From the start, the colonists (and the pirates, too) recognized the importance of what they’d discovered… for travel, for trade. In fact, it was Spain ‘s King Charles V, in 1524, who first had the idea of digging a canal through the isthmus of land we know today as Panama so the two oceans could meet.
It was the French, though, in 1880, who had the first go at blasting through Panama ‘s mountains to link the Atlantic and the Pacific. Their attempt was ill-fated. Then, in 1904, the Americans took up the engineering challenge…and succeeded in literally dividing Panama in two. The Panama Canal was open for business starting Aug. 15, 1914, when the SS Ancon made the first official voyage through.
The Americans operated the canal they’d dug through the end of the 20th century, pulling out in 1999. With them went their military personnel, their support staff, their engineers…and all the disposable income those gringos had been dumping into the Panamanian economy for nearly a century. No surprise, recession followed in the hub of the Americas .
Fewer than 10 years later, the turnaround has been remarkable. Today, Panama is a great success story and the fastest-expanding economy in the region. But perhaps the best part is that there’s every reason to believe this country is positioned for years of continued growth and sustained stability.
Not only are the Panamanians operating the canal far more successfully (that is, profitably) than the Americans ever managed to do, but they’ve also begun work to expand it. They’ve committed $5.2 billion to the Panama Canal Expansion Project, to make the waterway wide enough to accommodate post-Panamax freighters. It’s the most ambitious infrastructure project in Panama and in the region since the canal was built.
As I said, Panama is the fastest-growing country in this part of the world. It enjoyed growth rates of better than 8% in 2006 and in 2007, and projections are for a further 7% spike in 2008.
You can’t grow as rapidly as Panama is growing without experiencing stress. And, indeed, Panama ‘s capital is a city bursting at the seams and operating well 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. The city’s infrastructure, built by the Americans during the 80 years they were in town operating the canal-and long recognized as the best in the region-is, to put it kindly, straining.
Work is under way to expand Avenida Balboa in an effort to ease gridlock along downtown Panama City ‘s primary thoroughfare. Meantime, driving in this city is not for the impatient or the intolerant.
As many as 10,000 new hotel rooms are either under construction or in the planning stages. It will take up to two years, though, for enough of them to come online to make any real difference in the city’s ability to accommodate the tourists, engineers, architects, visitors, workers, investors, businessmen, and would-be retirees migrating here in ever-greater numbers.
Just beyond the city, crews are busy blasting and digging the bigger canal. This mammoth canal-expansion project, launched in September 2007, is contributing big-time to the surge in the capital city’s population and to the stress being put on the country’s infrastructure and service systems.
But it’s not the only infrastructure project in play right now. In addition, the country’s existing ports on both coasts are being expanded, and a new port is being planned for the Pacific entrance to the Panama Canal . Mega-energy projects (hydro-electric, ethanol, and oil) are in proposal and planning stages, and the government is working hard to attract outside investment, offering incentives for foreign companies to set up call centers, for example.
Panama ‘s telecommunications are without peer in the region, and Panama City is a globally-recognized financial center, home to more than 70 international banks.
Panama is also a tax haven, taxing residents on money earned within Panama only. And its has been a dollar-based economy since 1904, meaning Americans living, investing, and doing business here face no currency-exchange risk.
Where am I putting my money right now?
In fact, I have been investing in Panama for the past half-dozen years. Today, though, I’m accelerating efforts with the intention of positioning myself further in what I believe is the closest thing to a recession-proof market you’ll find anywhere in the world today. Little Panama has solid legs that should carry her well into the 21st century.
This country’s prospects for growth and sustained prosperity are not tied to the U.S. market or to any single market anywhere. Panama holds a one-of-a-kind asset with unequaled global value, one that guarantees the world will keep returning to her shores to do business.
I don’t see any other market in this part of the world competing long term.
P.S. My favorite neighborhood in Panama City , Casco Viejo, has grown more expensive than I can afford. It’s one of my many woulda’, shoulda’, coulda’ stories. If only I’d bought an old colonial building in this charming old town five or six years ago…
Casco Viejo is technically part of Panama City but really a world unto itself. Situated at the western mouth of the Panama Canal on a peninsula jutting out into the Bay of Panama , it’s the oldest city on the Pacific coast of the Americas . It was the cultural and political center of Panama City until the early part of this century. But its labyrinth streets were too narrow for the modern world, and the city spread east.
As the new Panama City grew and modernized, this historic district was left to decline…and decline it did. Then, in 1997, UNESCO listed Casco Viejo as a World Heritage Site, and the revitalization efforts began.
When the French made their failed attempt to build a canal across Panama at the end of the 19th century, Casco Viejo is where they hung their hats. Their influence is obvious in the architecture, the squares, the parks…
As unlikely as it may seem, my favorite place in Panama outside Panama City also has strong French connections.
For the past 10 years, the French have been endeavoring to dress up another part of this little country. A decade ago, a French architect named Gilles St.-Gilles and his wife discovered the east coast of Panama ‘s Azuero Peninsula . 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 views you don’t easily forget 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 any place 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 mosaic 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.
And they’re selling as fast as M. St.-Gilles can build them.