Throughout the history of movies and Hollywood there have been many movie locations around the world which have attracted the attention of property developers and tourist. As an example the filming of the movie The Da Vinci code was set in Scotland and the particular church used for the dramatic shots, Rosslyn Chapel, has become something of a tourist attraction in the region. This is just one example of how exposure on TV, in cinemas and various media formats has increased the profile of many many regions around the world.
The filming of the new James Bond movie, Quantum of Solace, saw the cast and crew moved to Panama with Panama City mobbed by tourists and film buffs trying to catch a glimpse of the stars of the film. This exposure put Panama and in particular Panama City in the headlines around the world, but is James Bond the only reason why the Panama property sector should be considered?
There are many different elements to Panama which would surprise a whole host of investors and observers from around the world. Historically Panama, very much like Brazil, has been grouped together with the various South American political and economic worries which have caught the headlines over the years. However, the Panama of today is no basket case and has created a very useful and potentially very lucrative property market for overseas investors.
The main elements to consider regarding Panama are:-
According to the CIA World Factbook, the unemployment rate in Panama is well under 10% and the poverty rate was noted at around 30% in 2006 but has fallen markedly since then – even these historic figures compare well to other wealthy nations in the region such as Argentina. However, the underlying economy is very strong at the moment and was the second fastest-growing economy in Latin America in 2008 and is forecast to be the fastest-growing economy in Latin America in 2009.
The Panamanian economy is predominantly service based with heavy exposure to banking, commerce, tourism, trading and private industries. The famous Panama Ship Canal, which was handed over by the US government sometime ago, is central to the prosperity of the country and is one of the busiest shipping routes in the world. Over the last few years we have seen some major developments in Panama with improvements to the ship canal, substantial fiscal reform and a complete overhaul of the social security system. While some of the social reforms have attracted some criticism they were necessary in order to bring the Panamanian economy under control and reduce historic overspending.
However, the reforms to the Panama Ship Canal, costing over $5 billion, will give the operation the potential to double capacity and increase substantially the government’s income from the operation. The fact that the Panama Ship Canal is a one of the most important trading routes in the world has attracted many of the largest names in the business world and created a very buoyant property market over the last few years.
When you consider that GDP is expected to increase by more than 10% in 2008 and a similar level in 2009 this together with inflation which is just 4% bodes well for a the country which has grown substantially over the last few years. Let us not forget that Panama is only 75,000 km² in size with a population of just under 3.5 million.
While there has been something of a lull in the recent real estate boom time, due in the main to an increasing cost of living, this has served as a useful consolidation period for a market which was in danger of over heating. As well as the growing tourist market it is expected that up to 20,000 Americans will choose Panama as their country of retirement which will bring in welcome foreign investment, increased demand for services and helped to push the economy onwards and upwards in the future.
The ever-increasing business community will also offer something of a backdrop to the property market as demand for offices, homes and tourist developments continues to pick up. The country has also signed a number of trade agreements with overseas partners which will also open the door for many overseas property investors and improve the country’s standing on the international stage.
Even though there has been some unrest of late with regards to the social services reform the political scene in Panama has been fairly calm for some time. Gone are the days of sky high inflation, mass strikes and ever-increasing debt, to be replaced by a modern economy which continues to attract more and more overseas investment allowing the authorities to instigate substantial internal investment plans such as the development of the Panama Ship Canal.
The tourist market has grown substantially over the last decade as the situation in the country and the economy has calmed down. This is one of the only countries in the world where you will be able to visit two different oceans in one-day and experience a diverse number of climates from the rainforests to the mountains to the white sandy beaches. It is this unique blend of climate and culture, together with the growing economy, which has drawn in tourist’s from each and every part of the world.
The greater the demand in the tourist market the more developments required which sees greater and greater investment into the property market. This has opened up many opportunities for international property investors, a number of whom have already introduced their funding to the country and taken advantage of the early prices where the risk to investment was higher.
The exposure from events such as the James Bond movie have brought the country to the attention of many people overseas who had never even considered Panama as a tourist attraction never mind a retirement venue. There is a feeling that some movie location exposure can assist on a short-term basis but Panama is more than capable of looking after itself at the moment and the James Bond headlines will probably be short lived.
Panama is a very interesting country which is unique in many ways, i.e. the Panama Canal, and offers the potential for substantial growth in the property market against the backdrop of a government who are more in control of the economy than ever before. If everything drops into place the potential for Panama as a country is substantial for the future.