Anatomy Of A Missed Opportunity
About 10 years ago, on a visit to Panama, a friend extended an irresistible invitation. “Let me show you the best of Panama City,” he teased.
My friend picked me up from my hotel and drove us 10 minutes down avenida Balboa, leaving the high-rises behind. Bearing left, we passed a crumbling arch and then came face-to-face with what could only be described as squalor. The barefoot and unwashed local population meandered back and forth across the road oblivious to traffic. We progressed slowly, carefully, and I couldn’t help but wonder where in the world we were headed.
On and on, we rolled past block after block of derelict buildings. Decrepit but not abandoned. Au contraire. These structures were over-occupied, some by dozens of people, leaning in doorways, hanging out windows, resting on balcony railings, all with seemingly nothing else to do.
Some places, the streets were inches deep with litter. Windows were broken, wood was rotting, concrete collapsing.
I couldn’t wait to get out of the car and have a closer look. We parked and set out on foot, up one brick-paved lane and down another. As we wandered, we saw not rot nor ruin. We were oblivious to the stray dogs and the ripening garbage.
What held our attention was what lay beyond and behind all this. Every turn brought more and better architectural delights. Here on this forgotten peninsula, just outside downtown Panama City, was one of the most impressive collections of 18th- and 19th-century colonial structures I’d ever seen. Three- and four-story buildings with balconies at every level, shuttered windows, hand-turned columns, archways, interior courtyards… Classic structures, the caliber of which exists in only a handful of places around the world, in abundance. And every few blocks a square, with a church, trees for shade, sometimes a gazebo.
At that time, I learned, you could have bought one of those classic French- or Spanish-colonial buildings for as little as US$50 a square meter–maybe US$10,000 or US$20,000. Of course, you then had all those tenants to contend with, most paying no rent and having nowhere else to go.
For me and Casco Viejo, it was love at first sight. I wanted to buy on the spot. But the complications surrounding the purchase got the better of me, and I moved on to other opportunities.
Four years later, when I was preparing to open my first office in Panama, I took another look at Panama City’s old quarter. As charming and historic as ever, but now, I was delighted to find, many fewer squatters, much less garbage, and, here and there, a fully renovated structure. Prices? Those had increased three- or four-fold and stood at about US$200 per square meter. We jumped…but on someone else’s account.
That purchase progressed exactly according to plan. We invested in a 300-year-old French colonial gem, on the corner of the region’s main square, renovated the entire building, then sold, less than three years later, for twice what had been invested in the place.
Trouble was, we didn’t want to sell. The more time we’d spent in Casco Viejo, the more we’d grown to appreciate her appeals. But, as I explained, we’d bought for someone else and had no choice but to execute the planned exit strategy. Great investment…home-run return…but, alas, we were left without an address in Casco Viejo.
Meantime, more unofficial residents had been relocated, more trash-collection crews had been assigned, and more of the old structures that for so long had so captured my imagination had been carefully and lovingly rehabbed. And, yes, prices had appreciated further. By this time, about three years ago, when I got serious about shopping for a place of my own, prices in Casco Viejo had risen another 200% to 300%. A building that I could have snatched up seven years earlier for US$20,000 now listed for US$300,000, even US$400,000.
This for a ruin…a shell…in some cases little more than a pile of stone and brick with beams here and there to remind you that, at one time, the place boasted floors and interior walls. On top of the, say, US$300,000 purchase price, you could count on another, say, US$600 per square meter in renovation expense, meaning that, to make one of these 400-square-meter buildings right, you were talking about a total cost of US$500,000 or US$600,000, easy.
I’m as big a romantic as you’re ever likely to meet. But even I, considering particular properties for sale, had to take a step back and remind myself where I was. This was a barrio. Sure, most of the squatters had been moved out, and most of the garbage was now being collected most days. Here and there, some of the old structures sported freshly painted facades, freshly polished balcony railings, and freshly planted pots of bougainvillea.
But, come on. Bottom line, this place was just this side of a ghetto. US$600,000 to own a home here?
Crazy, right?
Yes…only not as crazy as the prices being asked today, another three years on. Today, apartments in buildings several streets back from the main square are selling for US$3,000 a square meter renovated…meaning that a 150-square-meter unit can go for as much as US$450,000. A 400-square-meter building? If you can find one for sale, you’re looking at a million bucks already restored or US$500,000 to US$600,000 for a do-it-yourself buy.
I’ve expanded my search well beyond the current “zone,” explained to agents and friends that I’m willing to be a pioneer and to buy on the edge.
Still, the prices are shocking.
If only I’d bought 10 years ago…
If only I’d bought seven years ago (for myself)…
If only I’d bought three years ago…
My search continues.
Kathleen Peddicord
P.S. I share this tale of missed opportunity with you as a reminder, both for you and for me: Making the leap can be scary, sure, and taking a risk is, well, risky. But not making the leap can come with a far greater downside. Doing nothing now leaves you exactly where you are today later.
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MAILBAG:
“Kathleen, my biggest concern in considering a move overseas is to do with qualifying for residency. I’m interested in Ecuador, specifically. Would I have to prove an income in Ecuador? What is the minimum amount of monthly income required to become a resident in that country? Once I’m there, can I use Internet sales as part of my required income?
“Would you have any suggestions for another cheap place I could begin looking into?
“It will be a year or so before I leave the United States, but I want to have a good understanding of what would be required of me to establish residency. Thank you for your help. I really appreciate any advice.”
— Raymond S., United States
To qualify for a retirement visa in Ecuador, you must prove that you earn at least US$800 a month from a pension, Social Security, or an annuity. If you have any dependants who would be relocating with you, you’ll need an additional US$100 per month per dependent. The total amount must be transferred to Ecuador each month.
If you don’t have a verifiable pension of at least US$800 per month, you have two other options for obtaining a residency visa in Ecuador. One is to invest US$35,000 in an agricultural or export business; the second is to invest US$25,000 in real estate or a fixed-term deposit.
Another cheap country worth considering? Nicaragua. To qualify for a retirement visa in this country, you need show income of only US$500 a month from a government or private pension or Social Security.
Likewise, Uruguay, where, again, you need prove an income of only US$500 a month from a pension to qualify for a residency visa.
In no case could you use projections of revenues from an Internet business to help meet the minimum monthly income requirements. The income must be guaranteed from a verifiable pension. Of course, you could still earn the Internet-derived revenues once you’ve relocated as a way to augment your monthly budget.
***
“What about all these condo developments in Panama City that were sold pre-construction but are now not being completed? I’ve heard that there are many cases of developers just walking away from buildings, taking investors deposits with them. Do you know anything about this?”
— Mark F., United States
Resident Panama Editor Rebecca Tyre replies:
“This has happened in Panama City, as I’m sure it’s happened all over the world, but less often than you might think. In fact, I know of only one case where the developer walked away and took investors’ funds with him. In the other examples of developers not completing projects, pre-construction investment funds have been returned to early buyers (after, yes, some hassle and delay).
“The case of the developer who absconded with investors’ funds took place mid-last decade, before the government enacted a law preventing eager developers from pre-selling units before the various ministries approved the building plans. Today, before a developer can start taking your money, the government must give permission to proceed, signing off on environmental and feasibility studies and plans.
“Six or seven years ago, though, before these hurdles were put in place, a handful of bad apple developers took deposits on units then walked away without putting anything in the ground. In most cases, the developers had more than one project on the go, so, when he realized he wasn’t going to be able to fulfill units in a new building, he’d offer a comparable unit in another of his buildings in exchange.
“Again, though, there is only one case to date of a developer taking funds, not building, offering nothing in exchange, not returning investment capital, and disappearing into the night. In this case, the developer was known to be bad news, so anyone with a good local connection would have known to steer clear.”
