The Republic of Panama - previously known only for its canal, hats and a certain tailor - is today home to Central America's prime migration destination and fastest-growing economy. The country has witnessed extensive real estate development in recent years and established itself as a low-cost haven for foreign retirees.

However, investment conditions in the Panama property market have recently changed, with the Panamanian government issuing new visa restrictions across a range of categories for international visitors that could directly affect overseas buyers. At the start of September the flow of Brits who have been steadily snapping up real estate in the Panama property market became subject to new permanent residency restrictions. To qualify for permanent resident status investors will now have to purchase a property in excess of $300,000, which is up from the $200,000 figure previously required. As retirees form one of the biggest groups of overseas investors entering the Panama property market this increase in the threshold for investment will undoubtedly hit some buyers, though not as many as one might fear.

"With regards to the amount of investment rising from $200,000 to $300,000 to qualify for an investor's visa, I am sure this will not help the market but by the same token I don't think it will damage it that much," says Simon Hurst, MD of Panama-based property specialists Knightsbridge Investment Group. "Most people who move to Panama permanently apply for different types of visas, the investor visa is not the most popular."

Other changes to the Panama visa system that were announced would have affected those investors who wished to visit the country in order to look at potential property investments. The plan was to limit holidaymakers and potential investors to stays of 30 days with a possible 60 day extension, down from up to 90 days with a possible further 90 extension. Fortunately, though, the downside to this visa reform was realised before it could seriously affect investors.

"The tourist visas were shortened down to 30 days but there was considerable resistance, particularly from those who pointed out that it would damage Panama's reputation as a retirement haven, so the government soon reverted to 90 days" explains Hurst.
The changes have come as a result of the Panamanian president issuing a review of the visa system back in February. Other changes include those for retirees living in Panama under the Pensionados programme, who will now have to prove they receive a minimum of $1,000 per month in the form of a pension, which is up from $500. The costs of visas, permits and fees for filing various documents have also been raised and every foreigner in Panama will now be required to register with a central agency, confirming their details and status in the country.

Despite these changes, however, the Panama property market is still attractive. With a strong economic base, plenty of sun and beaches and a steady tourist trade, potential retirees may even see a $300,000 investment as worth it to attain the country's relatively low cost of living. There is plenty of investment continuing in the Panama property market as well. High profile companies and real estate gurus of the calibre of Donald Trump have contributed to Panama City's rising skyline, while the city's old quarter will benefit from the most recent investment drive.

UNESCO world heritage site Casco Antiguo in Panama City is a focus for urban revitalization and is set to see funding from both government and private sectors towards local cultural industries and entrepreneurship. Only last week an ambitious project was announced by the World Bank, with $2 million set to be invested in the creation and promotion of cultural industries in the Casco area. The idea is to attract cultural entrepreneurs, art schools and artisans to Casco Antiguo, which will mean the historic area should benefit from significant cultural tourism in years to come.

With this in mind for the future of the Panama property market condo-hotel builders Salzburg Development are just one developer set to offer turn-key apartments to investors with high-end finishes in the UNESCO heritage site of Casco Antiguo.

Currently available are properties at the Destiny Panama Bay development. Situated on Balboa Avenue, a bayfront thoroughfare that connects Casco Viejo to the rest of the city, Destiny Panama Bay is located just minutes from the renowned Canal, clean sandy beaches, golf courses, undiscovered islands, lush mountainscapes and historical sites. Destiny Panama Bay offers a choice of modern one- and two-bedroom apartments each with unobstructed city and bay views. Development facilities include a large heated infinity-edge swimming pool, squash courts and a state-of-the-art fitness centre and Spa with commanding views across the Pacific Ocean.

Prices start from $323,960 for a one-bedroom apartment and from $396,500 for two-bedrooms with completion anticipated for the end of 2008.

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For more information visit:
www.gem-estates.com
www.knightsbridgeinvest.com

Article first published 16 September 2008