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Why Invest in Panama?
Panama is fast becoming one of the World’s top ranked real estate investment destinations, due to its low cost of living, superb climate and incredible tax incentives.
Economically Panama is going from strength to strength and has consistently maintained one of Central America’s highest per capita gross domestic products. The International Monetary Fund recorded 6% real term growth for 2006, and their forecasts are positive for the future.
Panama is the ideal offshore jurisdiction that enjoys a stable, democratically elected government, has excellent asset protection, offshore corporation laws and the second largest banking sector in the world.
Panama offers the most favourable and most flexible incorporation laws available in the world. Panamanian corporations are used by individuals from all over the globe who are interested in asset protection, tax minimization, privacy, investment diversification, affordability and convenience. Panamanian corporations can be used for international trade, to settle trusts or foundations, to establish and own bank or brokerage accounts, or hold ownership of real estate or any other type of asset. In some cases, Panamanian corporations are formed for very private and confidential business transactions such as the movement of funds to another jurisdiction for the protection of the assets.
What rental returns can you expect in Panama?
Panama City has spectacular yields on apartments and condominiums reaching up to 11.23%, for 190 square meter units. As the size increases, yields decline but only up to around 7.15%, which is still a good figure.
Existing condominiums in Panama City are priced at an average of US$1,695 per square meter. This is slightly more expensive than existing houses located in coastal areas, which are selling for US$1,411 per square meter.
5th best buy-to let-countries in the world with rental yields of 10.88%
Source:
Global Property Guide
Why invest in Panama’s Tourism or Condo Hotel industry?
Panama Hotel Occupancy Rates At All Time High - Across Central and South America revenue per available room increased 19.4% to US $74 in 2007 – which meant it is the world’s fastest growing region in terms of revenue per available room growth. Panama City with occupancy rates of 84.7% has become the first Latin American city to make it onto the occupancy Global Ranking Index, the second highest occupancy of any city in the world. The city also achieved the strongest revenue per available room in Central and South America – up 37.9% to US $121.
Panama City recorded an occupancy rate for 2007 of 84.7% up 11.6% from 2006.
Source:
Deloitte Global Ranking Index
Why Retire in Panama?
Panama's pensionado program, in its current form, was created with the passing of Laws No. 6 and No. 9 in June of 1987, which provide those who retire to Panama with the most appealing program of special benefits available in the world. To be eligible, you must be 18 years of age or over and receive a government or documented pension income from an international corporation of $500 (and an additional $100 for each dependent) per month. Those with private or non-documented pensions need to be at least 50 years old. The pensionado program entitles you to:
- 50% off entertainment such as movies, theater, concerts, and sporting events
- 50% off hotel stays from Monday through Thursday
- 30% off hotel stays from Friday through Sunday
- 30% off bus, boat, and train fares
- 25% off domestic and international airline tickets
- 25% off at restaurants
- 15% off at fast-food restaurants
- 20% off medical consultations
- 15% off hospital bills (if no insurance applies)
- 15% off dental and eye exams
- 10% off prescription medicines
- 20% off professional and technical services
- 50% off closing costs for home loans
- 25% off water and telephone
- 25% off electricity (if under $50)
As if that is not enough, pensionados also receive a one-time exemption on the importation of household goods of up to $10,000 and will additionally enjoy an exemption every two years from duties for the importation of a car.
‘A Latin Heavyweight Grows in Popularity’
As far as Latin America is concerned, Panama seems to be cleaning up, recently being voted:
- Most globalized country in Latin America - Latin Business Chronicle
- The best country for exports and imports of containerized goods in Latin America - The World Bank
- The fastest-growing tourism market in Latin America - The World Tourism Organization
- The fastest-growing economy in Latin America - The International Monetary Fund
- Panama rates as the number 2 best place in the world to retire - UK Online
Source:
International Property Showrooms
Panama at a Glace
- Panama has a stable government and a growing economy
- Panama has a stable economy that has been based upon the US dollar since 1904
- Residents pay no tax on foreign earned income
- Foreigners can buy and own property in Panama with the same rights and protections as Panamanian citizens
- Tourism investments have exemptions from import duties, construction materials and equipment, income, real estate taxes, to name a few
- Property tax exemptions apply to all new construction for 20 years and on a sliding scale according to value afterwards
- The US presence in the country for many years has lead to a US style infrastructure with a number of familiar names and businesses
- Panama has a reliable communications system with fiber optic telephone lines and much of the country has ADSL internet
- Panama City is the banking capital of the America’s with over 130 local and international banks
- Panama is one of the best offshore havens in the world
- Panama is home the second largest duty free zone in the world
- Panama is a popular location for medical tourism and has a number of US standard health care facilities and services with many US trained English speaking doctors available
- The pensionado program (retiree incentive program), possibly the best in the world, is not age related and the benefits are considerable
- Panama's climate is varied, from hot sunny lowlands to cooler highlands
- Panama is beautiful, diverse and rich in culture
- The country is beautiful, with access to Pacific Ocean and Caribbean Sea, many rivers, lakes, valleys and mountains, there is a beautiful location available for many tastes
- English is widely spoken
- The cost of living is low
Panama was the winner, for six consecutive years of International Living magazine’s Annual Global Retirement Index with Modern Maturity, Conde Nast Traveler, ARP Magazine and MSN.com, all praising Panama as the best place in the world to retire to.
Buy Association UK’s property editor Paul Collins predicts Panama in the top 10 countries for overseas property in 2008.
‘Favourite of American retirees seeking tax breaks, and now, of fugitive canoeists from the UK looking to miraculously come back to life, property in Panama has been gaining attention from the UK property press for some time now. The large numbers of multinational companies located in the city, along with the position at the hub of the trade world, make Panama's property market an attractive emigration and investment destination. New properties are springing up all of the time, and there are now retirement developments appearing out in the countryside as well, giving an extra dimension to investing and living there. As for living in anonymity, you may be better now to lay your hat elsewhere…’
Unprecedented boost’ for Panama market
'Law 41', recently passed by Panama 's National Assembly, created a stir throughout the region earlier this month as savvy investors recognized its potential to give a further boost to the already booming real estate market in the Republic of Panama ...
The Law, designed to encourage the establishment of Multinational Companies in Panama, gives exemption to Multinationals from the payment of income tax in the Republic of Panama for all services provided to any entity domiciled outside Panama.
In addition, it allows licensed Corporations to hire trusted foreign employees to fill management positions in the company authorizing them to work and reside in Panama which could spell an influx of international professionals moving to Panama.
Favourable economic development
In recent years, Panama’s significant real estate growth has been triggered by the country's favorable economic development, which in turn has been boosted by political stability, an increase in tourism and the recovery of activity in the Panama Canal. However, this latest development will give an unprecedented additional boost to Panama City’s real estate market as multinational corporations relocate to Panama and the demand for residential and office space increases.
HP and Caterpillar are just two of the first to announce new offices in Panama City and with Proctor and Gamble also rumored to be relocating a significant part of its Latin American business to Panama, the trend looks set to continue.
While residential sales prices have been increasing, particularly in prime locations, another interesting trend has been those related to Class A office space.
Vacancy rates for Class A office space are already down from 30% last year to 3% meaning that today there is virtually no available Class A space in Panama City. In addition, with Class A office space in such demand, lease rates have increased by approximately 20% over the past year.
Time is right to invest
"Average lease rates for Class A are $16-$20 per m2 per month with total occupancy costs at $22.74 per m2 per month (below those in the region including Costa Rica, Dominican Republic, Bahamas, Uruguay, Caracas, Bogota, Mexico City, Buenos Aires, Sao Paulo, and Rio de Janeiro) giving ample space for growth and also allowing for multinationals moving to Panama" said Alan Morrison, Vice President of Knightsbridge Investment Group, Panama City
"In addition, current sales prices are favorable, with the average sale price at $2,200 per m2. With these prices and Law 41 providing the final impetus for Multinational Corporations to relocate to Panama, the time is right for those looking to make an investment in real estate in Panama."
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