Turn-Key Versus Emerging—Two Top Retirement Havens Compared
Every time I return to Medellin, I can’t help but compare that city to Panama City, my current home base and a long-standing top retire-overseas choice.
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. During our entire visit, I heard the honking of not a single 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, say, 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 look at us in a way as to suggest they couldn’t quite figure out how we could have gotten so off course as to end up here.
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.
Right now, the most exciting thing about Medellin from a values point of view is the cost of real estate in this town. The real estate market in Panama City has settled noticeably from its boom-time highs of three years ago. Today, you could buy in this market for US$1,500 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 US$1,000 per square meter (resale). In less central, more local neighborhoods, you can buy for half that and 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.
Now the bad news.
Colombia (very unlike Panama) offers no user-friendly foreign residency option. The two main foreign residency options are for an Investor Visa (which requires an investment of at least US$200,000 in the country) and an Executive Visa (which requires you to establish a business and is very much a workaround solution).
In other words, right now, while Medellin qualifies as one of the world’s most interesting investment havens, it is best described as an emerging retirement haven.
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.
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.
It’s neigh on impossible, as far as we can tell, to open a local bank account in Colombia unless you’ve been a legal resident for at least six months or have a personal introduction from the right person.
The language hurdle is considerably higher in Medellin than in Panama City, where most professionals and even many shop workers, for example, speak at least some English.
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: 50% less expensive in Medellin…
Climate: Way more comfortable in Medellin…
Ease Of Residency: Panama is the big winner here, with its Gold Standard pensionado program and dozen other established foreign residency options. In Colombia, you have options for establishing full-time legal residency, but they are not straightforward, not universally relevant, and not at all turn-key.
Again, remember, Colombia qualifies at this point as a “workaround market,” a place where you’re going to have to work and to work around the system to accomplish whatever you want to accomplish. Reliable guidance is key…
Ease Of Banking And Doing Business: Again, Panama wins hands down, with its international banking industry (the exchange-of-information treaty the country signed with the United States last year notwithstanding); its lack of any exchange controls; the absence in this market of any currency exchange risk (with the U.S. dollar); 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, a place where you’re going to struggle to address the administrative challenges…
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.
I can tell you that we’ve decided not to try to choose but, instead, have decided 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: “Do business in Panama but live in Medellin. That’s the ticket…”
We won’t be relocating from Panama anytime soon, but as soon as our new apartment in Medellin has been renovated, we’ll be visiting at least monthly.
And we’re making plans for a satellite Live and Invest Overseas office in this city, to complement our base in Panama.
Kathleen Peddicord
