Apart from the hats and the canal most Brits would claim to know very little about Panama. For some time now the image of the country has been one that has been unfairly tainted by the reputation of its former dictator, the notorious Noriega. Now a representative democracy, Panama has gone some way to correcting this image through its economic performance. The country has the highest per capita income in Central America and has opened itself up as an attractive option to anyone considering a second home or property investment. The international airport is well served with flights from all over the world and over 15,000 cruises dock at its shores annually. For these reasons it is perhaps unsurprising that Panama is fast gaining popularity with American retirees and those looking for property investment opportunities.

For those who have visited Panama this news will come as no surprise as it is often described as one of the world's undiscovered paradises. The country has fantastic beaches, stunning mountainous regions, great weather all year round, political stability and all the modern amenities you would expect from a developed country. However, the best news is that Panama also has cheap property, a low cost of living and government-implemented tax breaks that are designed to attract second home-buyers to its sandy shores.

Where to put your investment in Panama
If you are looking to own a beach property then you are in luck because Panama has over 1,400 miles of coastline. There are also a large number of islands that are home to some stunning beaches. The Survivor television series was filmed on one of these and if you managed to catch any of it you will know that crystal clear waters, coral reefs, rainforests and coconut palms are what to expect.

The tropical islands of the Bocas del Toro archipelago are Panama's main tourist destination and as such are top of the list for potential property development and second home investment. The archipelago is made up of dozens of tropical islands all at different levels of development. The region is a melting pot of laid-back Jamaican culture, foreign born, expat-introduced western culture and traditional indigenous tribal influence. Cayo Agua is one island popular with investors. Views of the mountains across the Bay of Chiriqui and breathtaking sunsets can be found in much of the property available here. Elsewhere Isla Bastimentos and Isla Colon are the other islands at the forefront of investment activity. Resale homes are not overly common on the islands but it is worth keeping an ear to the ground because this is often where the real bargains can be found, often for under £70,000. New property developments, on the other hand, are frequently popping up and often have monopoly over the prime locations. With a new-build on a resort, property prices will vary enormously depending on what the resort has to offer and at what stage of development you choose to buy. A typical two-bed resort property bought in the planning stage will cost around £32,000.

There is also a good selection of beachfront property available away from the islands and, thanks to the slim s-shaped geography of Panama, when the time comes for a fact-finding trip you can view them in the Caribbean and the Pacific on the same day. Tropical-styled villas and 18-hole golf developments are a common sight along with more traditional Caribbean-style homes. Areas to look out for include Punta Barco, Playa Blanca and Coronado Beach, all on the Pacific side of the country. However, prices on the mainland tend to eclipse those on the islands and it is not uncommon to pay over £1 million for property on a five-star golf resort.

Away from the beaches Panama has a wealth of exciting property investment opportunities. There are mountains and highlands which are fast becoming some of the hottest spots for adventure vacations with rock climbing, white water rafting, kayaking, hiking and rock climbing topping the bill. The Chiriqui highlands is the main spot and Boquete in particular has a large expat community. Property is going so quickly on the resorts around the Boquete that growth in the area has outstripped all initial expectations. Elsewhere, the obvious site for an investment property is in or around Panama City – the economic hub of the country. New property there tends towards the highrise apartment variety but is not limited to this. Property near Panama City centre is likely to cost more with a three-bed apartment with an ocean view selling for around £100,000.

Property investment potential in Panama
The majority of opportunities exist in the growth sectors of tourism and retirement with an emerging possibilities for corporate letting in Panama city. The country's economic and political situation is very stable but location will be the all important factor for maximising profit margins. 

How to buy property in Panama
1. There are three different types of property on offer in Panama. The first type is called 'titled property' and it is this type that an overseas investor should look to buy. Titled property is verifiable through the public registry system and ownership is guaranteed by the constitution of Panama. Titled property can be mortgaged and is subject to property taxes if its value is above US$30,000.

2. The second type is 'possession rights' property. This is similar to 'squatters rights' and is property that is government-owned but is inhabited by a citizen who has been given possesion rights. It is possible to own this type of property but it involves a complicated process that involves buying from the government.

3. The final type of property is concession property which is government owned and can then be leased to an individual for a maximum 20-year period. Beach properties in Panama are usually subject to these rules.      

4. To buy titled property in Panama you will usually follow a procedure that involves: a promise to purchase contract (including a small deposit) that should be registered with the Public Registry; a title search which includes verification of the seller's right to sell, a review of the official survey map and verification of utility debts; Title transfer occurs when a buy-sell contract is signed by both the seller and the buyer and is registered at the public registy.

5. Finally, remember that contracts written in English carry absolutely no legal weight in Panama. By law they must be in Spanish!

Panama Factfile:
Timezone: GMT–5
Exchange rate: GBP1=US$1.82 (July06)
Mortgage availability: Limited
Deposit required: 10%
Agent's fees: N/A legal fees: US$1,500–2,000
Capital gains tax: Yes, varied rates
Peak letting season: December to April
Average daily temps celcius (Jan–Dec):
26, 26, 26, 27, 27, 27, 27, 27, 27, 27, 27, 27 (balboa)
Average property prices: 1-bed apart: £34,250;
2-bed apart: £48,550; 3-bed villa: £78,410

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Article published in August 2006