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Retire To Medellin, Colombia Or Panama City, Panama

Medellin Versus Panama City–Two Top 2011 Retire Overseas Choices Compared

Medellin, Colombia, is the featured destination for the current issue of the Overseas Retirement Letter (due in subscribers’ mailboxes later this week). The report is written by yours truly.

Preparing it, I couldn’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 yin and the 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 swatches 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 already 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 touristed zone, Lief and I were 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 seemed happy to discover us among them but looked 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. A bottle of water at the corner shop, a movie ticket, a gallon of milk, and a haircut will cost you more or less the same in Medellin as in Panama City (which, remember, is the most expensive part of Panama).

One important difference when comparing a Medellin budget with one for Panama City is that the former need not necessarily include any utility expense. Thanks to its year-round mild climate, you could live in Medellin comfortably with neither heat nor air conditioning. You could live in Panama City without air conditioning, too, but I wouldn’t recommend it.

This fact could save you as much as US$200 or more on a monthly basis.

Perhaps more exciting is the cost of real estate in Medellin. The real estate market in Panama City has settled noticeably from its boom-time highs of two 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 24+ 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 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 decade 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, Medellin qualifies as a top part-time overseas 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 bank account in Colombia unless you’ve been a legal resident for at least six months.

The language hurdle would be 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…

Cost Of Real Estate: 50% to 75% 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…

Ease Of Banking And Doing Business: Again, Panama wins hands down, with its international banking industry (the recently signed exchange of information treaty 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 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, whereas Medellin is an emerging haven, still in the workaround and struggle-to-get-around stage…

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, are working to incorporate Medellin into our long-term retire-overseas plan. We intend to return to the city early in the New Year, with the kids, to shop for a new family home base. We won’t be relocating from Panama (at least not full time) anytime soon, but we look forward to an apartment in Medellin that we can visit regularly.

As I said, my complete report, including full details of how Medellin stacks up as a retire-overseas option and why it’s near the top of my World’s Top Retirement Havens For 2011 list, is featured in the current issue of the Overseas Retirement Letter, due in subscribers’ e-mailboxes later this week…

Kathleen Peddicord

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