchasing power of their dollar, Panama will inevitably be high on the list. There is no currency fluctuation (Panama is on the dollar); the weather is as warm as the people; you can fly anywhere in the world (direct flights to several cities in the US, Latin America, and Europe); the shopping is as extensive as most major western cities; and the cost of living is very low.
Taking a survey at various stores around town, I compiled this sample of consumer good costs:
Sales Tax: 5%
Gallon of milk: $1.50
Pound of Bananas: $0.13
Brand new high-end Toyota SUV: $16,000
Items on Wendy’s 99? value menu: 75?
Bottle Italian Red Wine: $6
Bottle of Chilean Red Wine: $4
4-course lunch for two with wine: $20
Men’s designer suit purchased in the mall: $90
4-course dinner for two with wine at a trendy restaurant: $40
Pound of top sirloin steak: $3
Burger King Whopper: $1.35
Pre-sliced fruit salad in grocery store: $1
Dry cleaning, men’s shirt: $0.50
Comprehensive medical insurance for family (monthly): $100
1 night at a Panamanian 4-star hotel: $45
1 night at a Western style 4-star hotel: $85
Tube of toothpaste in a pharmacy: $1
Movie theater tickets: $2
I determined that, with an income of $2000 monthly, one could live exceptionally well in this beautiful, modern city (remember - the average Panamanian makes significantly less than $10,000 annually).