Monday, November 03, 2008

CNBC covers Latin Fever in Panama

Some people are still bullish on Panama....

Real Estate October 2008

Latin Fever

With real estate bubbles bursting across Europe, investors are heading for booming Latin America, says Sorrel Downer

Sweltering in a battered taxi in the heart of a street market in Panama City, it's easy to forget that this is a top destination for some of the world's most powerful commercial real estate investors. But, owing to the turbulence in the North American and European property markets, Panama, along with Mexico and Brazil, is beginning to look like a safe port in the storm. As European investors look to reduce risk through diversification and higher returns, Latin America is coming under closer scrutiny.

The service, natural resource and manufacturing sectors got the lion's share of the €67bn in foreign direct investment poured into the region last year, but there has been sustained growth in the real estate sector that doesn't look like easing off, and it's real estate that is regarded by many analysts as one of Latin America's best performing assets.

The UK has been slow to go to Latin America. "Sitting here in London," says Thompson, "very few people in charge of funds have Latin America on their radar, mainly because there's very little experience of doing business there, and more interest in Asia and Russia. But people are putting a toe in the water. We're starting in Brazil because of the size and stability, but also looking at places like Costa Rica and Panama - countries where there is genuine wealth, inflation is under control and there's a boom in real estate underpinned by a growing middle class."

Investors see the potential of real estate in Panama City's old quarter, now undergoing renovation, funded partly by foreign capital. But then Panama is full of positive signs: the expansion of the canal, proposals for refineries, and the development of banking, communications, tourism, and call centre industries evoke a certain optimism. Already, there are so many prestigious tower block developments underway along the shoreline of the Bay of Panama that there's talk of a glut. But enterprising investors are finding solid alternatives: financing office developments, for example, sometimes on a large scale such as the €435m 'mini-town' project on a former military base in the Canal Zone for which UK firm London & Regional Properties beat off 16 international competitors; or residential investments in exclusive gated communities and resorts up the coast, on the Azueros Peninsula, and on the Pearl Islands, or retirement communities in the temperate mountains around Boquete.

New arrivals to Panama will find themselves in hot competition with homegrown investors, as well as the North American firms squeezed out from Costa Rica, where land prices have rocketed and prime beachfront land parcels have been snapped up.

More about Panama real estate investments in the Home: World - Panama Buying the Home of your Dreams DVD video from Amazon

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