Bursting at the Seams

Tuesday, March 25, 2008

Panama City, Panama

Plus:

n      Jim Rogers Says: "Buy Agriculture." We Say: Go Direct...Buy Land

n      Grow Your Own Grapes, Bottle Your Own Wine-Romance, Adventure, Fun
...and an Annual 18% Yield

n      "I Love Being in Nicaragua..."

n      The World's Best-performing Stock Market (That You've Never Heard Of)

n      12 Reasons Uruguay Is the Next Panama

n      New Airport = Opportunity

n      Why South Korean Retirees Like Phnom Penh...and Why You Care

n      Dutch Filmmakers Continue to Stir Up Trouble

n      What the George and Martha Washington of Cashing Out Early Have Been Up To Lately

n      And Much, Much More!

---------- The Best Way We Know To Travel For Fun And For Profit ----------

RETIRE...AND GET PAID TO TRAVEL

Imagine sliding out of bed and knowing your "work" for the day is to scuba dive along the Great Barrier Reef...mountain climb in the Andes...or Kayak around the most remote of the San Juan Islands...

Here's the opportunity you've been looking for.

Get the Details and Your Free report here: The travel writers life

----------

Dear Live and Invest Overseas Reader,

Panama City is bursting at the seams...a city operating beyond full capacity. You can't get a hotel room, you can't hail a taxi, and you need reservations for dinner at the city's many trendy restaurants.

Work is under way in earnest to expand Avenida Balboa. Each day from the big windows of our loft apartment downtown, we and the kids watched the crews with their heavy equipment as they moved mammoth amounts of dirt in an effort to create a highway bypass out over the Bay of Panama.

It wasn't clear to me, neither watching the guys in action nor studying the renderings of the planned new system posted throughout the city, how the two ends of the bypass (one exiting from Balboa in the center of downtown, the other originating in Casco Viejo) would eventually meet up...but I'll leave the engineering to the engineers and hope for the best.

Meantime, the crews' around-the-clock efforts (24 hours a day, including the two Sundays we were in town) entertained 8-year-old Jackson...and kept the rest of us awake into the wee hours. Even on the 10th floor, the hammering could be heard through dawn each morning.

While road crews endeavor to ease gridlock on Avenida Balboa, other, bigger crews are busy blasting and digging a bigger canal. The Panama Canal Expansion Project launched last year and is contributing to the surge in the capital city's population.

It's all good news for the Panamanians...and for everyone invested in this market...but woe the poor traveler and visiting businessman. Hotels are booked weeks in advance...and the city's short-term rental market is spiking.

A friend had a client coming to town for two days while we visited...and he needed to find the client a place to spend the two nights. No room at any hotel he tried. Could we help, he asked? Lief called the rental manager for our apartment, who told him that, yes, she could rent the guy one of her apartments for two nights--at a cost of $265 a night.

Another friend told a story of a guy in town for one night...desperate for a place to spend it...paying $500 for an overnight apartment rental. All of this is music to Lief's ears.

Since our place has been available for short-term rental (nearly nine months), it has been occupied better than 80% of the time...and recent very short-term (one- or two-night) guests have also paid as much 500 bucks per. I won't quote you the net returns, because they beg disbelief. And I certainly won't try to guess how long this level of activity and of income might continue. But I have to admit...we're enjoying it while it lasts.

In truth, we (and other renters in the city) are probably looking at another year to 24 more months of this crazy scene. I read while in the city that as many as 10,000 new hotel rooms are either under construction or in the planning stages, but it'll take up to two years for enough of them to come online to make any real difference.

The frenzy of tourists, engineers, architects, visitors, workers, investors, and businessmen currently descending on Panama City has its downsides, of course. Driving in this town is not for the impatient or the intolerant. The infrastructure may be the best in the region, but it's straining.

These growing pains (not unlike the ones Ireland has experienced over the past dozen years) are unavoidable. You can't grow this fast without causing stress. The Panama economy grew by more than 8% in 2007 and is expected to do at least as well again this year...downturns in U.S. markets and worries about U.S. buyers notwithstanding.

There's inflation, too, of course. Prices are up for everything, especially in the capital. Some things, though, remain real bargains. You can still buy a bottle of Panamanian beer for less than 50 cents...and a good bottle of red wine in the grocery store for about $4. And a taxi ride across town (when you're able to find a taxi) remains less than $1.50.

(Though, as one taxi driver pointed out to my daughter when she hailed him down outside MultiPlaza shopping mall...these taxi rates can't continue much longer. "Gas is more expensive here, too, you know," he complained to her.)

I enjoy Panama City, maybe because it's such a lifestyle contrast to Paris, where we've spent a lot of our time the past four years. But I understood when friends we visited with in Panama last week couldn't help but ask: "Are you sorry to leave France to come here?"

We're making the move primarily for business reasons. Lief's activities will be focused in Panama for the coming two years at least. And Panama is certainly a more appealing jurisdiction than France in which to base my new Live and Invest Overseas venture. If you've ever had an employee in France or tried to run a business in this country...you understand.

Then there's the dollar. I don't let myself think about how much our cost of living in France has risen over the past year as a result of the ever-further-devastated Greenback. Paris can be more affordable than you might imagine, but it's not the most sensible place to live right now if you're earning your money in the currency of the United States of America.

On the other hand you have all the non-business, non-financial considerations, and, on this score, Paris can't be beat. No place on earth is prettier, more romantic, sexier, or more packed with entertaining and pleasant ways to spend your time.

The diversions in Panama are more of the beach and jungle variety...which the kids will enjoy and which even Lief and I will appreciate for a couple of years. So, no, we're not sorry we're moving to Panama. The truth is, we're as excited for this move as we were for the move to Waterford a decade ago...and for the part-time relocation to Paris four years ago. A move like this is a big deal. A reason to get out of bed in the morning.

Plus, of course, there's the long-standing French connection with Panama. It was the French who first tried to blast through the isthmus from one ocean to the other. Their efforts were unsuccessful, but their legacy, in the French colonial architecture, squares, and plazas of Casco Viejo, is one of my favorite things about Panama City.

And, as unlikely as it may seem at first, the French are endeavoring to dress up another part of this country as I write. A French architect named Gilles St.-Gilles and his wife discovered the east coast of Panama's Azuero Peninsula about 10 years ago. They came to visit an Italian friend with a home here on the Pacific...and, as the story goes, and as the French would say, they had a coup de coeur. They fell in love with the place.

They proceeded to buy about 300 hectares...to build a house for themselves...and then a small hotel...and, today, a decade later, they're developing on a full scale. It's an extraordinarily beautiful spot...remote...carefully and extravagantly landscaped...with killer views of the rocky coast and the crashing Pacific.

But what sets the place apart is the attention to detail. It is like nothing I've ever seen in any development anyplace else. This is no typical gringo project...for Monsieur St.-Gilles is no gringo. His French preoccupations with appearances and presentation are evident down to the paving stones and the big iron bell you must get out of your car to ring by hand to call someone to come to open the great wooden gate so you can enter the property.

Beyond this gate, terraced on the hills rising from the ocean, stand a couple of dozen houses...and 42 more under construction. The most affordable one currently on offer is a resale loft apartment, priced at $450,000. Farther up the hill are full-fledged mansions...selling for $1.5 million and more.

Selling as fast as M. St.-Gilles can build them.

Kathleen Peddicord

P.S. Other markets in this part of the world are turning downward as their U.S. buying pools wane. Everyone we speak with mentions it. "We're seeing fewer Americans," report developers, real estate agents, bankers, attorneys, and businessmen in countries from Honduras to Nicaragua, from Mexico to, yes, Panama.

The difference in Panama is that Americans don't constitute the majority of its buyers. On Roatan, for example, and in Nicaragua, Americans have been a serious driving force. Sure, Panama has enjoyed growing numbers of American investors, retirees, and real estate buyers over the past dozen years...but it's also enjoyed a strong and stronger market of its own, as well as good volumes of buyers from elsewhere in Latin America and, critically, Europe. Today, these euro and pound sterling buyers are keeping the Panama market from slipping, even as ongoing events in the U.S. are sidelining more and more investors from that country.

---------- Second Annual Global Real Estate Profits Summit ----------

GLOOM, DOOM, & PLUNGING VALUES? MAYBE...FOR SOME...

Meantime, in the midst of the current panic and confusion, one international real estate investment strategy continues to lead investors to locked-in gains of 26%...55%...105% and more in markets that are poised for continued growth. This June, in sunny Cancun, Mexico, at Lief Simon's Second Annual Global Real Estate Profits Summit, 13 of the world's most experienced and most successful global property investors will show those in attendance where to put their international real estate investment capital to reap the greatest returns. 13 hot markets...15 current opportunities for double-digit returns. Here's how you can be in the room:

"Agriculture is one of the few places where you're going to make a fortune in the next years," he said.

Rogers was talking about investing in cotton, wheat, coffee, sugar...

We say, yes, right, by all means, buy cotton and wheat, but also, and better: Go direct.Buy the land on which to raise not only, say, coffee and sugar...but also corn, soybeans, alfalfa, timber, cattle...even weeds.

The two best places in the world right now to buy land are Argentina and Uruguay. You can buy bigger in Argentina, but to get super-cheap prices, you've got to buy super-big...maybe too big, unless you're Ted Turner. Uruguay, therefore, can make more sense. Here you can buy productive agricultural land for less than $1,000 an acre. That's 20 cents a square meter.

On your big spread down Uruguay way you could run cattle...raise sheep...plant alfalfa...or you could cultivate eucalyptus.

Two kinds of eucalyptus trees grow in this part of the world. You don't need much of a green thumb to farm them, foreucalyptus grows like a weed-that is, quickly and easily. A single planting is cut three times before you have to replant; after each cutting, new trees grow from the trunk, sometimes three or four saplings per trunk per cutting.

The Uruguayans feed the cut eucalyptus into mills throughout the country...and export the paper. They'd like to grow this industry and are looking for ways to motivate eucalyptus farm investors.

I'm looking at two already-planted eucalyptus tree farms outside Montevideo right now, one with a list price of $1,600 per hectare ($640 an acre).

I've researched the idea for years, even considered specific grape-growing parcels in San Raphael. One day, I may take the plunge and buy maybe 50 hectares on which to grow my own vines from which to harvest my own grapes and produce my own wine. The truth is, though, when you look closely into the proposition, you realize it's a lot of work. Planting, harvesting, aging, bottling, shipping... Not to mention the expense...and the management hassles...

One friend, though, Tom Phelan, has researched the idea carefully...and remains undissuaded! He has purchased 100 acres in San Raphael and, as I write, is planting 20 acres each of the four main grapes of the region.

Certainly, that's more production than any one man could need...and Tom's idea is to share the wealth. He's inviting like-minded wine-lovers to participate in his new venture, enjoying not only the fruit of his vines (for 23 years)...but also the property itself, including the clubhouse he's building and the annual harvest festivals he's planning. Tom is calling it La Buena Vida Wine Estates. Find out more here.

"Tomorrow is Semana Santa," Tuey explained, "when all Nica goes to the playa. We'll be joining the migration, with tents, ice coolers, and food.

"I love having someone to help with the housework, which has never been my thing. I love coming home to hot, home-cooked meals. I love the new friends I've made already, and I love the extra time I have (now that I'm not cleaning house or sitting in traffic for long commutes). I've even joined a local book club.

"And I really love that, when I called an electrician the other day to come to put up new fans and to install new switches, he showed up, finished the work in a day, and charged me $20."

Yes, we have a point. Watch this space.

n      You can get a passport after four years of residency. In Panama, it takes five.

n      Uruguay is a sophisticated country, like Argentina, with visible European influences.

n      It's safe.

n      It's cheap.

n      The government is stable.

n      Lots of coastline, including some of the world's most absolutely affordable.

n      Classic-style apartments in old-town Montevideo can be had for as little as $700 a square meter, renovated, even furnished.

n      Uruguay's is an agriculture-based society. (See what Jim Rogers thinks about this above.) Uruguayan farmers are shipping every soybean they can grow to China. Timber and paper are big crops, too.

n      The country's tourism base is strong in summer and growing.

n      Big international businesses are setting up back offices in the free-trade zone (www.zonamerica.com.uy).

n      Historically, markets in Uruguay have followed those in Argentina, lagging by about three years. In other words, Uruguay has seen the same big ups and flat busts as has its bigger neighbor to the west. This is changing, as more Brazilians (they can drive here), Paraguayans, and Europeans are discovering the country...and, especially, as the current global commodity boom continues.

n      The Montevideo airport is being expanded to include a new international terminal.

Rumors have been circulating for nearly a year that the Panamanians have been thinking about building a new international airport in the middle of their country. However, as the airport at David on the west side of Panama is being expanded and should soon be able to accommodate flights from North America, I dismissed the coconut telegraph reports.

It seems, though, that the government is serious about improving access to the beach areas west of Panama City. Right now, it can take up to two hours to get to the beach resorts along that coast farthest from the city...like Playa Blanca. That travel time would be reduced to minutes with a new airport at Penonome or Anton.

Can you say, "Path of Progress"?

Meantime, the 10-year-old construction boom in Phnom Penh continues, fueled by South Korean companies building houses and apartments in the country for sale to their fellow countrymen. It seems South Koreans like to retire to Cambodia the way Americans like to retire to Mexico and Panama. And for the same reasons. Cambodia is cheaper than South Korea and warmer. The appetite of these South Korean real estate investors remains unsatiated, and the building frenzy will continue for the next three to five years at least.

If the Cambodian government indeed makes it possible for non-nationals to hold property freehold...I say, think about taking them up on the offer.

Geert Wilders, leader of the far-right Dutch Freedom Party, plans to air a short film later this month titled Fitna. Fitna is an Arabic word for religious discord, and the movie, which, according to the MP, shows the Koran as an "inspiration for intolerance, murder, and terror," seems certain to outrage Muslims. Remember the "Danish cartoons" controversy? Nevertheless, Mr. Wilders is determined to press ahead.

The Netherlands has a substantial Muslim population, particularly in Amsterdam and Rotterdam, and tensions have been rising for years. In 2004, Theo Van Gogh, another provocative Dutch filmmaker, was murdered by a radical Islamist, in response to a film showing writings from the Koran projected over naked veiled women.

"Our international crew (Mexican-American, Cuban-Canadian, Cuban-American, French, and American) boarded La Danseuse, Gaston and Gloria's 36-foot sailboat, on a sunny Monday morning at the Panama Canal Yacht Club in Colon, introducing ourselves and getting to know each other with commingled English and Spanish and a spattering of French.

"We stayed aboard the boat Monday night, provisioning and awaiting deliveries, including 125-foot lines (ropes for us non-sailors) and 10 old tires. No, these weren't to roll around on but to hang on the outside of the boat for protection as we moved through the six locks, three lifting us up to Lake Gatun then, once across the lake, three more to drop us back down into the Pacific Ocean.

"The biggest risk in the locks is if the lines fail, come untied, slip off, or otherwise free the boats while water is entering or leaving. If this happens, the boats could smash into the lock walls.

"Crossing regulations stipulate that a boat be ready to sail at least two hours before the official advisor boards...which is two hours before the boat is scheduled to enter the locks. We met the schedule, which allowed Gaston, our captain, time for a nap. He figured (correctly) that he had a long night ahead of him.

"Our Canal advisor, Edwin, boarded around 7 p.m. As we motored to the entrance of the locks, we served him and our crew dinner...but no wine. No alcohol is allowed during a crossing.

"For the crossing, we were bound together with two other boats, like one big raft. The captain of the center boat was in charge of maneuvering through the locks. After we three were connected, we waited...and waited...and waited.

"We were scheduled to enter the first lock at 8 p.m. After passing through three locks, we would anchor for the night in Gatun Lake. The plan was for a 10 o'clock arrival, which would give us time for a swim in the fresh-water lake...and a good night's sleep.

"If you want to make God laugh, tell him your plans.

"Finally, around 12:30 a.m., our adventure began. Our raft of three sailboats motored into the first lock. We tucked in behind a Hong Kong-registered container ship. Once our crews had secured our boats in the center of the lock, the massive lock doors closed. Water poured into the lock, and our linesmen pulled in the lines as they continually slackened. We were lifted 30 feet in 7 minutes. Then the linesmen released the lines, and we readied to motor into the second lock.

"Train locomotives pull the mega-ships from lock to lock. When the locomotives need more power, the ships turn on their motors. The forward movement creates turbulence that carries the smaller boats along.

"Lock number two...same, same. Lock number three...we were experts by now. Of course, though, each lock took a good, long time from start to finish.

"After leaving the third lock, the sailboats separated from one another. Finally, we were at the lake and anchored. It was 3 o'clock in the morning. We celebrated our success with a nightcap...then dropped dead tired into bed at 4 a.m.

"Next morning, as daybreak shimmered on the Lake Gatun waters, our next advisor, Ernesto, climbed on board La Danseuse. Anchor up, we headed across the 80-mile lake to our next destination, the series of locks that would drop us into the Pacific. Rather than motoring directly across, Ernesto guided La Danseuse through the "Banana Cut," a short-cut that gave us a close-up view of the jungle and tropical forests all around.

"We arrived at the locks in plenty of time for our noon appointment to re-connect with our two sailing companions. The three of us rafted together again, we motored ahead, secured our position, and, again, waited...and waited.

"Two three-story passenger ferries were to share the locks with us. Thanks to traffic troubles, though, the busloads of tourist-passengers arrived late. The entire system shut down to accommodate them...which meant more waiting.

"Once the ferry boats had tied their lines to the lock walls, the steel doors closed behind us. As the water rushed out, we saw the container ship in the neighboring lock rise. He was headed north, to the Atlantic. The Panama Canal runs north and south!

"Our descent began around 1 in the afternoon. The linesmen released our lines, and our boat dropped 25 feet. The lock doors parted, and we motored into the Miraflores lock. Passing through, we waved at the tourists watching from the observation tower and we waved at the online cameras filming us. Every ship passing through Miraflores is filmed. You're supposed to be able to watch in real time, but I've had no luck watching ships being raised or lowered in the lock. However, you can see an accelerated film of a passing here: http://www.metacafe.com/watch/232538/accelerated_webcam_miraflores_lock_panama_canal/

"In the final lock, we dropped to sea level in 7 minutes, then glided into the calm Pacific..."