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Why should you use a buyer’s agent for a property search in Panama? What’s special about a real estate buyer’s agent anyway? Buyer’s agents work for you alone, the client, the person searching for an ideal property. Such an agent fully represents your interests, and very often this service comes at no charge to you! Hiring a buyer’s agent can be particularly helpful for property searches in real estate markets like Central America, where there is no fully functional, rational, and North American-style multiple listing service (MLS). This is the case for Panama.
Buyer’s agents in Panama work with clients from all over the world to help them find the home of their dreams and advise them on investments involving real estate. Such agents are present at every step of the buying process, from the initial search through closing on the property. In addition to holding a vast database of properties for sale and the time the agent dedicates to finding a home matching the buyer’s interests, a buyer’s agent also provides advice and support to make correct, informed decisions. Here are nine reasons why one should use a buyer’s agent when looking for a property in Panama.
The primary goal is understanding the buyer
Property buyer’s agents spend a lot of time with their clients to fully understand their wants, needs, and priorities. In addition to telling your agent what you’re looking for and what you absolutely must have, also be clear in communicating what you’re willing to compromise on. For example, you may think you want a house in Panama City's Costa del Este, but if there’s a fantastic apartment with plenty of space, in another city-center area like San Francisco or Obarrio, you may be happy to concede if you’re still getting everything else you want.
Finding commercial or investment opportunities
Instead of looking for a new permanent home or holiday home, you may (also) be looking to buy Panama real estate as an investment. If you’re interested in renting out your property to create a new income stream, a buyer’s agent will be able to tell you where the best rental markets are, and which seasons are the busiest. Good news: in many areas, like the Pacific Beaches of Panama, tourism buzzes year-round. Or, you may want to purchase property that will serve as a bed and breakfast, hotel or commercial rental. Your agent won’t just be able to find you suitable properties to consider, but they’ll also explain how much work needs to be done (if any) to get it up-and-running as a business. In addition, some agents specialize in agriculture-related investments in Central America, and can present advice on investment portfolio diversification.
Agents specialise in the specific area where you’re looking to buy
Teams and larger real estate offices that cater to buyers tend to have multiple consultants with specialties in specific regions. For example, RE/MAX agent Charlie Leary is based in Panama City and can cover all the main property hot spots in the country, however he also has a team member in Bocas del Toro, and his office, RE/MAX Freedom, has offices in David and Boquete too. Of course, RE/MAX, with the number one network of offices in the world, has offices in all the other international locations like Paris, London, Geneva and New York.
Buyer’s agents have access to hard-to-find properties
Local estate agents don’t necessarily have every listing in a specific area because they work on behalf of sellers, meaning they only have the properties that sellers have listed with them. If you’re looking for property in a popular destination, it’s best to work with a buyer’s agent. Not only will they have a broader selection than local real estate agents, but they will also know about properties for sale that are unlisted. This is common when there’s a high-profile seller who wants to keep the sale of their property confidential.
They have the best connections, too
Buyer’s agents also boast established, trustworthy connections. They can reach out to the top estate agents, lawyers, and sellers in your destination. Also, since agents have relationships with developers and large property owners, they’ll be able to find out information about a property that you may not discover on your own. By getting in-depth information about a property before purchasing it, you can decide if you’re able to take on the building’s challenges or would rather keep looking.
You don’t have to speak your destination’s language, Panamanian Spanish (yet)
While you will want to learn Spanish, you can go through the buying process without being fluent. Many agents are multilingual. They can speak your native language, the language of Panama, and additional languages if need be. This will be particularly helpful when trying to understand and negotiate finance, legal and tax issues.
Lots of effort goes into the research stage
A buyer’s agent often spends weeks or months researching a property for a client. That way, agents can accurately point out the strengths and weaknesses of the property so that you, the client, knows exactly what they’re getting into. When it’s time for the buyer to take a viewing trip, only the best, most suitable properties will be on your list. Handing over the research to a qualified and experienced Panama real estate agent means that you won’t be so wooed by a property’s high points (beach access, pool, heating, multiple outbuildings) that you miss drawbacks, like interior work that needs to be done or lack of parking for all your cars.
A buyer’s agent and his team will help with negotiations
Agents aren’t there just to find the perfect property and then leave you on your own. They’ll be present and active throughout the process and help negotiate a deal that’s in your best interests. They are trained and experienced in negotiation. Since the agent is acting for you as a buyer’s agent, he is not partial to any specific seller, and he will be objective when offering his advice or opinion. Buyer’s agents have also trained in negotiation techniques, both through places such as RE/MAX University as well as regular university and professional courses. This is something to look for when selecting an agent.
Hiring an agent often doesn't cost you anything
Service is most often free to the buyer because the real estate agent earns part of the sales fee. The fact that you’re a valuable client only if you’re entirely thrilled with the homes you’re presented means that the agent will work for you until you’re happy with the outcome. It’s in everyone’s best interest to wait until the right property is found rather than try to force you into a deal you don’t want. Sometimes, a buyer’s agent in Panama will have to ask you to cover his commission, but that is only in cases where vendors or other agents will not cooperate on paying commissions.
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We are happy to announce that Charlie Leary ranked as the top commercial real estate agent in Panama based on sales volume for January, 2021. Charlie Leary, PhD, MBA, also ranked as the number six agent for all of the Central America and the Caribbean region. This ranking was based on sales of income-producing coffee lands in Boquete, Panama, as well sales of investments in the Peini Cacao specialty chocolate business.
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Want to get away from the rat race to start living and working in your desired location?
Inns, boutique hotels, B&Bs, and even restaurants can be great business options if you seek to make a lifestyle change that includes operating a new or existing hospitality enterprise. As a Reuter`s article recently noted, “the COVID-19 pandemic will mean holiday-goers will shy away from larger hotels for the foreseeable future in favor of boutiques and home rentals . . .”
A lifestyle business is defined as a business set up and run by its founders primarily with the aim of sustaining a particular level of income while also providing a foundation from which to enjoy a particular lifestyle. Some types of enterprises are more accessible than others to the would-be lifestyle businessperson. Those requiring extensive capital (think car manufacturing) are difficult to launch and sustain on a lifestyle basis, while others such as small creative industries or hospitality businesses are more practical for sole practitioners or small groups such as spousal teams.
Lifestyle businesses typically are not hugely scalable since this kind of growth would destroy the lifestyle for which their owner-managers set them up. However, lifestyle businesses can and do win awards and provide satisfaction to their owners and customer. Obviously, substantial growth can occur in a hospitality lifestyle business, such as a boutique hotel appealing to an upscale market. This is truer in Panama than many jurisdictions due to factors such as
The potential is great. As one recent article on the boutique hotel sector noted in February, 2021:
"Small stays and boutique hotels are already starting to see a surge in demand. Going by feedback from property owners, most guests prefer to stay in smaller properties to keep pandemic worries in check. It seems the preferences are towards properties with open spaces, without central air-conditioning, and for rooms with balconies that allow fresh airflow. Besides, many guests are opting for boutique hotels for personalized holiday experiences that make their stay more memorable and unique."
Panama has a number of spectacular opportunities for making that switch and starting your new lifestyle business! Whether you are seeking out Pacific beaches, a spot in the Caribbean paradise of Bocas del Toro, or a mountain hideaway with a cooler climate!
Charlie Leary’s services extend not just to searching for the appropriate property and/or business, but also assisting in analyzing the numbers and advising on operations, marketing, revenue strategy, and the like. He can also advise on the details of starting a hospitality business from scratch, including building your dream hotel or B&B.
“I have a list of confidential hospitality properties as well as developable land now on the market that current owners do not necessarily want publicly advertised. So please contact me with your ideas, requirements, and dreams!” he stated. Panama has a rich diversity of possibilities on offer!
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The potential for new tourism ventures in Panama is strong, despite the COVID 19 pandemic. Among all Latin American countries, Panama`s economy has solid underpinnings supporting a dollarized economy within a geographically compact and strategically positioned country of about 4.2 million people. Within the past year, the Panamanian government announced incentives for new tourism enterprises, and will host a tourism investment conference in mid-March, 2021. As one example of an area where a solid tourism recovery in Panama should become reality is the Caribbean archipelago of Bocas del Toro. This positive outlook relies partly on a government-backed project that will strengthen local infrastructure on Isla Colon, the location of Bocas Town.
Panama is spreading the world of its tourism investment potential at an online forum. On January 28, 2021, the government announced the Panama Tourism Investment Forum – 2021 Virtual as an “international, virtual forum, organized by the Panama Tourism Authority together with PROPANAMA, which will take place on the 17th and 18th of March, 2021.”
The Forum´s main objective is to promote high-quality tourism investments, that reinforce environmental, social, and cultural sustainability values, as well as contribute to creating new employment opportunities and to the economic reactivation of Panama’s tourist destinations.
As Roger Kinkead, head of investment banking at Panama’s MMG Bank recently noted:
"Panama is sending a strong message to both national and international developers and investors with the announcement of new tourism incentives. These incentives, according to experts, show great potential in welcoming private investment in local tourism and infrastructure development."
New tourism industry investment will contribute to an increasingly diversified and stable economy. For example, in recently granting a large liquidity line of credit, the International Monetary Fund (IMF) noted that the government has taken measures including reinforcing expenditure controls, strengthening revenue collection, privatizing enterprises, improving financial supervision, combating money laundering, and establishing targeted transfer programs to reduce poverty. The IMF summarized that Panama’s economy grew at an average rate of 6 percent between 1992 and 2019—the fastest in region— and achieved the highest per capita income in Latin America. Likewise, FocusEconomics concluded in late 2020 that the economy should gradually recover this year from 2020’s Covid-19-induced contraction, as the easing of quarantine restrictions provides room for a rebound in domestic activity and tourism. FocusEconomics Consensus Forecast panelists foresee the Panama economy expanding 6.4% in 2021, which is up 0.6 percentage points from the previous forecast. For 2022, the economy is seen growing 5.1%.
By contrast, FocusEconomic had this to say about Panama`s neighbor Costa Rica:
"The economy is expected to slowly recover in 2021, after this year’s pandemic-induced contraction. However, the country faces many downside risks, including weakened government finances to face maturing debt, social unrest due to the proposed measures to try to secure a USD 1.75 billion IMF loan, and uncertainty over the course of the pandemic. FocusEconomics panelists see GDP expanding 3.3% in 2021, which is up 0.3 percentage points from last month’s forecast, and 3.5% in 2022."
The government of Panama has created incentives for tourism industry investors that are tax credits equivalent to 100% of the sums invested. These investments can be made through bonds, shares or other financial instruments issued by tourism companies or real estate investment companies and meet certain legal requirements. These unique tax credits are independent from the securities that originated them and may be assigned or sold to third parties.
As Kinkead of MMG bank writes:
"The first advantage is that by using or transferring the tax credits to third parties, the risk of loss of the investor's capital is significantly reduced. The potential ROI may also increase, as the investors could receive their capital sooner than expected.
Another advantage is that incentives such as these alleviate the uncertainty of investing in projects before having tourists or waiting to have tourists to build, since by reducing investment risk through the granting of tax credits, investors would have an additional window of time to see their investments stabilize without affecting their return on capital."
Part of the government`s goal with the incentives is to generate socially inclusive development and protect the environmental resources that provide the basis for these kinds of tourist attractions. And the incentives will integrate with other government initiatives in public works.
In Bocas del Toro, on Isla Colon, the government has launched an initiative to reactivate the island as a touristic center. The initial plans for this project were conceived through suggestions from the Caribbean island community in a previous hearing during the Gabinete Turistico (Tourism Cabinet) on August 30, 2019, and the original proposal was published in November 2019.
Image courtesy Bocas Breeze
The project design will be finalized in the middle of February, says Rafel Sabonge, Minister of Public Works (MOP). According to journalist Felipe Ernesto Lopez Rodriguez, Sabonge also stated there is $29 million already assigned to the Bocas project by the Ministry of Economy and Finance. The budget will be finalized after the project design is approved, which is scheduled for mid-February. Bidding on the projects should begin as of March 1st. The bidding and contracting process is expected to take up to 6 months, with construction likely to start before the end of this year.
The last phase of the urban redesign proposal is the creation of a completely new road connecting the Paunch, Bluff and Boca del Drago beach attractions, creating a beltway road circumnavigating all of Isla Colon. The proposal includes paving the road from Paunch to Bluff Beach, while redirecting the current roadway slightly inland away from the beach in Bluff and the protected area of the municipal reserve. This road will include a bridge over the Mimbitimbi River.
Another notable part of the project is urban street redesign, including the refurbishment of Bocas Town sidewalks and the addition of a bicycle lane that would circle through Bocas Town and then lead out of town, along the proposed coastal loop road. This will create a total of 37.25 kilometers of ciclovía (bike lane). Also included is the construction of new, wider pedestrian sidewalks and streetlights; not only in the town center, but also along the complete span of the new beltway road.
The example of investment in tourist-oriented infrastructure in Bocas del Toro combined with the new tax incentive and the tourism conference suggest strong interest by the current government in promoting tourism investment, and backing that up with concrete public commitments.
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Panama has established itself as an ideal country for business and investment of all scales for numerous reasons. It has maintained its status as one of the economically stronger Central American countries during the COVID-19 pandemic, and a variety of options exist for those looking for investment targets or acquiring a lifestyle business, such as a boutique hotel or tourist rental business.
Charles Leary, PhD, MBA, with RE/MAX Freedom in Panama, says investing in business opportunities in Panama makes sense, whether as a passive investor or a business owner. He pointed to several third-party sources expressing confidence in Panama. For instance, Leary said a recent report by Bank of America Global Research concluded the current government is “doing a good job at covering funding needs and preventing the fiscal deficit from ballooning” during the pandemic, and the outlook is “constructive for 2021.” Growth prospects remain favorable and the sovereign will likely retain its investment grade credit rating.
Indeed, in October, 2020, Moody’s maintained Panama’s investment grade status. The Baa1 rating incorporates the sovereign's still-present underlying credit strengths, including trend growth in excess of 4%, which has been above that reported by most Baa-rated peers. Additionally, Panama's ability to access market funding at relatively low borrowing costs keeps government liquidity and refinancing risks contained. Panama's long-term foreign-currency bond and deposit ceilings remain unchanged at A2.
Recently, the International Monetary Fund noted that the government has taken measures including reinforcing expenditure controls, strengthening revenue collection, privatizing enterprises, improving financial supervision, combating money laundering, and establishing targeted transfer programs to reduce poverty. As a result of these IMF-supported reforms, the economy grew at an average rate of 6 percent between 1992 and 2019—the fastest in region— and achieved the highest per capita income in Latin America. In January, 2021, the IMF granted a 2-year Precautionary Liquidity Line of $2.7 billion to Panama as an insurance policy against shocks.
Private industry, too, remains optimistic about Panama in 2021. For example, First Quantum Minerals expects a strong rebound at its US$6.5bn Cobre Panamá copper mine in 2021 after COVID-19 disruptions last year. The company produced 206,000t copper and 85,000oz gold at the Panama operation in 2020, ahead of revised guidance of 180,000-200,000t copper and 70,000-80,000oz gold. The figures include 66,000t copper and 25,000oz gold produced in Q4. After the advent of the pandemic, Forbes rated Panama as number one amongst places worldwide to invest in real estate for future resale.
In another article, Forbes author Kathleen Peddicord stated:
"The best example of a city with brand-name resiliency in the Americas is Panama City. It’s the regional headquarters to hundreds of multinationals and a genuine business and financial hub with deep and diversified pools of both buyers and renters from around the world. In addition, Panama’s economy is backstopped by the Panama Canal, which accounts for about 40% of Panama’s GDP. If you’re in the market for an investment with a short-term horizon, start here." (https://www.forbes.com/sites/kathleenpeddicord/2020/05/07/global-property-markets-post-pandemic-how-and-where-covid-19-is-creating-opportunity/?sh=313cce5987c1)
Those interested in investing in Panama today should know that the climate for investment is stable in social, political, and economic terms. On the legal side, Panama presents a transparent and robust environment, which improves the desirability of investing here. Additional value comes from the use of the U.S. dollar as a currency and strong banks. This makes investment options attractive because investors prefer to put money into a currency that does not have mini devaluations, thus protecting capital and assets. The recent climb in the value of the Euro over the dollar makes investments in Panama even more attractive for Europeans.
Investing in Panama today offers great options to generate large gains thanks to a strategic geographical location, enormous productive potential, and natural resources combined with a strong economy. Explains Leary, “The expansion of the Panama Canal is another great advantage of this country that, moreover, is free of hurricanes and earthquakes. Tocumen International Airport is a true hub, connected with the world’s major cities, and Panama has five seaports with the most modern facilities, the largest merchant fleet in the world and the second largest Free Zone on the planet (second only to Hong Kong), in Colon.”
For the European investor this is the best time to invest in Panama, as it helps it to dodge the current housing bubble, taking advantage of a Euro stronger than the dollar to invest in dollarized markets. In addition, Panama is becoming the second place of residence for many retirees around the world, mainly Americans, under the large tax incentives offered by Panamanian laws. Leary himself recently established legal residency in Panama under the Friendly Nations visa program, having previously worked with RE/MAX in Spain. This is a visa distinct from the retiree visa.
In Panama, retirees and those seeking alternative residences can find value properties, with the added advantage that local banks grant mortgages for non-residents for 70% of their appraisal value; therefore, only 30% of the capital is required. Investing in Panama today is the safest and most cost-effective option for small and large investors and developers who decide to place larger sums, from the purchase of more than one new construction apartment to the construction of all kinds of housing and tourism projects, whether in Panama City and on beaches, the interior of the Republic, or on islands. RE/MAX Panama has numerous investment options, from stable alternative agriculture investments to commercial real estate to city center apartments.
Panamanian coffee is one example of opportunity. “Panama has quietly staked its claim as a force to be reckoned with thanks to growing the renowned Geisha coffee bean, which can sell for over $1,000 per pound,” notes author Ali Wunderman. Such specialty coffee grows in regions like Boquete and Volcan. Leary knows of investment opportunities involving ownership of Boquete coffee lands. “This sort of income producing opportunity is one of my specialties in my work with RE/MAX,” Leary reported. I first visited Boquete in 1997, at a time when no one could imagine its emergence as the world leader in specialty coffee production.
As Wunderman wrote:
"To put it in perspective, Panama’s Geisha coffee continues to set records year after year. First in 2004, when a washed Geisha from Hacienda La Esmeralda sold at auction for $21 per pound, blowing past the existing record of $4.80 per pound. By 2017, these beans were selling for $661 per pound, finally surpassing four figures in 2019 at $1,029 per pound. In only 15 years, Geisha from Panama redefined the entire concept of luxury coffee."
And coffee is not the only thing brewing in Boquete. Leary says recently a specialty chocolate production facility has opened there, which also has opportunities for investors, as such chocolate heads for international markets. Adds Leary, “This country literally at the hub of the Americas is ideally located for a business doing business across the Americas. Thanks to the investment made over decades by the U.S. military, the infrastructure in Panama City is in a league of its own for the region, and much of the population, thanks again to the extended American presence, is English-speaking.”
Panama has successfully attracted companies like Dell, Procter & Gamble, Adidas, Caterpillar, Nike, Estée Lauder, and others seeking out the best place to locate their regional headquarters. Around 150 multinational corporations have Panama City as their base, employing, among them, thousands, including hundreds of foreign management staff. Says Leary, “All of these people need places to live, and the imported foreign executives have helped fill apartment buildings that in other circumstances might have remained empty.”
Panama has another huge economic advantage in its canal, which was expanded in 2016 and generates more than $2.6 billion of revenue each year, a huge income source for a country of 4.2 million people. Also, in 2017, former President Juan Carlos Varela established diplomatic relations with Beijing, leading to huge increase in Chinese investment, much of it related to the canal.
Investing in Panama has never been simpler for foreigners. Real estate and other investments are easily transacted and transparent, with almost no restrictions on foreign ownership. Also, company formation is easily accomplished.
As part of the Panamanian Government’s strategy of attracting foreign direct investment, the Panama Agency for the Attraction of Investment and Export Promotion (PROINVEX) has been established. An autonomous government agency attached to the Ministry of Trade and Industries of Panama whose express objective is to explain to foreign investors how to invest in Panama.
“The intention of the creation of PROINVEX is that the government of Panama can provide as much assistance as possible regarding the legal and bureaucratic processes that foreign investors have to comply with if they wish to invest in Panama,” explains Leary.
Since it is a government agency, but autonomous, PROINVEX positions itself as the best option when advising foreign investors in Panama. This agency’s extensive network of contacts can provide investors with the necessary synergy between the public and private sectors. This has the aim of facilitating direct investment processes in the country.