Live & Invest In Medellin, Colombia

Medellin Versus Panama City—Two Top 2012 Havens Compared

Jan. 12, 2012, Medellin, Colombia: Medellin, Colombia, and Panama City, Panama, are two of the world’s top overseas retirement havens.

Dear Live and Invest Overseas Reader,

In the spirit of our New Year's comparative analysis agenda, let's look today at Medellin, Colombia, versus Panama City. Panama City is my current home base, the headquarters for our Live and Invest Overseas business, and a long-standing top retire-overseas choice. Medellin is an emerging option that has captured my attention completely over the past 18 months.

In many ways, these two places are the retirement haven yin and yang of each other.

Arriving in Panama City, you recognize instantly that this town is open for business, pushing for growth, and embracing prosperity. Your heart rate quickens, and your mind works quicker, too, trying to keep up with the commotion all around.

Arriving in Medellin has the opposite physical effects. Your heart slows a bit, your mind settles...

Unlike Panama City, Medellin's cityscape isn't all high-rise condo towers and features nary a single building of glass or steel. From any height (the windows of one of the city's luxury penthouse apartments for example, or the top of one of the surrounding hills), Medellin appears a sea of red clay tiles and red brick buildings interspersed regularly by patches of foliage and flowers. The effect, again, is calming and peaceful.

You can learn a lot about a place both from and by its taxi drivers. They're a top source of getting-to-know-a-city information and insights, of course, but they're also a barometer of the mood of a place. In Panama City, taxi drivers are in a hurry. They honk their horns constantly. They weave in and out of traffic, from lane to lane, pushing for constant progress. They can't abide sitting still or even slowing down and tend to run traffic lights and ignore things like "Stop" signs.

In Medellin, the taxi drivers, like their city, are gentler and calmer, happy to stop to offer directions or even to chat. In Medellin, you rarely hear the honking of a car horn, not by a taxi driver and not by anyone else either.

It's also worth noting that, in Medellin, taxis are not only ever-present, but also always painted yellow and metered, unlike in many of the places where we recommend you spend time. Again, orderly...genteel...

Medellin is impressively green, with trees, plants, and small gardens everywhere, and remarkably clean. In the central neighborhoods, you see no litter. The metro, a point of pride for the local population, is spotless and like new. At every station and in every train we boarded, I looked for but was unable to find even a cigarette butt or piece of gum on the ground.

Panama is working hard to clean up and green up its capital city. The long stretch of parkland along the bay known as the Cinta Costera has dramatically changed the face of Panama City for the better (and is being expanded). Still, while one might describe Medellin as genteel, a more appropriate adjective for Panama City might be gritty.

Walking around Medellin, especially outside the central tourist zone, Lief and I feel like an anomaly. This is one more thing that is very unlike in Panama City, where Americans have been part of the landscape for decades. In Medellin, by contrast, the people seem happy to discover us among them but, whenever we wander outside the central tourist zone, look at us in a way as to suggest they can't quite figure out how we could have gotten so off course as to end up there.

From a cost of living perspective, I'd put these two cities on par...depending on the relative strength of the Colombian peso. Right now, the U.S. dollar is at a high against the peso, meaning our dollars go further when we're in town. In Panama, where US$1 is US$1, this isn't an issue.

The most exciting thing about Medellin from a values point of view is the cost of real estate. The real estate market in Panama City has settled noticeably from its boom-time highs of three or four years ago. Today, you could buy in this market for US$1,700 to US$2,200 per square meter (down from US$2,000 to US$3,000 per square meter 36 months ago).

In Medellin? You can buy in El Poblado, considered the best address in the city, for as little as US$1,000 per square meter (resale). In less central, more local neighborhoods, you can buy for less.

The real estate market in Medellin reminds me of the market in Panama City when we first began paying attention to it about a dozen years ago.

We've reported in the past that Colombia (unlike Panama) offers no user-friendly foreign residency option. And we've been told by our Colombian attorney (who we trust) that we're wrong in this. Juan Dario assures us that there are at least three straightforward options for establishing permanent residency in this country. He'll be joining us for our Live & Invest in Colombia Conference in Medellin later this month to detail them in full for attendees.

Meantime, our Latin America Correspondent Lee Harrison is preparing a report on Colombia residency options that I'll share with you as soon as it's finalized.

Another practical matter that is not as straightforward in Colombia as it is in Panama is opening a bank account. It's not possible as a foreigner to open a local bank account in Colombia unless you have a personal introduction to the bank. If someone tells you otherwise, I think they're speaking optimistically and not from real world experience.

The alternative is to open an account with what's called a "fiduciary," the local equivalent of Charles Schwab. This is relatively straightforward, easier with a personal introduction, and a reasonable strategy for dealing with local bills. The downside is that transaction fees can be high.

The other downside to Medellin compared with Panama City is that few in Medellin speak English, whereas, in Panama City, it's very possible to get by speaking no Spanish.

In addition, Medellin (again, very unlike Panama) is not a tax haven, and taxes are high. Living here, your tax burden could increase, depending on your nationality, where you hold legal residency, and where your income comes from. The country even imposes a wealth tax (after five years of residency).

Colombia also imposes exchange controls. These are manageable if you plan and execute any investment in the country carefully and correctly. But they're not an issue at all in Panama.

Bottom line, here's how I'd break all this down...

Cost Of Living: It's a tie, more or less, depending on the relative strength of the Colombian peso...

Cost Of Real Estate: As much as 50% less expensive in Medellin...

Climate: Way more comfortable in Medellin...

Ease Of Residency: Panama is one of the easiest places in the world for a foreigner to establish full-time legal residency. There are a dozen options for how to do it, and the process is figured out and well documented. In Colombia, you also have options for establishing full-time legal residency, but I would maintain that they are not as straightforward, not as universally relevant, and not as turn-key. Again, Juan Dario says he'll prove me wrong in this position during this month's conference...

Ease Of Banking And Doing Business: Here, Panama wins hands down, with its international banking industry (the exchange-of-information treaty the country signed with the United States in 2010 notwithstanding); its lack of any exchange controls; the absence in this market of any currency exchange risk (as Panama uses the U.S. dollar as its currency); and its greater prevalence of English-language speakers...

Infrastructure And Accessibility: Another tie...

Taxes: Panama is the screaming champion on this score, a true tax haven, while Colombia qualifies as a high-tax jurisdiction, with, for example, a 33% corporate tax rate...

Health Care: Top notch on an international scale in both cities...

Ease Of Settling In: Panama City is a kind of halfway house for expats, a very easy and comfortable first step overseas. Medellin is the antithesis. Medellin is not an established retirement haven but an emerging one, meaning you're going to struggle more here to address the administrative challenges of establishing yourself...

Which place might be better for you?

I can't say. As I remind you often, it depends on your personal circumstances, your priorities, and your preferences. What is your current situation, and what kind of experience are you looking for?

I can tell you that we've decided not to try to choose but, instead, have been working these past 18 months to incorporate Medellin into our long-term retire-overseas plan.

As a new friend in Medellin, who also divides his time between that city and Panama City, put it recently: "Do business in Panama but live in Medellin. That's the ticket..." Lief and I would agree.

We won't be relocating from Panama anytime soon. We've based our business here for the long haul. However, as soon as the renovation of our new apartment in Medellin has been completed (hopefully within the next two to three weeks), we'll be visiting that city at least monthly.

And we're making plans for a satellite Live and Invest Overseas office in Medellin, to complement our base in Panama City, by year's end.

Kathleen Peddicord

P.S. Our conference team is busy this week finalizing the program and the activities (welcome reception, cocktail parties, city tour, etc.) for this month's Live & Invest in Colombia event. It's not too late to join us if you can. I promise you: Medellin will charm you. Come see for yourself. Details of the event we're planning are here.

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