Country Article / Postcards

Where Have All the Gringos Gone?

Date: 08/20/2003

Dear International Living Reader,

Almost 50,000 Americans have been relocated from Panama within the past five years. These personnel, with the military and canal, were a vital part of the country's economy. Their purchasing power, coupled with their real estate holdings and investments, were important to Panama and its citizens. The government drastically underestimated the impact this "vacuum" of capital would have on the country. Real estate was one of the sectors hardest hit, and still, years after the exodus, continues to reel. Prices in Panama City are hovering between $50 and $100 per square foot, depending on location and age. Renovation costs can be as low as $20 per square foot.

Granted, all of the houses and condominiums selling for these prices are not in Show Home condition, but some require only cosmetic work to be comfortable and appealing. I was lucky and found a beautiful home built in 1930 with Spanish tile floors and 15-foot ceilings. The upside is that I rent it for $600 a month. The downside is that, if I were to buy it (as I'm interested in doing), I'd want to put about $70,000 into it in renovation work. Estimates by local architects and engineers I've gotten are in line with the standard of around $25 per square foot. If the numbers don't work to buy this house, I'll probably relocate to the Casco Viejo area of the city. It's by far the most charming area of Panama City with its 17th- and 18th-century Spanish and French architecture. Tax incentives are in place for this neighborhood, and a new renovation project is launched almost weekly.

A quick note on property taxes: If you own any property in Panama with a registered value of $75,000 or more, you're liable for a 2.1% property tax. However, if you buy or build a residential property in Panama, you may be exempt from property tax for up to 20 years. But, this provision is being phased out. I go into more detail about this in the September issue of International Living but if you want to take advantage of this provision while there's still time, good legal counsel is a must. I recommend attorney Rainelda Mata-Kelly (contact the local office in Panama for details: Panama@internationalliving.com.)

Greg Geurin
For International Living