central america
Good, bad, ugly and booming in Panama
April 10, 2008
Donna Jean MacKinnon
STAFF REPORTER
Booming! That's Panama, when it comes to building holiday residences. North Americans and Europeans are running around waving greenbacks at developers. Even The Donald is in on the action and celebrities such as Brad Pitt have bought at the deluxe Trump Ocean Club in Panama City. (Suites average about $375,000 U.S.).
This buying and building frenzy is driven by several factors: cheap labour, cheap property, soaring Costa Rican and Mexican prices, baby-boomer retirement and the biggie – seductive tax breaks and extras offered to foreign buyers by the Panamanian government.
The two hottest spots are the mountain settlement of Boquete, Chiriqui province, which has been rated top retirement town by International Living magazine, and the strip of Pacific beach from Coronado (condos and villas galore), past Santa Clara to Playa Blanca, Cocle province. (International Living also rates Panama first overall on its retirement index.)
THE GOOD: Residential real estate, in prime holiday locations, runs about $100 to $170 per square foot compared to $1,000 per square foot in Florida. The Panamanian economy grew 8.1 per cent last year and property prices have risen 25 per cent annually for the past three years. The government supplies a pensionado visa to anyone over 18, who has a guaranteed pension income. The visa is good for:
Half off closing costs for home loans; exemption from property taxes for up to 20 years; exemption from taxes on foreign income.
Up to 50 per cent discounts on air, bus, boat and train fares and in restaurants, hotels and clubs.
Banks offer 30-year mortgages and financing at about 6.5 per cent interest.
THE BAD: Panama has very little infrastructure for tourism. There's no tourist information office in Panama City. There are the usual inequities one would expect in former Banana Republics. For example, there are appalling tin-roofed shantytowns for the workers, who keep the Canal Zone stoked and the bankers, in Panama City's 100 registered banks and financial institutions, serviced.
THE UGLY: Wherever there is construction, there are workers balancing overhead, spraying paint and chemicals without harnesses and masks. Commonly, others hang off beams with ropes tied around their waists. For construction workers, death is a real possibility. These workers make $1.75 to $3 U.S. an hour.
On Feb. 14, members of SUNTRACS, a national labourers' and construction workers' union, went on strike. The union presented the Panamanian government with 10 demands including safe working conditions and better wages. Police killed one protester, which ignited riots in Panama City and Colon. More than 900 protesters were arrested. More than 400 of these paid a $25 fine, before being released, and 51 more were charged with damaging state property. The strike shut down the city and the U.S. embassy warned American citizens to stay away.
Toronto Star