Ivanka Trump hails Panama’s booming real estate market

The developer behind one of the grandest real estate schemes in Central America and the Caribbean has revealed demand is outstripping supply at the project.

Ivanka Trump of American firm Trump Organisation sung the praises of Panama, where the company is developing the Trump Ocean Club luxury real estate scheme.

She told the Latin business chronicle Panama is now one of the strongest real estate markets in the world, and was attracting investment from across the Americas.

Recession? What Recession?

Michael Manville
www.panamaatyourservice.com
Michael is the author of the Panama 101 – E-Book Guide to Living and Investing in Panama.

I went driving around Panama over the last few weeks, keeping a keen eye out for signs of a recession. Would there be soup lines, street people, and muggers on every corner?

What I found instead was a thriving local economy full of people buying, selling, coming and going. I also found a lot of people who couldn’t care less about the stock market nor the Obama bail out plan.

Rural cities and towns in Panama like Las Tablas, David, Penonome and Santiago seemed bigger and busier than ever. Penonome was humming with shoppers, and traffic was all jammed up in mid-afternoon for no apparent reason.

Major hotels in Santiago and David were full or near full and even some of the run down accommodations were full (the Hotel Gran David in Santiago was my only option for one night, and I definitely do not recommend staying there if you can help it).

The curious part of the puzzle was that the hustle and bustle in the heart of Panama’s sparsely populated rural countryside does not appear to be driven by tourism. Panamanians themselves seemed to be filling up the clothing outlets, supermarkets, hotels, and construction supply stores.

New super-sized hardware stores, pharmacies and supermarkets have opened in both Santiago and David in recent years, all of which appeared to be thriving with Panamanian consumers. Only in Boquete did the foreign influence appear obvious with coffee shops and restaurants bursting at the seams with gringos.

The reality is that Panamanian spending habits do not depend on the performance of the Dow Jones or the S & P 500. Most Panamanians do not have stock portfolios and those who do tend to be so extravagantly wealthy that even a 50% decline in the value of stocks have very little effect on their daily lifestyle or local business investments.

In Panama City, construction rolls on full speed ahead. In addition to residential towers, commercial towers and hotel construction, Panamanians are also busy with one of several major public works projects like the Cinta Costera, the Panama Canal expansion, or the new airport in Pedasi (more about this project in future e-letters).

The point is that the wave of foreign investment that hit Panama is still cycling through the local economy. Ask a Panamanian how they have been affected by the global economic crisis and they will probably shrug their shoulders. The common worker in the developing world generally does not own stocks and were not buying ever larger homes with ever larger mortgages to impress the neighbors and justify their highly stressful “first-world” lifestyles.

Have pre-construction condo sales in Panama City hit a wall? Yes, probably. Are finished condos and homes in Panama still selling? Yes, if priced right. Are the folks in the Colon Free Zone overwhelmed with high inventories and a slowdown in activity? Quite likely, yes. Is a real estate crash just around the corner? Too early to tell for sure, but a correction will be healthy for the market. Can you find a hotel room in Panama City at the last minute? No, not unless you call every hotel at check out time and pray for an opening.

As mentioned in previous e-letters, it is likely that many buyers will not be able to pay the balance owed on many of the thousands of condos under construction in Panama City and developers may be left holding the bag. The results may very well lead Panama’s economy into recession along with the rest of the planet.

Will layoffs occur thus slowing the Panamanian economy? Probably. But Panamanians, unlike North Americans or Europeans, are used to getting by on very little. Those living in Panama’s rural communities are likely to be sheltered from the brunt of the global recession due to their reliance on only the basics – food, water, shelter and plenty of cerveza and seco on the weekends.

Retirees from abroad are still interested in Panama. Although real estate buying has slowed, interest levels have not. Foreigners still want to dream the dream and Panama is still high on many lists of affordable places to retire. The “boomer effect” whereby millions of retirees are considering their options for an affordable, laid-back lifestyle is just getting started.

While Panama City can and will feel the effects of the worldwide credit crisis, rural Panama is as pleasant and peaceful as ever, even if traffic jams have begun to strangle the ten square blocks that make up the quaint town of Penonome.

Boquete is the best place for retirees to live

09 March, 2009
Nestalí Geneteau / The Panama Post
nestali.geneteau@rimolamedios.com

Before coffee prices dropped precipitously at the end of the ’90s, the plantations of Boquete employed almost all of the workers in the Chiriquí province.

The closure of farms and lack of credit forced many coffee growers out of the business that had formed the basis of the local economy and been their livelihood for many years and.

In the middle of this crisis, American Sam Taliaferro rented a home in Boquete with his Panamanian wife.

Through determination and vision, Taliaferro acquired 50 hectares of coffee-growing land where he built his residence. It would eventually become Valle Escondido, one of the most well known destinations in the region.

Thanks to Valle Escondido, said Taliaferro, Boquete is internationally known as the best retirement destination for North Americans and Europeans, due to its pleasant climate and lush vegetation. The coffee economy has also recovered in the last decade and Boquete coffee has won international awards for its excellent quality.

Taliaferro spoke with The Panama Post about his project, vision and mission in Boquete.

How did you arrive in Boquete?

We lived in Boquete for a few years before buying this property that is now called Valle Escondido. We weren’t looking for a development opportunity because we never had any prior experience with real estate development. Around the year 2000, international coffee prices dropped dramatically and Boquete was not doing well economically.

Looking at the earlier coffee crisis, we thought we should do something good to help the region of Chiriquí, whose economy depended directly on coffee production.

We sought to create something different from other countries in the region, something that could attract foreign investors to Boquete with the aim of helping the community. We knew that we had to direct our efforts towards the international market.

When Valle Escondido began as a real estate development and tourism project, foreigners were not buying property in Panama. This made our development the first one to be targeted directly toward to the international market.

In order to develop this project in a place where there were no construction companies, workers, contractors or suppliers, we had to start from nothing.

Now, many developers come here to Valle Escondido and are impressed with what we have done. Others have come to develop projects, but they are not able to match the scope of Valle Escondido, even though the conditions for development are better today.

How did you begin to develop Valle Escondido?

We began development by contracting local people and we had only one foreigner. We had to train everyone to build a project of this magnitude, while I didn’t even know myself how large it would become.

Along with the construction, we had to develop a marketing strategy, because a project like this had never before been offered to the international market.

There was a perception at the time that the dictator Manuel Noriega would remain in power. We had to market Valle Escondido and change the wrong impression people had about the country in those years, which was very difficult.

Part of the marketing strategy was to promote the temperate climate, the low cost of living in Boquete for North Americans, and above all, the natural beauty of the environment that pervades this region.

I would like to point out that we never received help from any government official. The local government tried to deter me by putting up all of the obstacles they could in order to prevent the development of Valle Escondido.

The building code department wanted to stop the project as well. They were always looking for something that I might be doing wrong.

As a result of all of this interference, I can say that without the involvement of the government in the development, Valle Escondido would have been finished even sooner.

What was your key to success in finishing this project in the face of all of these barriers and obstacles?

It was my gumption, vision, and above all, the determination not to stop until I reached my goals.

The Panamanians who worked with us helped to complete Valle Escondido, because one man cannot do something like this alone.

The population of Chiriquí is different. They are friendly and have an interest in learning and doing different things. Because of this, we were able to complete the project in Boquete as opposed to other locations like the capital, Azuero, or other areas of Panama.

Now I am a consultant for the development of other projects. I also write a blog about investing that is read by people around the world.

Many developers come to me for advice about real estate development, learning a lot from the exchange of ideas.

How did you end up living here?

I love Panama and I didn’t even know about Chiriquí until I met my wife, Thalia Velasquez, who is from Chiriquí. She brought me to Boquete in 1998 and showed me a place that she visited frequently when she was young.

In the United States, I always lived in the mountains, because I like the alpine climate. My wife told me that she always came to this part of Chiriquí because of the climate.

After receiving my pension and retiring, I lived in Boquete a few years in a rented house in the mountains. When I saw the local conditions and the low prices of international coffee forcing young people to leave the area due to a lack of opportunity, I decided to do something different.

After three years of developing the project, Forbes magazine named it as the best place for foreigners to retire, especially for North Americans. We are in this magazine and many others.

I marketed Boquete as the best place in the world to live at a time when we had no international recognition.

Valle Escondido became an agent of change that increased investments in Boquete and brought with it the confidence of banks, investors, developers and others.

The government has changed immigration laws and reduced the tourist visa from 90 to 30 days, almost destroying this type of business for the area.

I hope that this situation changes in the next governmental administration, because people will not invest in homes if they can only stay in the country for one month. (The law requires registration with immigration to extend the tourist visa for 60 additional days.)

What is your perception of tourism development in Panama compared to Costa Rica?

There is one specific issue. When people think of this country, they only think of Panama City, which has a centralized government that doesn’t consider other areas of the country.

In the capital, there are only businesses and no tourist destinations, with the exception of the Panama Canal.

Boquete is a primary place in Panama that tourists visit, but the Tourism Authority of Panama (ATP) doesn’t market it at all.

Last year only 82,000 visitors traveled to the countryside, but Panama City saw more than one million visitors.

In a sense, the foreigners that the ATP is counting are not tourists, but visitors who come to do business here.

This is important because tourism is not for business deals.

The Fair was back – January 8th through 18th.

Although the fairgrounds were severely damaged by the flooding last November, the community came together in a very short time to repair the damage caused by the flooding of the Rio Caldera river. All levels of government, together with local companies and volunteers worked tirelessly to get the ground ready for Boquete’s biggest fair, the Festival of Coffee and Flowers.

According to reports from Festival management, all of the amazing efforts were rewarded with a twenty percent increase in attendance over last year’s fair, with about 100,000 people attending this year.