Article Courtesy from Business Panama

New Real Estate Opportunities in Panama
by Ricardo Eskildsen M





This article is intended for those who have recognized new opportunities emerging in the Real Estate market, especially for promoters or those with purchasing power. These opportunities apply both to the domestic and the international market.

Real Estate development in the Republic is a well known business, especially for local developers. Panama’s image as a destination for financial investment, has reached a new level. With advertising from the public sector covering tourism and hotel construction, we are now seeing opportunities for many in the private sector to develop or promote second home properties, or what is now known as: “Residential Tourism,”

In US magazines, and particular those specializing in writing for the retirees’ audience or those magazines addressing the generation of “baby boomers,” the issue of the value of purchasing real estate abroad is also a new trend. A potential profit can be made in the international market by those interested in acting first. In magazines such as “International Living” or “Modern Maturity” many are finding recommendations as to why Panama, among other nations in the region, is a good destination for investment. The most common factor for such publications is based on the fact, among others, of: a) a wide uses of the US dollar as the local currency, b) the openness of the local economy for foreign investments, c) the blending of race and nationalities, d) the widely-spoken English language, e) the well respected precedent of the financial investment of the Panama Canal, initially operated by the US Federal agency during the last Century.

After the enactment of the 1994 Law No. 8, the Panamanian Government followed the lead initiated by Costa Rica in the region, with the promotion of Tourism. Law No. 8 provided tax incentives, originally for twenty years, for those interested in developing tourist projects on beaches or at golf courses with hotels within the Republic of Panama. Interested developers needed to focus their investment in areas which had already received governmental support; represented by 10 “Tourism Development Zones”.

The tax incentives, promoted by Law No. 8, which are due to expire in 2015, are being revised in the Congress at this very moment. A new Law should come into force, supported by the Tourism Bureau’s initiative, and will extend the tax benefits until the year 2020. New financial structures are also been included, such as placing Tourism Bonds on the market, with tax incentives for the buyers, etc.

After twelve years of promoting tourism in Panama, a new segment of tourism has surfaced. Furthermore, after the successful promotion in the US by “International Living” magazine, Valle Escondido in Boquete, the reality of Second Home owners in Panama, is no longer a thought but a reality. Boquete, a sleepy town in a great coffee plantation, situated 1,000 meters above sea level, is the new scene along the Caribbean coast, which is attracting new investors from the US and Canada. In addition to the need for new hotel builders, foreigners are also demanding villas, golf courses and US standards for their second homes.

To complement the above trend which has been ongoing since 2003, Congress is, as we write these notes, debating the approval of new legislation offering concessionary rights for 40 or 60 years to those developers, foreigners or domestic, interested in investing in tourism attractions on islands in the public domain. This new legislative project received support from the Executive Cabinet on September 14th, 2005 and also regulates “possession rights” which are somewhat different to the usual “Deed title” which will allow Real Estate agents to promote in rural areas.

Further to the above, the land and buildings around and alongside the Panama Canal are also becoming an important area for investment. And local developers have turned an old US Air Force golf course into an international standard golf facility with townhouses and a hotel. This is the case with the old golf course known as Horoko which is now being restructured by Tucan Country Club & Resort, S.A. As a result, a 180 acre private gated residential golf community, villas and townhouses with a hotel and club membership is being developed adjacent to the Panama Canal. The project is 20 minutes from the financial center, and is located on the West side of the Panama Canal near the beaches on the Pacific.

And driving away from the city limits parallel to the Pacific, another development, Vista Mar Resort, on the shores of the Pacific Ocean, is being built, comprising an international standard golf facility, with villas and condominium units for sale. This gated community on titled property will, in the near future, also include a hotel.

Legislation covering foreigners is in place and since 1987 the enactment of Law No. 6 and No. 9 has allowed the entrance of Pensioned Tourists into Panama. To receive a visa the petitioner must prove a permanent income of not less than US$500.00 per month from a private or public source. This immigration status allows a foreigner to purchase real estate property and stay and live in Panama.

Due to all these new opportunities, the real estate market is resulting in brokers from the US being interested in offering a commission for real estate located in Panama. Many brokers and members of the National Association of Realtors (NAR) have joined forces and created alliances with local Licensed Brokers via the referrals tradition of doing business in the US.

According to Law Decree No. 6 of 1999, and its regulations through Executive Decree No. 39 of 2001, as the intermediary between the developer and the buyer, the broker needs to have a license. As for a United States broker, participation in the commission, and alliances, needs to be established in compliance with the Law. Article No. 286 from the Criminal Code sanctions a person who engages in the exercise of a licensed profession without holding the proper license. In Panama, real estate brokers receive their Licenses from the Real Estate Board of the Ministry of Commerce.

Panama, October 10, 2005.

Ricardo Eskildsen M
Attorney and Senior Associate of
Eskildsen & Eskildsen


 

Article Courtesy of Business Panama
The American Chamber of Commerce (AMCHAM)
and Deal Inc.

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