Charles and Sharon Erwin, two semi-retired residents of Mobile, Alabama, have spent much of the past few years travelling the world in search of a second property to which they can escape during the colder months. Between leisurely holiday trips and more active searching, the couple have visited more than 40 countries so far. But tonight, they are sitting in a cosy family restaurant in the hills of Panama and they sense that their quest for the ideal spot has come to an end.
"Have you ever met somebody you just liked immediately?" asks Mrs Erwin, an elegantly dressed woman with fine features and an intoxicating southern drawl. "Well, the Panamanian people are mostly like that."
Now 71 and 62, respectively, Mr and Mrs Erwin are part of an invasion of foreigners who are snapping up Panamanian real estate in every shape, size and location imaginable as part of what has turned into the most vigorous property boom in decades. "It is as if they were rediscovering America again," says Lourdes Fabrega, the restaurant owner who says an increasing number of her customers are foreigners on a hunt for property.
In Panama City, the capital, real estate developers have responded to the foreign interest as well as to strong local demand by building tower blocks of luxury flats on just about any plot of land they can get their hands on. Last year, construction permits surpassed $1bn, growing more than 10 per cent compared with the previous year. Iván Carlucci, president of Acobir, the national association of estate agents, says Panama is the target for 175 high-rise apartment blocks, which are either under construction or in the pipeline.
The surge has been so great that the government has had to establish special courses to cater for the growing demand for plumbers, electricians, carpenters and other construction-related skills. Diomedes Concepción, who heads the programme, claims that about 200,000 Panamanians will receive such training this year alone.
The fundamental reasons for the interest in Panama seem clear enough. Investors, particularly foreigners, are reassured by the fully-dollarised economy, the country's stable government, rapidly expanding economy, proximity to the US, hot climate and good healthcare provision. In addition, prices are relatively competitive in relation to those of neighbouring Costa Rica, which has been attracting foreign buyers for years. Juan Francisco Pardini, president of Business Panama Group, a one-stop investment shop, says property prices about five years ago were between eight and 10 times cheaper than those of Costa Rica: today, they are just three times cheaper.
Mr Pardini also points out that buying property in Panama is straightforward in terms of paperwork and bureaucracy. Typically, he says, charges related to purchasing real estate regardless of value are roughly $3,000 plus an optional fee of 1 per cent of the property's value for title insurance.
Inevitably, however, all the interest has produced inflation. The cost of steel went up 40 per cent at one point last year. Meanwhile, the availability of cement at the start of this year became critical. In February, Ms Fabrega, the restaurant owner, could not ensure a reliable supply for the small house she was building on her land. "If I wanted 10 sacks I could only get five," she recalls. "It felt as if there was no cement in the entire country."
Property prices have also risen. Mr Carlucci says that land prices have increased on average 100 per cent in the past two years alone.
Such rises have spawned talk of a bubble forming in the real estate market. The feeling has been reinforced by growing evidence that some investors – from the US but also, it appears, from Venezuela and neighbouring Colombia – are buying pre-sale condominiums in bulk to "flip" or sell them on as little as six months later.
On top of that, three highly publicised high-rise projects in Panama City have run into problems – though apparently for different reasons – and have either been cancelled or significantly altered.
All this has led many experts to express caution about whether the market can continue to expand at today's rates. As Guillermo Chapman, an economist and a former finance minister, says: "You should look at the housing part of Panama's growth with a critical eye."
Not everyone agrees, however. Mr Carlucci of the real estate association, rejects the idea of a bubble, arguing that the sector is both healthy and sustainable thanks to Panama's strong economy and real demand both from locals and foreigners.
Héctor Alexander, the finance minister, agrees. "The few projects that have run into problems are the exception to the rule," he says. "The construction sector is sustainable."
True or not, it is unlikely to make much of a difference for families such as the Erwins. Even with the price increases they still think it is cheap. And that, as Mr Erwin admits, is important to a man of his background. "I was brought up kind of frugal, and I just hate to spend money," he says with a smile.
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