Bursting at the Seams

Living In Panama

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.