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Panama: Eight Destinations in Which to Spend the Winter Months

First Time Reader: Why Panama? – This blog explains the rational of the trip and this series of blogs.

http://www.travelpod.com/travel-blog-entries/lobo/excursions/1266327384/tpod.html

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Lobo's Real Time

March 10,2010

This morning I made my escape from San Jose by taking a bus to beautiful San Isidro located just 220 km north of the Panamanian border. Having passed through here about two weeks ago, I am back in Room 48 at Hotel Chirripo overlooking the lovely city square.

March 9,2010

The TICA BUS from Granada, Nicaragua to San Jose, Costa Rica was a long ride - 10 hours to be exact. It was also arduous because of a weak air conditioning system and the only chance for a coffee and a bite to eat was when we crossed the border into Costa Rica.

When we finally arrived at 17:00 I wanted no part of San Jose so I immeditately took a one-hour rush bus ride to Heridia a city located just to the north. I was hoping to stay there for a day but this is not a destination for an expat. The city not only lacks charm but it also feels like an embattled camp as every business and house is well protected with tall steel fences as well as barbed and razor wire to protect against theft . Walking back to the hotel after supper along streets void of pedestrians was a weird feeling. Theft is a recurring theme in Costa Rica in general but it is particularly bad in San Jose and the surrounding area.

March 8, 2010

I find myself in one of the most beautiful cities in the Americas. No, it is not San Miguel de Allende nor San Cristobal de las Casas in Mexico. Instead I am in Granada, the jewel of Nicaragua.

At the start of this trip I had no idea that I would be travelling to Nicaragua. But then, you can only listen to so many travellers going on about how Nicaragua is a great destination without coming to the conclusion – well - maybe I should go there.

The itinerary is pretty clear in Nicaragua. Arriving from the south (Costa Rica) the first stop along the route is San Juan del Sur, a former fishing village that has developed into a hot destination, in more ways than one. It is hard not to like San Juan del Sur as the scenery and the atmosphere are outstanding. The interviews included a hotel owner who was a former student from Bell High School in Ottawa where I used to teac,h to a German doctor who runs a stem cell therapy clinic.

The next stop was Lago Nicaragua and the beautiful island of Ometepe. The island resembles two mutating cells each of which has a gigantic volcano at its center . The island is charming with isolated beaches and muted development. Strolling around in its main town – Moyogalpa - was a pleasure. It is a peaceful island that begs the visitor to shed the stress of everyday life.

The next destination was the city of Leon in northern Nicaragua. Spanish splendor is on display here in the form of the largest cathedral in Central America. Strolling along the surrounding streets is an experience. Interviews included a French baker who had finally started his own business after "baking his way around the world" as well as a member of Santana's band (Black Magic Woman) who invited me to his house to view this memorabilia. This will undoubtedly be the strangest story of the trip.

From Leon the trip took me south to my present location - beautiful Granada. My energy for interviews seemed to wane here but in the end some amazing things took place.

Tomorrow morning at 07:00 I board a luxury Tica Bus and head for San Jose, Costa Rica . Yes, the much-maligned San Jose that seems to have no redeeming feature just like Managua, the capital city of Nicaragua.

My flight home from Panama City is on March 18 so it is time to start heading south. My plans to check out Ecuador came to nonfruition as the one-way flight from Mangua to Quito was $680. The flight from Quito to Panama City would be another $400. I like writing about expat communities but it has its limits.
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Panama City

Destination No. 1 of 8 (in no particular order)

Panama City: Real Estate
Part 6 of 7 on Panama City

LOBO'S FEATURED EXPAT  "Robert" from Quebec City
- no. 1 of 24 expats to be featured– (chronological order)

Robert (pronounced "Row-Bear") was the second person I spoke with while exploring the streets of Panama City shortly after my arrival. If it was knowledge about Panama City that I was looking for, Robert was a great source of information that he dispensed on several occasions during my week's stay in Panama City .

Since real estate is a big part of living abroad for some expats, my ears picked up when Robert, my "local expert" from Quebec City mentioned that he had bought property in Panama City.

Panama City and real estate go together like milk and honey, at least on the surface, as the real estate presentation in this city is big and flashy and its selection of condominiums might rival that of Vancouver, British Columbia.

He bought in Betania Centro which is a lovely residential suburb for professionals. The first thing you notice here is the absence of the flashy glass towers. Instead it is mostly well-maintained single family homes with a smattering of low rise condo buildings. It was one of the earliest examples of urbanization in Panama City.

Robert is a cautious investor, no glitzy glass tower for him. No incomplete construction and unfinished promises for him – slow and steady is his approach . The numbers must add up and the real estate must be there completed before he will buy.

He took that leap in Betania Centro in 2007. As part of the "Pensionado Program" he is entitled to pay no property taxes for the next 20 years, as is anyone else who applies for and qualifies for this program. Property taxes in general are very low in Panama but it does represent some savings nevertheless. It is also an exemption that can be passed on to the next buyer.

At the time he bought the third floor, two bedroom corner unit unit for $50,000 with no down payment. The developer then tried to buy it back for $60,000 as the market was heating up.

Because Robert is involved in home renovations back in Canada he decided to invest another $12,000 in upgrades such as kitchen cabinets, washroom fixtures, furniture, fridge and stove. His thinking was that the property would be easier to rent and eventually to sell .

Condo fees are $30 per month and there are actually condo owners who attend the annual condo meeting since all units are occupied by mostly young, nice working people. His insurance costs for the condo are $78 a year.

Now that I have visited Panama City I have added a metaphor to my vocabulary regarding poor attendance. "It was as poorly attended as a condo members' meeting for a 200-unit Panama City Condo". Like I wrote in other blogs, the night-time view of most condos is bleak as there are no lights illuminated in units that are stalled under construction or unsold.

He is presently renting the fully furnished condo for $1000 a month. That leaves him $300 a month after expenses. In making his business case he says it takes seven months to cover his expenses. Considering how there was no down payment he believes this to be a good ratio.

Part of the calculation of expenses is his accommodation in Panama City . He is sharing a condo with a young couple in the Eldorado district of Panama City within walking distance to downtown and only steps from the upscale Mulitplaza Shopping Centre. His rent is $250 a month. Remember the condo was bought as an investment and not to sit empty for nine months a year.

Part of his strategy is the involvement of his female lawyer. She has become a partner in future real estate deals and she is the rental agent for the property. Apparently finding a good lawyer is one of the challenges of buying Panama City property.

With respect to the housing bubble and Panama City he says that there certainly is a huge housing bubble but not at this price. He estimates the present selling price of the unit to be around $90,000. Very importantly this is a price range that some Panamanians can afford unlike the glitzy steel and concrete towers.

He feels that despite the burst bubble, the bottom has come up .

Betania is close to the center of the city and it is green with ample landscaping and trees – an apparent rarity in Panama City.

Before buying he did lots of research looking for low prices, a safe and green area with not too much traffic and low maintenance fees.

That is all good talk but I had a few occasions to accompany Robert as he was making the rounds in checking out present real estate. He is extremely well prepared and methodical in his approach.

In one case he made an offer on a two-bedroom high rise condo in the Eldorado area. The asking price as I recall was $115,000. After a close inspection he sat down at the table with the couple and in detail went through the work that had to be done to get the condo up to scratch and then proceeded as well to outline the present real estate . His major point was that the present market has another 20% to drop till it hits the bottom . I studied the sellers face and it was not pretty. By the way having come here for four years, Robert speaks Spanish quite well. When he wrote his offer of $85,000 on a piece of paper, the face of the seller got even uglier. At that moment I was wishing that I was sitting closer to the door. But in the end everything was amicable and Robert left with the words “Send me an e-mail if you change your mind”.

As I said it was all done very professionaly.

In the end Robert and his partner, the lawyer, have decided to put off their next real estate purchase in Panama City given the uncertain and turbulent times in the city's real estate market.

Lobo's Comments:

It is a cruel process but that is how the market works. I sat and observed and felt some anxiety over our own purchase of a condo in the Victoria, British Columbia market. In no way, shape or form is there the kind of flood of built and unfinished condos in the Victoria market but at the same time there are no guarantees .

On the other hand, you have to see to believe the surplus of condos in this city as many projects are on hold or have on what Robert calls "a two-man workforce" on the construction site.

Many owners who presently own condos will not be able to hold onto them in a declining financial environment as the market is likely to drop at least by another 20%.

Finally the skyline of Panama City is beautiful by any measure but the real estate market at the present time is ugly.

However, there is optimism for Panama as it is a major banking center, the Panama Canal will always continue to be a cash cow and there is political stability

--------------------------------------------- Real Estate Websites: 

It is a real stretch to think that Panama would be sheltered from the economic crisis . On the contrary from what I see on the ground (and in the sky) it has only made the situation worse
http://www.expatexchange.com/lib_rd.cfm?articleid=3191&networkid=87

More points of view on the Panama City real estate bubble:

http://pcbdaily.com/realestate/have-panama-city-beach-condos-hit-bottom-yet-probably-not

http://www.costaricapages.com/panama/blog/will-panama-city-panamas-condo-bubble-burst-934

A recent article (in Spanish) that appeared in La Prensa was e-mailed to me by Robert:

http://mensual.prensa.com/mensual/contenido/2010/02/28/hoy/negocios/2107901.asp

The articles reports about Panama City real estate investors who have been the victims of abuse by real estate promoters. They have established the following e-mail address for victims to report their situations .

realestateabuses@ptyvictim.com

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May 2010

Here is a link to an article I found long after writing the blog that mirrors my reservations about Panama City real estate.

http://internationalliving.com/2010/05/panama-city-condo-market/
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Comments on some Photos included in this blog.

I have been putting off getting a hair cut for a long time. As my hair thins getting a haircut is more and more a revealing situation. Since Robert was getting a hair cut, I got up the courage to join him. I tried to communicate to the barber not to cut my hair too short and as he launched into the job with “mucho gusto” my spirits sank thinking about what the end product might look like . Keep in mind that most Panamanian men don't wear shorts and cut their hair extremely short and it looks good, but not on me. I was pleasantly surprised at the quality of the cut. It was the best that I have had in a long time, and all for $3.50.
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A suggestion to share a huge steak for $13 at Lena ---- in the food court of the Albrook Mall was not declined neither was the double scoop of ice cream for $2.25 at Gelarti Helado Gourmet.

The steak was incredibly huge, certainly enough for two persons. Suffice it say that this was the best steak I have eaten since Argentina and the ice cream maybe since Italy. 
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The hazards of Panama City sidewalks continue to attract my attention. Failure to do so could have adverse consequences.
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Coming Soon: Panama City - The Conclusion