Panama Property Booms

Who Lit the Fuse on Panama's Property Market

2009-01-11T03:38:00.000-08:00

Spectacular is the only way to describe the property boom in Panama, 30,000 units built between July 2006 and July 2007, another 40,000 announced and/or being built, rental yields going through the roof, as is the tourism, the latter attracting global corporations like Hilton to build sky scraping hotel complexes and giving Panama City a skyline to rival any of the world's greatest cities -- which may go some of the way to explain the influx of American retirees chasing cheap living in the sun. But where has it all came from, and why now?

With the property market booms in the Eastern European States, it was easy to see where they came from, break up of the Soviet Union and entrance into the European Union, but in the case of Panama, it is really more to do with what Panama hasn't done and what the U.S. wants to try and stop them doing: joining forces with Hugo Chavez's Venezuela in his socialist war of rhetoric with the U.S. and the west.

The closest thing to a trigger for the boom is the handing over of control of Panama's canal from U.S. to Panamanian control. The Panama Canal is one of the most important in the history of international freighting, because it runs right through Panama to connect the Atlantic and Pacific oceans. This meant ships no longer had to take the treacherous routes of Drake Passage around Cape Horn at the southernmost tip of South America.

Handing over the Canal has been a massive boost to the Panamanian economy. But more than that, the U.S. is putting money into the Panamanian economy in the hope that the boom will set an example for other states that either already are, or are considering joining or forming an alliance against Western interests.

Like so many economic factors today influenced by U.S. global realpolitik but with one difference: this U.S. policy actually seems to be working. More U.S. retirees are buying their retirement homes in Panama than anywhere else, and the country that has secured its place as the fastest growing Latin American economy is lining up to take its place as one of the hottest property investment destinations of 2008, here's why:

A very conservative estimate on capital appreciation is 15-20%, rental yields in the big cities are an astonishing 11.23% on a property of 190 sq.m, amazing for a property of such a size, another plus is the pro-landlord rental laws. The buying process for foreign investors is also incredibly simple, with only 7 stages that can be completed in around 44 days.

There are no restrictions on foreign ownership - according to the sales people I have spoken to those are two of the key issues people look for when buying an overseas property: an easy buying process and freehold rights. Other reasons are the low roundtrip transaction costs of around 7-9% including agent's fees of 3-5% and no inheritance tax, all things buyers look for in overseas purchases. Another plus point for an investment in Panama is the low Capital Gains tax. Foreign owners can choose to be taxed on their gain in two ways:

5% of the sum of the following: 10% of the property's cadastral value for every year the property has been held, plus the cost of any improvements, plus the property's cadastral value at time of sale. This option consolidates transfer tax and capital gains tax, and means the final sum of the above calculation is all that a foreigner pays upon selling a Panama property.

The second option is: 2% of the higher value between: the sales price, and the sum of the property's cadastral value at time of acquisition, improvement costs during ownership, and 5% of the property's cadastral value, (including improvement costs) for each year the property has been held. The second option incurs a further taxation on the selling or transfer price, less transfer costs, the acquisition cost or cadastral value, and 10% of acquisition costs for each year the property has been held, the sum of which is then taxed at standard income tax rates.

In my humble opinion the first option is best, but advice from a financial advisor and solicitor should go hand in hand with any property transaction, buying and selling, their advice on which option is best for you is far more valuable than mine. Before that though you have to actually buy a property, the volume of new properties coming onto the Panama market will have you spoilt for choice.

We at David Stanley Redfern Ltd have an excellent property, of The Best Western Condo Hotel & Casino in the City of David, Panama's third largest City. Prices start from 32,000, and because they are smaller than 190sq.m the developer estimates a rental yield of 18%.

About David Stanley Redfern

David Stanley Redfern Ltd is one of the U.K.'s leading overseas property investment specialists. The reasons for this are an incomparable range of international properties spanning 40 destinations worldwide, and unrivalled customer care, which lasts long after the purchase has been completed. Experienced, professional staff and membership to the overseas property market's regulatory body: the Association for International Property Professionals, as well as their stringent due diligence procedures gives buyers the confidence that any purchase with David Stanley Redfern is a safe one.

Media enquiries should be directed to: media@davidstanleyredfern.com

Panama Property to Benefit from Sustained Growth

2008-07-06T09:14:00.000-07:00

The Panama government has just extended its tax-exemption law for retirees, which were due to expire next year. Panama is currently the foremost destination for American retirees, and the Panama government is, understandably keen to ensure this continues. Panama is regarded as being the American version of what popular parts of Spain -- i.e. the Costas -- are to Britons.

In other words Panama is an incredibly popular tourism destination with Americans, and increasingly, those from around the world, not least those in search of bargain cosmetic surgery. This means, that, given the size of America's population compared to that of Britain; the potential profit to be made from Panama property in the coming years is absolutely huge.

Rental yields on prime Panama property are already huge, holiday apartments are readily fetching yields of not less than 10%, and even up to 18% is possible on the smaller units in the best areas.

Speaking of smaller units in the best areas; studio apartments on David Stanley Redfern's Bala Beach development are currently available from £43,000. The Bala Beach development consists of 850 units covering some 20 acres of gorgeous Panama coastline. 1 and 2 bedroom apartments are also available.

Panama exploded onto the international property investment scene when the canal expansion plan was announced in 2005. The Panama Canal is central to the Panama economy, as is the Colon Free Trade Zone. The Canal has gone over its capacity, and over the capacity given by previous minor expansion attempts, and has become too small for many of today's larger ships.

The major expansion, due to be completed in 2014, will not only double its capacity, but triple or even quadruple its revenues, as it allows bigger ships and more cargo to pass through it.

Panama's economic growth is already strong, and the completion of the Canal expansion will give Panama's economy a new lease of life, and will likely turn it into one of the largest economies in South America, if not the world.

Find out more about Panama property investment.

About David Stanley Redfern

David Stanley Redfern Ltd is one of the U.K.'s leading overseas property investment specialists. The reasons for this are an incomparable range of international properties spanning 40 destinations worldwide, and unrivalled customer care, which lasts long after the purchase has been completed. Experienced, professional staff and membership to the overseas property market's regulatory body: the Association for International Property Professionals, as well as their stringent due diligence procedures gives buyers the confidence that any purchase with David Stanley Redfern is a safe one.

Media enquiries should be directed to media@davidstanleyredfern.com

Panama’s Bala Beach Apartments Selling Fast

2008-06-18T06:53:00.000-07:00

Only a few studios remain in David Stanley Redfern’s Bala Beach development in Panama and apartment units are selling fast.

Set on more than 20 acres of picturesque Caribbean coast, Bala Beach is one hours drive from Panama City, and just minutes away from some of the most interesting landmarks in Panama.

Nearby, historic 16th century forts, coral reef communities, and coastal forests dot the landscape of the 34,846 hectare national park. While inside Bala Beach, tennis courts, swimming pools and Jacuzzis are just some of the many free amenities that make up the resort.

Prices start as low as £40,000 and as Panama is America’s number one holiday destination, rental yields upwards of 10 percent can be expected, in some cases rising as high as 18 percent. Property prices have already increased by 50 percent in the last two years.

Bolstered by this solid growth in real estate, as well as growth in construction, banking and shipping sectors, the economy grew by more than 10 percent in 2007 – one of the fastest economic growth rates in Latin America over the past three years.

Panama currently has the highest GDP per capita in South America, yet its huge economic growth is likely to continue for at least ten years. The country has been largely driven by its inter-oceanic canal, and with the expansion due to be completed in 2014, Panama’s GDP growth is expected to double or even triple.

Add to this the likely September signing of a free trade agreement with the U.S and the future looks bright. In 2007 alone, Panama and the United States exchanged more than $4 billion worth of goods – nearly twice as much as just four years ago. The free trade agreement will build on this vibrant trade relationship by immediately eliminating tariffs.

All the above makes Panama an excellent place to invest in property, for short-term gains and/or long term security.

Find out more about Panama investment property.

About David Stanley Redfern

David Stanley Redfern Ltd is one of the U.K.'s leading overseas property investment specialists. The reasons for this are an incomparable range of international properties spanning 40 destinations worldwide, and unrivalled customer care, which lasts long after the purchase has been completed. Experienced, professional staff and membership to the overseas property market's regulatory body: the Association for International Property Professionals, as well as their stringent due diligence procedures gives buyers the confidence that any purchase with David Stanley Redfern is a safe one.

Media enquiries should be directed to: media@davidstanleyredfern.com

Strong Growth in Panama Property Market

2008-04-10T10:45:00.000-07:00

According to David Stanley Redfern research, property prices in Panama City have been growing at an average 25% per year for the last two years. This is based on the fact that prices in the Global Property Guide for early 2006 were $1700 per sqm, the average price of a Panama City property is now $2910, an appreciation of fifty percent in two years.

This is a good sign for the City of David, which is currently seeing a lot of development, and similar potential for growth as Panama City. Development's here are all very new and it is very early on the growth cycle, so prices are still low, but likely to grow at the same rate Panama City has enjoyed for the next few years.

David Stanley Redfern's Panama property The Best Western Condo Hotel and Casino is in the City of David, and priced at just £32000 for a 1 bedroom fully serviced apartment. The Hotel has replaced the Panama Rey Hotel one of the swankiest in Panama, rates of £40 per night. Because of its location, Panama's growing tourism and the hotel's reputation, David Stanley Redfern expect rental yields of at least 10%, but yields could potentially reach as high as 18%.

Rental income in Panama is taxed at 15%, plus an education tax of 2.75%, sellers can choose how they are charged capital gains tax from two different schemes:
1) 5% of the sum of the: the property’s cadastral value + improvement costs + 10% of the property’s cadastral value for each year of owning the property.

Under this scheme capital gains tax and transfer tax are consolidated, so there is no further tax to be paid on capital gains.

2) 2% of the higher either: the sales price OR the sum of the property’s cadastral value at the time of acquisition + improvement costs accrued during ownership + 5% of the property's cadastral value (including the improvement costs) for each year of ownership -- whichever is higher.

The second option incurs a further tax on the capital gain. The taxable gain is the selling or transfer price less the acquisition cost or the cadastral value + transfer costs + 10% of the acquisition cost for each year of ownership. The final gain is calculated by dividing the above by the number of years the property was held and is taxed at the standard income tax rates.

The second option is subject to the 2% initial tax on the selling price, but this can be credited as real estate transfer tax, and as such deducted from the sale price. Total transaction costs in Panama are 7 to 10% and the 7 processes can be completed in around 44 days.

Find out more about Panama investment property at: http://www.davidstanleyredfern.com

About David Stanley Redfern

David Stanley Redfern Ltd is one of the U.K.'s leading overseas property investment specialists. The reasons for this are an incomparable range of international properties spanning 40 destinations worldwide, and unrivalled customer care, which lasts long after the purchase has been completed. Experienced, professional staff and membership to the overseas property market's regulatory body: the Association for International Property Professionals, as well as their stringent due diligence procedures gives buyers the confidence that any purchase with David Stanley Redfern is a safe one.

Media enquiries should be directed to Liam Bailey: media@davidstanleyredfern.com