Amazing Mansion for sale in downtown Panama

Tuesday, June 16

 

Rare Free-Standing Mansion in Downtown Panama City, Panama up for Sale by Panama Equity Group

In the midst of Central America's largest real estate boom, Panama City in the Republic of Panama is beginning to see rare mansions arrive for sale on the market. Known as a tax haven and increasingly popular as a tourism destination, the cosmopolitan capital offers only a limited amount of free-standing homes. <p>

Panama City, Panama (PRWEB) June 11, 2009 -- The first quarter of 2009 showed Panama's economy to be quite resilient, representing something of a global anomaly and reinforcing the long term outlook for major growth. The condominium market has slowed recently due to the possibility of an oversupply of inventory, however in its wake is emerging a different niche: the capital city's scarcity of well constructed and centrally located homes. <p>

Built on prized downtown lots of almost 500m2, homes like a fully renovated duplex in Panama City's Obarrio neighborhood never actually enter the public market, as owners historically chose to pass the home from generation to generation. Now, however, the market is starting to see examples of limited edition properties with surprisingly reasonable price tags. One two story, 4-bedroom, home featuring a lush, tropical back yard with pool, located in the heart of the banking district was just listed at a mere $780,000. This includes over 8,000 square feet of construction, and a grandfathered rate of $2,000 in municipal taxes per year. <p>

"The reason I am so excited about this opportunity," says Kent Davis, the home's selling agent, "is that so few of these homes exist, and they are owned by Panamanian families for generations. We rarely have an opportunity to list them, and they tend to sell very quickly." Davis points to Panama's current status as a tax haven when promoting the privacy of such a purchase, suggesting that anonymous corporations (like the one in the name of this home) make for a smooth transfer of ownership and represent the utmost in privacy for new owners.

Panama's increased profile as a travel and investment hotspot has also drawn attention from groups such as Hilton who just signed four multi-year agreements in the capital city with plans for a Hilton, Embassy Suites, Doubletree, and Hilton Garden Inn. <p>

Davis continues, "Scarcity is the driving force behind an investment in a home like this. For anyone that's been watching the Panamanian real estate market for an opportunity to purchase a stately mansion in the middle of the city, this is the chance of a lifetime. This stunning home has to be seen to be appreciated." <p>

<p> http://www.panamaequity.com

May Real Estate and Economic Update from Panama

Monday, May 25

Greetings from Panama Equity!
This month we explore a new President, a growing economy, and an
interesting investment option in the near future

It has been a very interesting last few weeks here in Panama.  Ricardo
Martinelli, the Panamanian business tycoon and owner of the Super 99
supermarket chain won the presidential election in a landslide, and
everyone here is eagerly awaiting his promised changes.  Martinelli made a
number of far-reaching commitments to the people of Panama, and the expat
community stands to benefit greatly from many of his proposed new
initiatives.

First and foremost on Martinelli's agenda is a major transportation
overhaul, including a proposed light rail system that will alleviate
Panama's growing traffic problem. He has also suggested some far reaching
tax changes that could open up many new opportunities for foreign owned
businesses.  Another priority for the new administration will be courting
the US Congress to insure that the free trade agreement with Panama is
finally passed.  Promises are all that we have right now, but come July
1st, we will have a much better idea of what this Martinelli guy is really
about.  I for one am extremely hopeful and think he could change the face
of this country.

Overall, the economy' in Panama is in pretty good shape, all things
considered.  Shipping volume is down, but that's to be expected and will
probably continue until demand picks up in North America. New construction
starts have slowed drastically, which I believe is great news for the real
estate market here.  We have been starting to see pricing pressure from a
perceived oversupply on the residential side, so any slow down is good news
for the long term.

I still think prices have not bottomed out, and I expect to see a lot more
" deals " as speculators are forced to liquidate their positions once their
final payments are due and their pre-construction "project" becomes
reality.  We're already seeing a correction in city prices for condos in
the $200,000 plus range, and rent rolls are declining as well.

Just like anything, this is a real estate cycle, and because Panama was
built on foreign capital, we're naturally seeing some correction as that
foreign capital becomes less available. Good news is, Panama is already one
of the brightest stars in Latin America this year,  and 2010 will likely
show a return to the double digit growth as the canal expansion project
goes into full swing.

42% Growth in Industrial Sector
Recession? What recession?

Growth in the industrial sector of Panama grew over 42% in the month of
March compared to last year during the same time, according to the May 12th
Martes Financerio.  These kind of numbers are a very positive sign for the
macro economic picture in Panama, and this type of growth will inevitably
affect other other areas, including housing absorption and local commercial
growth.

One particular company that the report highlighted was Cemex, the
worldwide producer of concrete based out of Mexico and with locations all
over Panama.  Cemex will be ramping up production capacity in anticipation
of the Canal Amplification project, which is already underway.  The " big "
contract is expected to be awarded in August, when bids that have been
sealed in a vault will be opened. Stay tuned here for the results of the
big one!

It's nice to report the good news, but the picture isn't as rosy as some
would have you believe.  The cost of living is increasing at an alarming
pace, and while it is still a fraction of what we are used to paying in the
States, Panamanians made this a major issue at the polls.  Energy costs
have been going up for  the past two years and Panama remains one of the
most expensive countries in Latin America in terms of cost per kilowatt
hour.  President-elect Martinelli has vowed to combat rising energy costs
through continued investment in power generation capacity, some of which
will be coming online as early as the 4th quarter of this year.

Other interesting headlines in this past week's local press included
exciting news from Hilton Hotels, who have committed over $569,000,000 to
new hotel projects, some of which will be ready by the end of this year.
Anyone that's been to Panama between December and April know how difficult
it has been to find a decent hotel room, so this is welcome news to all of
us real estate agents who end up scrambling to help them find a place!

Hilton's new Panama Brands include Embassy Suites, Double Tree, and Hilton
Garden Inns.

 Announcing Panama Pacifico

Massive project across the bridge

Breathtaking is about the only word I can use to describe the setting of
the new Panama Pacifico project,located on the former Howard air force base
just ten minutes outside of Panama City.

Anyone considering moving business operations to Panama needs to give this
mixed use project  a very serious look.  Reason being is Law 41, which
essentially creates another free trade zone where qualified businesses will
be exempt from any and all taxes, including import duties, sales tax,
capital gains taxes, and a laundry list of other benefits including a " one
stop shop " government office. The master plan is impressive to say the
least, and their 40 year time frame shows a commitment to progress and the
vision to carve something amazing out of the beautiful piece of land that
they acquired back in 2006.

Construction began last year, and London Regional will be delivering the
first commercial spaces in their International Business Park in August.  A
few big names have already signed leases including 3M, Catepilliar, and
several large logistics and shipping oriented companies.

Why haven’t you heard about this project yet?  Because there's nothing
for sale (it's all leased space), but that will all change in about six
months when the developers announce the residential component of the
project.  Up until now, they have been focusing on developing the
infrastructure and courting big business for their commercial and
industrial parks which are about half way done.

It seems like the global trend in construction right now is towards
sustainable, mixed use development focusing on amenities, infrastructure,
and services. Basically, a self contained community that offers jobs,
housing, good infrastructure, and everything one would need to live and
work.  Up until now, projects like this have not been seen in Latin
America, but thanks to the cooperation between the government of Panama and
the developer of the project, London Regional, this plan is coming to
fruition and will no doubt create more jobs and bring yet more
international exposure to Panama.

I'll include an update on the project once they start releasing
residential space, because if everything goes according to plan, early
investors could see tremendous returns on a project like this.

That's all Folks!

Im still down here selling real estate, working hard to make sure that my
clients are well taken care of.  If you know anyone that might be
interested in learning more about the big things happening in this little
country, use the " forward to a friend " button on the bottom of this
email.

As Always, I hope this note finds you well.  Have a great week!

-
-
- Kent Davis
[http://www.equitypanama.com/] www.equitypanama.com
" Making it Happen inPanama "
( 011 ) 507 6030 - 6782
Skype: kentpd22

Introducing Kent's Picks

As the global crisis will likely worsen before it gets better, odds are
there are going to be some exceptional deals that become available here. As
aggressive foreign investment cools off, opportunities will arise.

Kent's Picks represents the best deals on the market right now.  Basically
a distilled list of exceptionally priced property from all over the
country.  Last month, we featured a few existing condos, a piece of land,
and a pre-construction reassignment offer.  Each month will have a
different focus, but rest assured that all of these lists will be nothing
but exceptionally priced real estate deals. All of this month I have been
focusing on on finding " turn-key " investments- basically money makers
from day one. Most of these are either tenant occupied residential
opportunities, or healthy, successful businesses for sale.

Sign up for Kent's Picks by
[mailto:kentpd@gmail.com?subject=Kent%27s%20Picks] emailing me today!

 Ocean View Villa

  Infinity pool, furnished
 2br/2ba $130,000

  Amador Causeway

  Best views of the City
 1br/1ba $275,000

  Playa Blanca

  Resort Lifestyle

 2br/2ba $240,000

  Trump Ocean Club

  Sales At or Below Cost
  $350,000 and up

More about Your Man in Panama-

Kent Davis

Making it Happen in Panama!

Have a Look at My Links

- [http://www.biggerpockets.com/blogs/404] Blog
- [http://www.linkedin.com/in/kentpd] Linked In Profile

-
[http://www.thepanamareport.com/real-estate-in-panama/panama-investment/panama-real-estate-warning---blood-on-the-streets-739.html]
Blood on the Streets
- [http://www.buscapanama.net/] Panama Nightlife

News out of the Caribbean Coast of Panama

Monday, April 27

Caribbean Update from Panama

Cruise Traffic Exceeds Expectations

Headlines in the local papers last week reported hopeful news out of Colon 2000, the main port and cruise ship hub on the Caribbean coast of Panama. Last August, Royal Caribbean announced that they would be moving the Enchantment of the Seas operations to Panama because of visa difficulties that their Latin-American-based passengers had experienced in previous years trying to get into Florida to start their cruise.

 This past December , Royal Caribbean embarked on their first Enchantment of the Seas cruise, marking another first for Panama The results of their first season's operations exceeded all expectations, with the biggest surprise coming from the local Panamanian market, who accounted for over 11% of overall cruise traffic on the Enchantment line. More than 40,000 passengers rode on the Enchantment's 20 sails over the last four months, and almost 300,000 cruisers passed through Panama during the same period.

This is not just pass-through cruise traffic. This means that cruise ships are now STARTING and ENDING in Panama, and the economic implications are obvious:
• Increased hotel occupancy as cruisers come early or stay late
• More money spent in country on goods and services
• Increased exposure to Panama as a country (and not just from the deck of a cruise ship)

For anyone considering starting a business on the Caribbean Coast, the cruise ship market is certainly not one to be overlooked. In fact, it is just the tip of the iceberg, and word on the street is that several other large cruise ship companies are now considering a similar move next season. Hotels are already popping up near the free trade zone, including the newly completed Sheraton Four Points.

Business opportunities in the travel and leisure, fine dining, and corporate services industries are becoming very attractive for anyone with the resources to make it happen. Keep the Cruisers Coming!

Madden-Colon Highway Near Completion

Another exciting piece of news is that the much talked about Madden-Colon extension linking Panama City to the Caribbean Coast is almost done! Odebrecht, the Brazilian company building the highway announced that they expect to complete the 42km corridor traversing the isthmus by May 15th!

According to the Ministerio de Obras Publicas report on economic progress, the main motivation for constructing the highway extension was to facilitate the flow of goods over land from Colon ( the Atlantic entrance to the Canal ) to Panama City. It was also designed as a means to transport the raw materials that will be needed for the canal expansion project, which has already started. The new road is a Godsend for anyone doing business in the Free Trade Zone, because they will see what was once an hour and a half commute shortened to less than 45 minutes.

The road is also great news for all of the tourists and residents in Panama who prefer the tranquility and raw beauty of the Caribbean. I have to say that Playa Langosta is probably my favorite beach in Panama, and every time I drive up there I see a new building and yet another tour bus.

This road will no doubt be the Tipping Point that finally positions the Caribbean coast as THE preferred tourist destination for the weekend traveler. It’s already one of the most popular areas in the country for fishing, birding, and surfing and now it will be that much more accessible.

White Sand, lush mountains, great beach side food, and now easy access on a brand new road. Great news for everyone!

Spotlight on Bala Beach Resort and San Marino 

San Marino was the pioneering community in Caribbean development, and owner Enzo Caponelli reports that there has been renewed interest in his small gated development near Portobello. "We still have a handful of beautiful homes as well as one ocean front lot remaining," he reported enthusiastically. "We also welcome anyone interested in a vacation rental to contact us."

The recently completed $2,000,000 marina and breakwall is a great addition to the San Marino community, which is only five minutes from one of the most beautiful natural ports in Panama, Portobello. Head a bit further down the road and you get to Isla Grande, a stunning and up to now fairly inaccessible little island known for great surfing and good snorkeling.

Progress at The Bala Beach Resort is also now "Firing on all cylinders" according to sales director Evan Forbes. "We've moved more units since the announcement about the road, which is quite a surprise considering the state of the global economy." Im amazed that it (the road) is going to be completed in less than a month, which was well ahead of what we had been expecting."

People have confidence in this project, because Bala is one of the few that has already secured bank financing through solid presales. It is also very well positioned to capture the cruiser traffic and Free Trade Zone business in terms of potential rental markets.

Things are finally happening, and promises are starting to be delivered. In five years, the days of tiny buildings and dilapidated old fishing villages on the Caribbean coast will just be a memory. For anyone even considering an investment on this coast, now is the time.

How not to get screwed in Panama

Monday, April 27

So you have just spent two grueling weeks waging war in the streets of Panama, dealing with realtors that don’t show up on time and home owners that answer the door in their pajamas. You are on the home stretch, and have finally decided on your “short list” of Panama properties: you’re ready to buy. 

This report is designed to be a bit of a primer for someone that has never purchased real estate in Panama. You will find that many of our laws, customs, and things to think about are quite similar to what you are used to at home, but there are also a number of distinctly Panamanian laws and nuances that you need to be prepared for.

Remember that the Panamanian Real Estate Market is still relatively unregulated, and many agents do not know the laws and protocol set forth by governing bodies such as ACOBIR and the Ministerio de Vivienda . This guide is an accumulation of my experience helping clients to buy and sell real estate here in Panama, and I am providing it to the community as a resource during a time of financial crisis so that any decisions made with regard to Panama real estate are sound ones.

The Offer
How do you know what a fair price is when there is no such thing as an MLS? Well, although Panama does not have a formal MLS, there are a number of classified advertising sources that have reasonably up-to-date pricing information. While it may be very time consuming, it is possible to run searches by neighborhood and criteria, but pay careful attention to fields such as “last updated “, because you may be looking at a terribly outdated listing that has no relevance whatsoever. You should be suspicious of project delivery dates (sometimes not even listed) as well as potentially deceiving pictures.
The other main challenge is that there is no true, comprehensive sales history that is maintained in Panama.  All real estate transactions ARE recorded at the Registro Publico, and this information is public, but the challenge is that the registered price is not always the actual sales price. The majority of real estate transactions are completed using offshore corporations and nominee boards of directors, and oftentimes the corporation that owns the property may be sold for less than the value of the property for tax purposes, and a separate contract written for things like “ the furniture “ or even a personal loan ( both of which are legal ).   Good for tax purposes, bad for a buyer that needs to know fair market value before jumping in. Not to mention that going to the public registry itself and trying to sift through information is like pulling teeth.
What does that mean for you as a potential buyer? It means that you will have to make sure that Your agent is doing his homework and is familiar enough with the market, with the seller’s situation, and with what constitutes a fair offer.  In short, he/she needs to be your best resource for gathering and interpreting all of the market data that is available. Be careful getting pricing advice from attorneys, family members, and others that may not be as up to date on current market conditions as someone who does this for a living. Some of the people mentioned above might still tell you things like “ Casco Viejo is so dangerous “, or “ Don’t pay any more than $1000 per square meter in Punta Pacifica. “ They may be a BIT out of touch, so you’ll need to rely on your agent to provide comparables and sales history.
Because there is no formal protocol for submitting a buy/sell offer, most agents will work on a verbal offer and end the negotiation process once a price has been agreed upon. Don’t fall victim to this rushed and often times incomplete process: make sure all offers are written and explicitly approved by the seller or the seller’s agent.
An offer should always have the following:
•    Price
•    Payment terms
•    Due diligence period
•    Move in Date
Once both parties have agreed to the offer in writing, you will need to create a “promise to purchase” document stating the terms above. Make sure to have your attorney register this document (signed by both parties) with the public registry so that the seller cannot turn around and sell the property to someone else. 

Oftentimes the seller will require some earnest money in order to take the property off of the market (10% is the standard amount). You can use an escrow account or your attorney’s account to deposit said monies, which will not be transferred to the seller until the contract is signed. Note: Cancellation clauses should always work both ways. If the seller backs out of the agreement, you should get any deposit money back plus some sort of indemnity for tying up your money. It’s not easy to collect, but is always worth putting in the contract.
Find yourself a good legal service in Panama, who you should be comfortable doing business with BEFORE MAKING AN OFFER. Although your agent will push you for some earnest money to keep the deal together, do not transfer any money until you have consulted with an attorney. Remember also that real estate deals can come and go quickly, and if the property is priced to sell and there are multiple agents showing the listing, then you need to be in a position to execute. If you are already comfortable with a good lawyer, you don’t have to waste any precious time searching for an acceptable attorney while the seller entertains other offers.
If you are looking into purchasing property here in Panama, you are most likely to encounter the following situations:
•    Individual owner selling an existing property owned under their own name
•    Individual owner selling an existing property owned under corporation
•    Individual owner selling a pre-construction property owned under their own name
•    Individual owner selling a pre-construction property owned under a corporation
•    Developer selling the rights to purchase a property in construction
Each of the above warrants its own list of “things to watch out for “, and I’ve run into a myriad of problems and situations that you as a potential property owner need to keep an eye out for. Let’s break them down, shall we?

Individual owner selling an existing property owned under their own name
In this example, you as a buyer will be purchasing an existing property from a seller that owns said property under his/her own name. (For the purpose of simplicity, we are going to assume the “property” that is being purchased is either a condo or home, because land has it’s own headaches and warrants a separate list of dos and don’ts. We’ll save that for another report…).
In all instances in Panama, the seller is responsible for any taxes incurred in the sales transaction, which amounts to 10% capital gains taxes and a 2% transfer tax ( in the case of an individual selling property under their name ). It is also customary for the seller to incur the costs of forming the purchase contract. Oftentimes, the first step is taking the property off of the market through the form of a good faith deposit. A small “ deposit agreement “ needs to be drafted up stating that the specific terms of the contract will be determined within a certain timeline, and that the monies transferred shall be used to take the property off of the market. 99% of the time, this money is non-refundable unless the seller backs out.
There are a number of things your attorney will need to research to make sure that the property in question is in good standing. Due diligence and contract formation usually can take anywhere from 5 – 15 billable hours, and most attorneys in Panama charge anywhere from $50 - $150.00 per hour.
A few items that your attorney will be performing due diligence on:
Title Search- all real properties (i.e. houses or condominium units in a P.H. which stands for Propiedad Horizontal) have a registered and unique Finca number. This process will also verify that there are no liens, encumbrances, or law suits registered to the property through the department of Public Registry. Also take note that title insurance is very new to Panama and because of this, prices are high and options are limited.   

Paz y Salvo documents- these are the documents that prove that the unit and building are in good standing in terms of utilities, building fees, etc.
Your attorney will also make sure that the seller is in fact the owner and is the only person that can sell the property, among a litany of other things that are too detailed to go into in this report. 
Building Inspection- there are several firms that specialize in building inspection, most of whom charge by the square meter for the property that will be inspected. Rates typically vary from anywhere between $1.00 - $2.50 per square meter, depending on the location of the property in question ( in-town or out of town ) and the scope of the inspection. You can also work with your inspector in terms of requirements: if you want a full structural and foundation inspection (in the case of a home) or just a physical plumbing/electrical/structural inspection in the case of an apartment.
Once you’ve completed the due diligence and property inspection, you are almost home free! Upon signature, you are required to register the property under the new owner with the Registro Publico, which will cost anywhere from $500 - $5,000, depending on the value of the property.  Once the property is transferred, monies are sent and it’s official!  You will need to notify the building of the change of ownership.  .

Individual owner selling an existing property owned under the name of a corporation
Most of the same will hold true as in the example above in terms of due diligence on the property. The added due diligence will be regarding the corporation for sale. Your attorney will first need to verify that the seller is representing the corporation that holds the property for sale. In most cases, the seller either sits on the board of directors or is the sole shareholder of the corporation. After that, your attorney will verify with the government bodies that said corporation is in good standing and does not have any outstanding debts or claims against it.
If you are purchasing property for visa purposes, the Panamanian government does not recognize property owned under corporation as an acceptable means to qualify for the $300,000 economic self solvency visa. You MUST purchase the property under an individual’s name and not the shares of a corporation that holds that property. One possible option in this case is by moving said property to a foundation, which can in most cases be used to qualify. Another option would be to move it out of the corporation and sell as an individual.
The contract to purchase will be a “Transfer of Shares “agreement, essentially transferring ownership of the shares of the company that owns the property from the existing shareholder to the buyer.
In a Transfer of Shares situation, the seller incurs only a transfer tax as opposed to a transfer AND capital gains tax. The transfer tax is a bit higher : 5% as opposed to 2% on the total value of the sale.

Individual owner selling a pre-construction property owned under their own name
This situation arises when you wish to purchase a property that has not been completed yet. Be very careful in these situations for a number of reasons.
First of all, the seller in this case is an individual that has signed a promise to purchase agreement with a developer and has probably put down some sort of deposit towards the final price of that property (which has also been stipulated in the contract). Here are a few issues you need to address with the agent representing the seller before you even consider purchasing this type of property:
•    Are there any restrictions on transferring, assigning, or otherwise passing on any of the rights to purchase to a 3rd party (in this case YOU, the buyer) stipulated by the terms of the contract that the seller signed with the developer?
•    Are there any penalties or additional costs that are associated with a transfer or reassignment of rights (some developers try to squeeze you for a second commission or Fee to authorize the transfer)?
•    The seller’s agent MUST furnish a copy of the contract that was originally signed. Keep an eye out for cost of materials increase clauses and maintenance fund contributions, which are other costs that you as the new owner will have to incur at the time of the property being delivered.  Remember, you as the new owner will be held responsible for all of the terms of the contract and CANNOT change anything once you take over the contract.

Price- A few words about how the price is derived on any pre construction “reassignment.“ Let’s take an example: The seller purchased a condo unit through a developer and now a similar property is valued at $250,000. The seller is offering his unit for $140,000. Let’s say that the seller purchased his unit for $100,000 and has put down 30%. Your payment to take over the contract will need to be profit + deposit, or in this case $40,000 (profit) + $30,000 (deposit). So your payment of $70,000 goes to purchase the rights to buy what was once a $100,000 that is now valued at $250,000. On paper, it looks like you’re getting a pretty good deal!
Risk vs. Reward – Keep in mind that if this project goes belly up and the developer has to return your money, then you will only be receiving the deposited amount on the contract, so your risk is much higher purchasing in these types of situations. In other words, you wouldn’t get your full $70,000 back if you purchased the unit above. You’d only get the amount that the original buyer put down which was 30% of his original purchase price, or $30,000.  In theory, you are “ saving “ $110,000 off of market value in the example above, making it appear to be an exceptional deal.
Due Diligence is the same as if you were to be purchasing directly from the developer- investigate their past work, the stage of completion, % sold of the building, and all of the other things you would have been looking into. Also get verification that the seller is current with the developer in terms of payment timeline. The last thing you want is to take over a contract that is at risk for default because the seller is behind on their payments.

Individual owner selling a pre-construction property owned under the name of a corporation
This is very similar to the situation above, with the exception being that there is the contract is between a corporation ( S.A. or Sociedad Anonima ) and the developer. 
If the original contract contains any prohibitory or punitive wording about transferring or reassigning rights, be very careful. Whenever you are thinking about taking over the contract on a pre construction project, it is imperative that you as the buyer demand a letter from the developer acknowledging the transfer of rights from the old owner to the new, even though the corporation ( the buyer ) remains the same.
Some smooth talking real estate agents will try to convince you that there is no risk associated with this type of reassignment, and that the developer doesn’t have to approve the sale.  “ They don’t need to know about this transaction .“  “It  is a private matter “ they will tell you. “No one needs to know about this except the buyer and the seller “. Wrong!
So where is the risk?  Standard protocol dictates that you dissolve the board of the original corporation and form  your own board and appoint a new legal representative.  The corporation name changes, but nothing else remains of the original entity.  This CAN POTENTIALLY cause a red flag with the developer at closing time because the original legal rep signed the contract and they can cancel the contract if there is any clauses forbidding transfers.  This will leave you out $70k, with no recourse with the seller who has already spent your money on a trip around the world.   
It’s an easy fix: just get the developer to draft a letter acknowledging the transfer of rights. The seller may have to pay a “ kickback “ to the developer in the form of additional $$$, but that needs to be reflected in your purchase price and is something that the seller’s side must sort out in advance.

Developer selling the rights to purchase a property in construction
This case arises when you are ready to purchase a property that is still under construction directly from the developer.
There are a few things to watch out for when purchasing directly from the developer:
•    Get as much put into the contract as possible in terms of finishing quality of the building materials. Your agent is promising you granite counter top and marble floors? Put it in the contract! Two swimming pools and a roof top roller skating rink? Put it in the contract!
•    Be mindful of “ materials cost increase clauses “, contained  in almost every preconstruction contract. If the project is 80% completed, have the contract removed. If the project is just getting started, then make sure it is below the standard rate of inflation in Panama, which at the time of publication was right around 7%.
•    Make sure that the maintenance fees are clearly stated in the contract.  Take this with a grain of salt as it will probably change after year ONE when the developer hands off the property to the home owners association.
•    Completion timelines are generally un-enforceable because as we all have seen, construction projects inevitably get delayed all around the world. Panama is no exception. One obvious thing to check out is the jobsite- hopefully it will be swarming with workers as opposed to a ghost town.

The process of buying real estate in Panama is a complicated one, primarily because this country is so new to the real estate industry. Where at home we are often comforted by decades of documentation and easily-accessible historical evidence with regards to property, Panama has no such thing. Therefore, doing your research and paying the utmost attention to detail can make or break a transaction (trust me, I’ve seen many go both ways). There will be a lot of movement in the Panama real estate market over the next few years, and more than ever the nuances of the purchasing process will be emphasized. Build a solid team, heed sensible advice, and keep an eye out for the red flags.

Why I still Love Panama

Tuesday, April 21

Every morning I walk my girlfriend to work and on the way back I always try to reflect on what is going on in my life RIGHT NOW and try to do some planning for the future. Today it really hit me- I love this country! But why? Well, I'd like to share a few reasons as to why I still feel like Panama is THE place to be, for me, right now.

I encourage anyone that has lived here to add to my list of little eccentricities and nuances that make Panama special for them.

I came here looking to be a part of something big. I moved here without having ever been to this country, and most of my friends and family held their tongues because they thought I was nuts. Well, I'm here, I'm making it, and I'm happy.

I am a simple guy: I enjoy street food, I appreciate beauty in most things, and it doesn't take much to keep me smiling. Every morning when I wake up, I think of all the folks in my home country (the USA) that are downright scared about the future. I thank God I ended up down here, where I can survive, if I had to, on less than $1,000 a month. My girlfriend of a year is not a gringo hungry gold digger, I've gotten to the point where I don't have to run A/C all day, and I drive a pretty sweet car by Panamanian standards.

So that's me, and this is why I know Panama will succeed:

1. The HOPE

Right now, the US and really the rest of the world are dealing with some pretty hefty problems, and all signs for future, at least in the short term, point to a worsening of the situation. I got chills watching the Obama inauguration yesterday, and this morning I prayed that he will be the one to lead my nation out of the dire straights that they are facing right now. But that's not what this article is about, so we'll leave the US stuff to the Americans.

There is an undercurrent of hope and anticipation running the country of Panama right now. The massive construction projects (the Canal expansion, Cinta Costera, oil refineries...etc), the ambitious plans for the future, and the pending presidential election all have me and my Panamanian hosts thinking about the direction of this country.

I like to use the term "Middle of the Beginning" because to me it sums up where we are in Panama right now. In 2004, no one in Panama had any idea that their country could almost double the number of new buildings in their small city of only 800,000. Now, the sky's the limit and everyone here is excited to see this happening city become an international playground for the rich and famous.

Things in Panama could go one of two very different ways. Maybe all of these new condos will drive real estate prices so low that we will see an influx of foreigners who, six months ago, could never even have considered a move to Panama. In that case, it will be a mad scramble for deals and as a real estate agent, I think it will probably be good for my business. Speculators will be left holding the bag, and I imagine there will be some pretty harsh emails exchanged between the angry clients that were promised the world and the real estate agents that were blowing smoke.

Here's the worst-case scenario: Maybe demand will dry up and there will be a mass exodus from Panama. What does that mean for the folks that stuck in it until the end? Simple: more affordable real estate, with some kick ass new infrastructure and less folks down here clogging up the streets. In short, Panama will return to what it was five years ago, which was an amazing tropical country with affordable real estate and unexplored, unexploited beauty.
On the odd occasion that prices will see only a small correction and then continue to rise as world pressure increasingly draws people out of their home countries and down to Panama, the boom continues. I don't have my crystal ball, so I wont get into that right now.

But back to the hope: people in Panama see a big future for their country. There's a very important election coming up that will inevitably bring change to Panama. Voter turnout here is close to 90%, which means that politics are a very real subject and everyone I have spoken to passionately supports their candidates. It's refreshing to see such patriotism and such an attitude of "my vote counts" type of thing.

2. The PRIDE

To this day, I have never met a Panamanian that is not unequivocally proud of his country. Ask any Panamanian what they think of their country and their faces will light up with a passion. They refer to it as "My Panama". It's cool. You don't get that type of thing in the US these days; at least you didn't about two months ago. Now that Obama's become a bit of a superstar, people may be able to start being proud to be American again, but for the most part people back home are pretty ambivalent about their patriotism.

In Panama, you see the pride everywhere. Men walk down the streets with ironed shirts, clean slacks and polished shoes, regardless of their socio-economic status. Ladies are always presentable, and walk the streets with their heads up and their backs straight. You don't see too many people shuffling through the streets, staring at their feet, just trying to get from point A to point B. Most people in Panama tend to stroll with a bit of a swagger and a sense of purpose. Yes, the ladies get whistled at but I've actually seen a few (a very few) of them actually smile at a clever catcall or a friendly tease. It's playful, and they are as proud of their sexuality as the men are of their beautiful women.

In my field of real estate, I see a lot of homes and would say that about 90% of them are very well kept, clean, and presentable. Granted, some of them may be filled with the ugliest furniture and cheesiest decorations ever, but from the semi-abandoned buildings in Casco Viejo to the itty-bitty row homes in Don Bosco, you see humble little abodes where one can really feel the PRIDE of the homeowners.

Go visit a little town like Pedasi, or venture into Arraijan and you'll see the same thing: quaint, well-kept homes with a fresh coat of paint and a nursed garden or green space. It translates into every facet of life, and you don't get that in too many places in the world.

3. The DINERO

Prices without a doubt are going up in Panama. Milk that cost $0.55 last year is now $0.70. That's a 30% increase, and to a Panamanian making $400 per month, what may seem negligible to me can really add up, and it is certainly felt in a household of four. Cost of living is a hot topic politically, and all of the candidates are working hard to address the situation and propose a solution to help the average Panamanian dealing with increased costs.
But it's happening all over the world, and as a gringo coming from the US, things are still relatively cheap here. If you're talking luxury hotel rooms or four-hand foot massages, that's a different story as prices in Panama in this sector are similar to home. But let's look at the basics. In Atlanta, I was paying $3.25 per pound for chicken breasts. Here, I buy them for $1.55. That pint of milk would have run me about $1.60 from a similar corner store in Richmond, Virginia. And try even stepping in a taxi back home for under $15.00. Here, I can still get across town for about $3.00 (although the same cab last year was about $1.50). I'd rather see the taxistas make a bit more anyway, because they are the ones that have to deal with this crazy traffic.

Movie prices are going up, but I can still take my girlfriend to a movie on a Friday night in a nice theatre, with drinks and popcorn for under $12.00. Hell, the popcorn and soda'll cost you that much in the US, Canada, or Europe. Mid-range restaurants and cafes are much cheaper here, and if you know where to go you can still get a very good lunch or dinner for under $3.00. Granted, it'll be Panamanian style, but Niko's beats the hell out of Denny's in my book any day.

The point of the laundry list above is that things are still relatively cheap for someone from the US, Canada, or Europe. That means I can afford to go out a bit more than I did in the states, and that I don't have to stress about drinking and driving because I know it wont cost me $50.00 to get home from the bars at night if I do end up taking a cab home from the clubs.

4. The PANAMANIANS

Panamanians crack me up! They drive like crazy people, they throw trash out the window like it aint no thing, and sometimes they start drinking at 10am on the weekends. They can function on 2 hours sleep, they can work 10 hours a day and still have the energy to go to night school, and they love to laugh and poke fun. They jokingly call each other chombo (the gentle version of the "N" word in the states), Cholo (redneck), Chino (Chinese one) and take no offense when called the same. Back in the States, those would be fighting words if you said them to the wrong person.

As a guy, I can't help but mention the fact that the women are smoking hot. Some people say the girls in Costa Rica or Colombia are hotter but I would have to disagree. We have an amazing mix of Indian, Black, and Spanish that make for some absolutely stunning women if that look is up your alley. Watch them on the dance floor and it's enough to fall in love five times a night. The point I'm trying to make is that yes, there are beautiful women all over the world but Panama seems to me to have a disproportionately high percentage of them. But that may be because they're all exactly my type.

The food is great, and there are new restaurants popping up every day. I eat out maybe once a week, so for me there are still places that I havent tried in my few years here. I am reserving places like Rincon Suiza, La Posta, Sake, and Europa for special occasions, and I still haven't even been to Twist, Mostaza, or half of the places on the Causeway. I'm so in love with Niko's, Pescaito, and Kyukos that it's hard to go anywhere else, but just knowing I have those options is comforting.

This is the part where I stop being eloquent and start just listing things I love: Casinos, beer, unexplored territory, romance, air conditioning, price mart, Albrook mall, Casco Viejo, Cinta Costera, the Diamond Exchange, Royal Caribbean Cruises, strip clubs, Cuban cigars, reggae dancehall, San Blas, Contadora, The Darien, close to everything like Miami, Spirit Airlines, Martinelli, Mate, Venezuelans/Colombians/Argentineans, the National Theatre, Diablo Rojos, Chiva Banderas.

It's definitely not all perfect. The traffic is bad, and seems to be getting worse. If the increase in crime is not addressed immediately, then this country is in for a major wake up call. And I'd love to see people stop littering so much. But hell, Panama is a great country and great countries are faced with real challenges. Hopefully Panama can address them and I can continue to bounce along living, what I've affectionately realized to call, the dream.

Blood on the Streets Part II

Monday, April 20

( continued from Part I ) In the case of a unit that is more than one year into construction, the developer will often ask for the full 30% down upon signing the contract. Some developers are eager to get a sale and will drop the escalation clause just for asking. At the same time, I am always on guard when more money is requested down, seeing as though it can indicate the builder is a) running out of money, b) behind schedule, or c) low on sales.

I always recommend my clients keep in mind that developers here are usually in the power seat: they often start buildings with very little down themselves, instead waiting until a certain percentage is sold to begin construction. What does this mean? Low risk on behalf of the developer CAN (but not always does) represent a lack of commitment. This is why, as noted before, I always recommend dealing exclusively with reputable developers. People like me, in the business, know these guys like the back of my hand. But as a new buyer, chances are these names will be new to you. In such case, do find an agent who can give you the green light before you start to fall in love with a unit and it's developer.

Maintenance Charges clause: Pretty much worthless. Actually, you can count on the developer holding this maintenance charge ( which is usually a flat fee or a per square meter charge ) for no more than one year after they deliver the building. After one year, the developer’s obligation to manage the property terminates ( and they relinquish liability regarding any defects in construction ). That’s when the professional property management firms step in, and the fees can go up.

After the first year, the property administration ( home owners association ) takes bids from private firms and it is up to them to try to find a company that is offering prices at or near the original maintenance fees. That usually doesn’t happen, so budget on paying at least 25-50% more after the first year. That being said, to date there are very few property management firms in Panama, much less quality ones. So take this into account and make sure your agent is giving you proper quotes.

Cancellation clauses: Be vary wary if anywhere in the contract you see wording such as: The seller has the option to cancel this contract at any point, at which point all deposit monies will be refunded. I have seen this happen, especially in a market of rising prices where the developer feels like they can break with the original buyer and turn around and sell the same property for doubl.

This type of clause is not cool anywhere in the world, but it does happen here in Panama, regularly; perhaps the result of such a new market. As a representative of the buyer, I always make sure that my clients are covered in the event that the project does actually fail. Some developers offer a return on all deposit monies plus an extra 2-6% interest. If I don't see any of this protective wording in the contract, I make sure it gets put in before anyone signs.

Non-transferability clause: Some developers include in the wording of their contract a clause that prohibits the buyer from reselling his property. Sometimes this will be "within six months of occupancy", or other times you have to get written approval from the developer. What does that mean? It means that they are going to try to collect commission, which comes directly off of your bottom line, if you try to resell your unit before it is completed.

How do I help my clients avoid this clause? Purchase the property under corporation! Not only will this save you money in taxes, but, in this case transferring ownership is merely a matter of passing the bearer stocks of the corporation to a new buyer. In the event that you decide to "flip" the property before occupancy, a typical resale contract will be between two individual parties and is a private affair, so the developer or the government does not need to be involved.

Part 12: Conclusion

I’ll make this short and sweet because nobody likes a speech or book that goes on for too long. This country is amazing! Cost of living is very low, the people are wonderful, and the real estate is still affordable for what you are getting. There are thousands of people moving here every month, and this country has absorbed them with ( for the most part ) open arms. Panama’s long history has always been one of tolerance: Religious tolerance, political tolerance, racial tolerance, and tolerance of foreigners living in country. Unfortunately, this tolerance has been extended into the real estate world and to date, no one has stepped up and called out some of the games that are being played and the tricks that are being used.

The real estate market in Panama has made and will continue to make smart investors a lot of money.. The negative stuff I mentioned in this report and not meant to dissuade anyone from coming down to Panama because the benefits (in my humble opinion) far outweigh the risks. Just find the right partner, and you’ll do fine. Know what pitfalls to avoid, know the tricks people will use, and know Im here to help if you need me.

Nothing makes me happier than a satisfied customer who will go home and tell all his friends how wonderful his experience purchasing real estate in Panama was. Like I said earlier, I am writing this report so you the perspective buyer can be clued in to what I the real estate guy have seen in my time here in Panama. I’m not going anywhere, and I will probably be hard at work while you are sitting in your office reading this boring report. So if you like what you saw here, give me a call, even if it’s just to chat about non-transferability clauses.

Your man in Panama,

Kent Davis

Real Estate Advisor

Email me: <!-- var prefix = 'ma' + 'il' + 'to'; var path = 'hr' + 'ef' + '='; var addy49928 = 'kentpd' + '@'; addy49928 = addy49928 + 'gmail' + '.' + 'com'; document.write( '<a ' + path + '\'' + prefix + ':' + addy49928 + '\'>' ); document.write( addy49928 ); document.write( '<\/a>' ); //-->\n kentpd@gmail.com