(Photo opposite: Panama City´s skyline)This week there have been a number of major ripples in the Panamanian real estate market. The slow down in the market has been swift. The bubble which has been building for really the last five years started to pop this week. A number of large apartment/condo projects were canceled and investors are looking to get their down payments back from real estate developers. Some developers have sent letters to clients telling them that because of the high cost of building materials and energy that it is now impossible to build and make a profit, so they are cancelling projects. Buying into the Panamanian real estate market is starting to get very expensive and as any free-market economist knows if the price is not right then no one will buy. Buyers are looking elsewhere: Nicaragua, Guatemala and Miami. The problem in Panama right now is that prices are too high and people’s wages too stagnant for there to be any room for real estate speculation.

Even though the real estate boom is ending in Panama there are still properties to invest in. The boom created tons of commercial and residential building space, much of this will be empty. Prices should drop over time. But the short term forecast is for lots of project cancellations, and many expats leaving Panama for other destinations. Expats will run for the Exit Signs as they see their property values fall or as they realize that they can’t sell at a profit.


Tourism And Agriculture In Panama

(Photo opposite: Organic farm in the Panamanian Highlands.) Panama has a strong and growing tourism sector. That sector should keep growing; Panama has tons of natural beauty for vacationers. The country is close to the U.S., it has no hurricanes and it is slowly developing the infrastructure to handle more tourists. The Caribbean, Costa Rica and Mexico are the major competitors with Panama in attracting tourists.

But the sector to look into in Panama is the agricultural sector, especially organic farming. The highlands of Panama have very rich soil and the land has not been heavily used and the soils are very good for growing just about anything. Panama’s agricultural sector has been neglected over the years, but with the high demand and high price of food along with lots of fertile land, there will be a market for Panamanian agricultural goods.

Organic coffee is just starting to be grown in Panama. Panama has always had a small coffee economy, but since the early 80s there has been very little interest in coffee. Apparently, Vietnam started to grow coffee in the early 80s and that depressed the market. But if you talk to older farmers in the poor mountainous regions of Veraguas Province, they will tell that coffee was worth a ton of money in the late 70s and early 80s; $60 to $80 a bag. Farmers dragged their coffee out of the hills and sold it at market. There was no infrastructure to support the mass production of coffee in the Panamanian hills. No roads, few markets and too few heavy trucks for transporting the coffee to provincial capitals. But because the coffee was valuable, people found a way of getting it out of the campo (countryside) and to market, but then suddenly the price of coffee fell and no one was interested in growing coffee any longer.

It takes about five years for coffee bushes to mature and produce the red coffee berry that contains the bean. In Panama most coffee is grown in the wild and integrated with Orange or Grapefruit trees. Above the fruit trees there are normally large mahogany trees that shade the whole forest and drop orange and brown leaves on the forest floor around the coffee. The air is cool from all the shade. Coffee is grown at a high altitude. Because coffee grows in the cool shade you need to be careful of snakes.

Everyone in Panama is hoping that the country is not headed for another recession. The last recession began in 1998 and ended in 2002. During that time the economy in Panama stopped and the crime in the streets rose. Taxi cab drivers were attacked; people robbed and kidnapped – most kidnappings in Panama are a way of collecting gambling debts within the Chinese community. The police couldn’t seem to keep control over the streets from 1998 to 2002.

But around 2003 vistors started to pour into Panama. The first people to visit had read about Panama in magazines or on the internet. They read about the retirement benefits, the landscape, the lifestyle. For many this was their second visit to Panama: many were stationed in Panama when they served in the U.S. military in the 50s and 60s. They would remember their first time in Panama. They would always tell me about their first visit, a story about eating ceviche or their first flop house that they had landed in after a long night in a Panamanian hoar joint down on Calle Jota, in English, J Street.

The return of people who had been in Panama before or who had read about the country, started interest in buying land in Panama. But very few of the original vistors bought land. Most only came to see the country again after so many years.

Then other people began to arrive and they were not on Memory Lane in Panama, rather they were interested in making money off of Panama. They didn’t care about the place or people. They cared about money. They liked Panama because they could do things here that they couldn’t do in the States, pay people nothing or not pay taxes. They liked the privileges people with money have in Panama. After the money-seekers arrived a whole riff-raff of people came who went from being completely phony to comic-operatic phony. And finally a few people showed up who looked around to see what the whole mess had been about. And that’s where we are today.

* More Articles on Living in Panama
* Real Estate in Panama
* Banks in Panama - Worldwide Banking Directory
* Universities in Panama - Colleges & Universities listed by Country
* Embassies and Consulates of Panama