It is one of Latin America’s most notable economic success stories—and it’s providing opportunities for U.S. real estate entrepreneurs. With an average annual growth rate of 6 percent over the last ten years, a rapidly expanding skyline, and significant infrastructure projects underway including the widening of its famous canal, Panama is becoming one of the region’s premier gateways for trade and commerce.
“Development in Panama is ongoing and, judging by the number of cranes on the skyline, is reminiscent of Miami four or five years ago,” says Robert M. Dugan, principal at Fort Lauderdale, Florida–based international planning and landscape architecture firm EDSA. “We’ve been working on projects there for 30 years. There seems to be a combination of condominium investors, businesses seeking headquarters or branches, and hoteliers capitalizing on the tropical appeal of the city, which is compared mainly to Miami in style and demographics. Projects like the Trump hotel and Hard Rock are a testament to this.”
This past July saw the opening of the Trump Ocean Club International Hotel & Tower Panama—billed as the tallest building in Latin America. The 70-floor (21-m) sail-shaped structure in Panama City’s exclusive Punta Pacifica district is a 1,080-unit, $400 million development that is reportedly one of the most expensive buildings ever built in the region. The residential, office, and hotel construction comes along with a $5.2 billion expansion of the Panama Canal that will double capacity over the next few years as well as a new subway system.
“Panama has become an international country and an international base for businesses by virtue of its economy,” says Jorge H. Garcia, chief executive officer of the Boca Raton, Florida–based design firm of Garcia Stromberg, which has been active in the Panama market for a dozen years. “The economy is very strong, with incentives and free trade zones that make doing business in Panama very attractive. The country is appealing from a tax and labor standpoint, too, which is why a number of international companies have put their headquarters or important divisions [there].”
Benefiting from a low cost of living, a stable economy, a beautiful landscape, and a growing international business center, Panama’s real estate industry is purring along. “The president of Panama is a successful businessman who understands that side of the equation,” continues Garcia. “There is a lot of building, especially residential, from the upper end to house professionals and executives on down. We’re designing homes at six different economic levels.”
The Panamanian government expects to invest more than $13 billion in improving the country’s infrastructure, spread across various projects, as well as generate more than 34,000 jobs over a three-year period.
“The canal expansion is bringing a professional workforce and corporations,” says Dugan. “There is increased demand for second and retirement homes, which continues to drive real estate. There are also some 5,000 hotel rooms in the pipeline for the next few years in Panama City, in beach locations at both small- and large-scale resort communities, and in more adventurous inland locations alike.”
At present, EDSA is working with the developers of the regional-scale mixed-use residential community Costa Verde. A local family has owned the land for many years and seeks to offer a mixed-use community with residential, commercial, town center, logistical (light industrial, distribution, etc), educational, and institutional uses, Dugan adds.
“At more than 3,460 acres [1,400 ha], Costa Verde is one of the largest private developments in Panama today,” says Dugan. “Costa Verde is a dramatic departure from the regional norm in that significant natural forest and watercourse areas are incorporated as the backbone open-space system. Sensitive land development is far from the norm and Costa Verde has raised buyers’ expectations and perceived value by simple, sound land planning principles.”
Garcia Stromberg is working on a number of projects including Provienda Grupo’s Bijao, a diversified resort community on the Pacific Coast, as well as residential development in the Chorreras neighborhood west of Panama City. “We’re also conceptualizing three mixed-use centers that contain retail, office, and hotel, one in Panama City and on the outskirts,” he says.
Interested in developing in Panama? Then do your homework.
“You must understand the country and the business culture,” says Garcia. “The development process in Panama is different. You can’t just go there and hand out business cards. The Panamanians are very careful thinkers, very sophisticated. You have to understand that and be patient.”
Individuals interested in a quick real estate deal shouldn’t bother to go to Panama. “Be ready to invest a lot of time to gain a comfort level,” says Garcia. “We’ve been going to Panama for 12 years, and we are now reaping the rewards. You can’t just go in and expect to immediately start doing work.”
Friendships are everything in Panama, emphasizes Dugan. “Establishing relationships and trust takes time,” he advises. “Professional expertise from all continents is present, common, and welcome in Panama, and you will be as well.”