Panama City property auction seeks qualified buyers

The Panama Stock Exchange reported that an auction will be held for the lot of land and improvements for the Hotel Unicorn (Park Inn by Radisson under construction on Finca 1025) in 44 Street and Justo Arosemena Av., in Bella Vista, one of the prime neighborhoods of downtown Panama City.

Corporate bonds were issued of which about $ 2.7 million were placed on the market for the issuer UHR Development (BVP: UHRD).  The property will be auctioned by the bond trustee to interested qualified buyers under the terms and conditions of said issue.

For more information contact lagrealty @ laglex.com

The appraisal of the property is available in:

Panama Stock Exchange website http://www.panabolsa.com/PDFs/Informacion%20Corporativa/UHRD/informe%20inspeccion%20avaluo%20abr2016.pdf

Slideshare copy http://bit.ly/2bOoZmw

UHR informe inspeccion avaluo para subasta abr2016 from Bolsa de Valores de Panama

Panama’s agriculture sector modernises and looks abroad

Thanks to infrastructure modernisation projects and the ratification of numerous trade deals in recent years, the agriculture sector in Panama is poised for growth. Free trade agreements (FTAs) with the US and several Central and South American countries, as well as an association agreement with the EU, have opened international markets to exports. A government-sponsored overhaul of agriculture transport logistics, including the construction of a “cold chain”, is expected to boost national competitiveness.

In its Strategic Plan 2010-14, the government identified agriculture as one of four areas of the economy that would drive growth, along with logistics, tourism and financial services. This is part due to the sector’s ability to create jobs – it accounted for 17% of employment as of 2011, the most recent data available. Moreover, a number of developments in recent years have set the stage for expansion.

Trade deals

In June 2012 Panama, along with five other Central American countries – Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua – signed an association agreement with the EU. The agreement included trade liberalisation provisions expected to contribute to growth in the fruit, vegetable and nuts market, according to an independent report commissioned by the EU. Europe is Panama’s second-largest trading partner, after the US, and the biggest importer of Panamanian agricultural products.

Panama has also entered into FTAs with the US and the members of the Pacific Alliance: Mexico, Colombia, Chile and Peru. Panama’s FTA with Mexico is expected to be signed in spring 2014. All of these deals have reduced or eliminated agricultural tariffs, expanding the markets to which Panama’s farmers have access.

Enhancing infrastructure

Major infrastructure projects will help the country take advantage of this market expansion. These include the Santa María irrigation system (at a cost of $200m), the La Villa dam ($200m), the Barú irrigation system ($140m), the San Pablo dam ($165m) and the Peralas dam ($105m). Additionally, the Ministry of Public Works has devoted substantial resources to improving roads in rural provinces such as Chiriquí ($60.3m), Veraguas ($42.7m), Los Santos ($41.1m) and Herrera ($40.6m).

The most important infrastructure project for the agricultural sector is the development of a cold chain, a continuous, temperature-controlled supply chain designed to preserve produce from harvest to market. It is an essential component of any modern agricultural industry, and one that has been missing in Panama. The cold chain, which will include refrigerated trucks, post-harvest treatment and storage centres, will initially be used to transport and store types of produce that are sensitive to changes in temperature and humidity, such as peppers, green beans, celery and cilantro.

In 2011 the government awarded a $75m contract to Consorcio Panamá Frío, a joint venture between Outsourcing of Venezuela and Mejores Acabados of Panama, to build four post-harvest centres. These are located in rural, agricultural regions in the towns of Volcán, Cerro Punta, Dolega and El Ejido. As of mid-2013, the government’s investment in the project, including the post-harvest centres, the distribution markets and other elements, totalled $287m.

The cold chain can be expected to significantly boost agricultural output and quality. According to Consorcio Panamá Frío, up to 40% of Panama’s agricultural output is lost to spoilage before it arrives at market. The lack of a modern, temperature-controlled supply chain has also reduced the shelf life and freshness of Panamanian goods. According to the government, the cold chain will guarantee food safety, quality and traceability and will bring Panama’s agriculture logistics and products into line with international standards such as the Codex Alimentarius, ISO 9000 and Food and Agriculture Organisation guidelines, making local goods more attractive to international buyers.

The government expects the cold chain to be fully operational by December 2013 and construction appears to be going to plan. As of mid-2013 distribution markets in David and Panama City had reached or nearly reached the final phases of construction, and Consorcio Panamá Frío had turned over two of the post-harvest centres to the government, meeting its deadlines. With the cold chain operational and markets newly opened to Panama’s produce, 2014 could be a year of significant growth for agriculture sector.

See also http://www.oxfordbusinessgroup.com

Panama: Real estate on solid foundations

Panama: Real estate on solid foundations

Latin America | 7 Aug 2013

The real estate market in Panama is edging towards maturity, buoyed by the booming economy, a major national spend on infrastructure and ample liquidity in the financial system.

Initial estimates from the national statistics agency (Instituto Nacional de Estadística y Censo) suggest the sector expanded by 9% year-on-year in the first quarter of 2013, having notched up average growth of 7.8% in 2012 and 9% in 2011.

Panama City, home to nearly a third of the population, has been the centre of real estate activity over the past decade, with high-end residential, retail and commercial development combining to produce strong growth. New shopping malls and residential complexes have reshaped the skyline, alongside several hotels, evidence of the evolving tourism sector.

The city’s market for office space has been supported by strong macroeconomic growth and new business-friendly legislation, including the setting up of an incentive regime for multinational companies using Panama as a base for regional operations.

Vacancy rates for Class A office projects dropped to 7% from 12% in the second half of 2012, with the average monthly lease rate edging up from $23.30 per sq metre to $24.41, according to a study conducted by CB Richard Ellis (CBRE). New construction of Class A office space eased to pre-2009 levels in the same period, however, suggesting demand could now be levelling off.

CBRE’s study found Panama City’s residential market to be relatively stable. New unit construction eased, in keeping with a rising 76% absorption rate and falling sale prices for Class A real estate. The gross absorption rate across the wider market stood at 77%, with a total of 3346 units reserved from 4330 under construction.

However, there are signs that the retail market in Panama City could be edging towards occupancy saturation. Monthly lease rates fell from $41.31 per sq metre to $40.16 in the second half of last year, while vacancy levels in shopping centres rose from 6.1% to 9.1%. An additional 97,325 sq metres of new retail space was under construction as of late 2012.

Despite its overall impressive growth levels, Panama’s real estate market faces a number of challenges. The country ranked 75 out of 97 nations in the 2012 Global Real Estate Transparency Rankings, behind Mexico (43), Argentina (58) and Costa Rica (70). Jones Lang LaSalle, which publishes the list, described Panama’s transparency level as “low”, adding that a lack of both sophisticated investment vehicles and general market fundamentals were instrumental in determining the country’s position.

Panama also faces a major national housing shortage. The most recent estimates from the Ministry of Housing (Ministerio de Vivienda y Ordenamiento Territorial, MIV), published in 2010, put the shortfall at 136,665 units, against total national supply of 896,050.

The MIV launched a series of social housing programmes in 2010 as part of a target to reduce the shortfall to 30% and increase supply by 4.6%. Once completed, the five-year programme, backed by a $576m investment package, is expected to have benefitted an estimated 344,000 Panamanians. With $268.8m still to be spent, work is expected to accelerate during the second half of 2013 and through 2014.

The real estate sector is expected to continue maturing, with both the private and public sector helping to drive it forward. The government took a small, but significant step forward in May 2012, when it amended its regulations to create a new tax and financial framework covering the purchase and sale of real estate property. The legal changes paved the way for the introduction of key incentives aimed at supporting the housing market, including more favourable interest rates for first-time buyers and tax exemptions for residential home improvements. Ongoing support from the government, together with sustained growth in the private sector, will set the real estate market on course for further expansion in the medium to long term.

For full text see http://www.oxfordbus inessgroup.com/

More information is available in http://www.oxfordbusinessgroup.com/product/report/report-panama-2013

Nikki Beach owners want Panama resort to stop using its name

After 6 years of aggressive marketing, the partners of the Nikki Beach panama development have parted ways. According to court papers filed by Penrod International, a Panama company Casa de Campo Farallon misused its Nikki Beach trademark to open a resort in December 2010 and finally to misrepresent the nature of their termination in a publication of February 10, 2011.

Eventually, the hotel changed its name to Royalton Playa Blanca, after a management agreement was signed with Blue Diamond, a hotel operations company owned by Sunwing Group of Canada. Panama company RG Hotels announced this change in a March 14 press release which still contained the NB word.

While U.S. courts may be appropriate venue for a legal action under U.S. law, a winning plaintiff could find problems when enforcing a judgment against assets abroad of the foreign defendant unless proper notice of the initial action from the beginning.

The 2007 article gives an idea of the high expections under which the original project was sold to individuals. Thse buyers may be the ones left to lose more as they purchased relying on an internationally known brand of the "sexiest hotel in the world".

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Nikki Beach Severs Ties with Playa Blanca Resort

Playa Blanca, Panama (January 2011)

Nikki Beach has severed ties with a condominium hotel project under development in Playa Blanca on Panama’s Pacific Coast.

In 2007, Nikki Beach signed an agreement to operate Nikki Beach Hotel and Resort Playa Blanca, the first condo hotel in this coastal location. The opening was originally scheduled for 2008, but the project was delayed more than two years. The agreement has been terminated and all ties severed. Approximately 80 of the 140 condo hotel units are now finished, and the owner is continuing to market the property as a Nikki Beach Hotel & Resort.

Nikki Beach has no affiliation with the project and does not condone use of the Nikki Beach Trademark which is unauthorized and the subject of litigation.

For further information, please direct all inquiries to Nikki Beach Corporate, 786.515.1130.

Text from Company page http://www.nikkibeachhotels.com/ipage/notice.php cached in Google

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Nikki Beach sues owner of Panama hotel

By Jerry Limone

Full text in http://www.travelweekly.com/Travel-News/Hotel-News/Nikki-Beach-sues-owner-of-Panama-hotel/#

Nikki Beach drops hotel project in Playa Blanca Panama, Due to non-compliance with brand Standards

February 11, 2011 05:44 PM Eastern Daylight Time

MIAMI BEACH, Fla.--(BUSINESS WIRE)-- Nikki Beach recently severed its ties with a condominium hotel project under development in Playa Blanca on Panama’s Pacific Coast, and has taken legal action against the local developer, Panama’s RG Inmobiliaria, according to Peter Higney, director of operations, Nikki Beach Hotels & Resorts, Miami Beach.

“As a global five-star brand, we set certain standards for the design, construction and operation of our properties”

“As a global five-star brand, we set certain standards for the design, construction and operation of our properties,” Higney said. "We have a responsibility to maintain our brand standards and under no circumstances would we allow the developer to use our brand and misrepresent us to our loyal Nikki Beach customers."

On Thursday Nikki Beach filed an injunction in U.S. District Court in Miami against the Panama developer to prevent the unauthorized use of its name, brand and any other intellectual property belonging to the company.

A growing global hotel and resort operator, Nikki Beach has a strong Hotel Division with offices in Europe and the Middle East. The company has 10 projects in the pipeline in locations such as Croatia, Greece, Cyprus, Qatar, Cape Verde, Thailand, Spain and new projects in the making, added Higney.

Referring to the situation in Panama, Higney said that as of August 2010, the local developer had breached an operating agreement by failing to conform to the brand’s standards, architectural guidelines and operating requirements, as well as by misrepresentation of the brand. Additionally, the developer missed the opening date in 2008.

Consequently, Nikki Beach declared the developer in default, but gave the developer another chance to correct the numerous problems found by an on-site inspection in September 2010. When the developer did not respond, Nikki Beach sent a notice of termination on November 22, 2010.

Without Nikki Beach serving as the “exclusive operator” of the resort as called for in the contract, the developer had no right to open the resort in December, 2010 using the Nikki Beach brands, added Higney, since Nikki Beach had no way to insure quality control over such unauthorized use of its five-star brand. “As a global lifestyle brand firmly growing in the luxury boutique hotel niche, protecting our brand’s standards and intellectual property are paramount issues,” Higney said.

Full text in http://www.businesswire.com/news/home/20110211006243/en/Nikki-Beach-Drops-Hotel-Project-Playa-Blanca

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Nikki Beach owners want Panama resort to stop using its name

The Daily Business Review

...Panama resort to prohibit use of its name. Miami Beach-based Penrod International, which operates Nikki Beach, claims in a lawsuit filed Thursday in...

02/14/2011 John Pacenti Subscription Required

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Penrod International LLC dba Nikki Beach v. Casa de Campo Farallon, S.A. dba Nikki Beach Playa Blanca Resort et al

Date # Docket Text 2/11/2011 6 MOTION for Preliminary Injunction and Supporting Memorandum of Law by Penrod International LLC. (Attachments: # 1 Exhibit A, # 2 Text of Proposed Order)(Peretz, Steven) (Entered: 02/11/2011) 2/11/2011 5 Clerks Notice to Filer re: Electronic Case - Documents Improperly Arranged. The Filer did not properly attach the Civil Cover Sheet & Summons. Future filings must comply with the CM/ECF Civil Case Opening Guide. It is not necessary to re-file this document. (vjk) (Entered: 02/11/2011) 2/11/2011 4 FORM AO 120 SENT TO DIRECTOR OF U.S. PATENT AND TRADEMARK (vjk) (Entered: 02/11/2011) 2/11/2011 3 Summons Issued as to Casa de Campo Farallon, S.A., Rugiere Galvez. (vjk) (Entered: 02/11/2011) 2/10/2011 2 Judge Assignment RE: Electronic Complaint to Judge Jose E. Martinez (vjk) (Entered: 02/11/2011) 2/10/2011 1 COMPLAINT for Compensatory Damages, Treble Damages, Statutory Damages, Injunctive and Declaratory Relief and Attorney Fees against Casa de Campo Farallon, S.A., Rugiere Galvez. Filing fee $ 350.00 receipt number 113C-3511301, filed by Penrod International LLC. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10, # 11 Exhibit 11, # 12 Civil Cover Sheet, # 13 Summon(s) Casa De Campo, # 14 Summon(s) Rugiere Galvez)(Peretz, Steven) (Entered: 02/10/2011)

Court documents available in:

http://www.rfcexpress.com/lawsuits/trademark-lawsuits/florida-southern-district-court/70986/penrod-international-llc-dba-nikki-beach-v-casa-de-campo-farallon-s-a-dba-nikki-beach-playa-blanca-resort/summary/

http://www.scribd.com/doc/48621718/Penrod-International-v-Casa-de-Campo-Farallon-et-al

CASA DE CAMPO FARALLON, S.A.

PRESIDENTE RUGIERE GALVEZ

TESORERO MARUQUEL GALVEZ

SECRETARIO AURISTELA DE NARANJO

VICE-PRESIDENTE MARIO GOMEZ ESTRADA

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Industry Insiders: Jack Penrod, Nikki Beach Principal

By Marcy MacDonald December 21, 2009

A family tragedy led entrepreneur Jack Penrod to choose a garden spot at his beach resort and name it after his daughter, Nikki. After some outside influences expressed interest in the location, Penrod decided to allow the garden to be used for parties and events, and it eventually became the well-known Nikki Beach Miami. The empire now includes locations in Cabo San Lucas, Marrakech, Marbella, Koh Samui , New York, Panama, St. Barts and Toronto, to name a few. The avid pilot and diver manages the jet set-friendly brand with his wife, Lucia and talks about the humble beginnings of a nightlife staple after the jump.

Full text in http://www.blackbookmag.com/article/industry-insiders-jack-penrod-nikki-beach1/14445

Comments by buyers in http://www.blackbookmag.com/comments/industry-insiders-jack-penrod-nikki-beach1/14445#comment-1

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Nikki Beach Panama holds "Launching with Stars" http://mensual.prensa.com/mensual/contenido/2008/01/26/hoy/sociales.shtml Photo: Lucia Penrod and Rugiere Galvez, from prensa. com

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Nikki Beach is Coming to Panama

By Mona Sutherland Published: 2007-01-22 Mona Sutherland

Mona Sutherland is the Search Marketing Specialist for WSI Panama.

A key player in the impressive growth of Panama real estate is the recently arrived Nikki Beach. Nikki Beach, created by Michael Penrod, is one of the trendiest beach clubs in Miami, frequented by celebrities and models. Nikki Beach possesses facilities in Miami and Hollywood in Florida, New York City, Saint Bartholomy in the Caribbean, Cabo San Lucas and Puerto Vallarta in Mexico, Marbella in Spain, Sardinia and Saint Tropez in the Mediterranean, in Morroco, and now, in Panama. Two hotel projects will be constructed and will operate under the brand Nikki Beach, one in Playa Blanca and the other at the Amador Causeway.

Michael Penrod, the international representative of Nikki Beach, was in Panama the first week of December to attend the launch of Destiny Real Estate Sales & Marketing. At the launch party, Destiny Real Estate & Sales presented three real estate developments to be constructed in 2007, which will be primarily promoted to the United States market. The three real estate developments represent a combined investment of 110 million dollars.

The project Casa Grande Luxury Beach Community involves a total investment of 60 million dollars over its three stages. The project, administrated by Nikki Beach International, will be located in Playa Blanca and possess a Polynesian style residential community, including a 100-room condo hotel and resort. Construction will commence in January 2007 and the first phase is scheduled for completion in December 2007.

Nikki Beach will construct the Panama Canal Hotel & Spa on the Amador Causeway, between the Yatch Club and the soon-to-be Ghery Museum. Approximately 30 million dollars will be invested in the Panama Canal Hotel & Spa, and construction will begin mid-2007. The arrival of Nikki Beach may attract a new crowd to Panama.

Traditionally, Panama has been an attractive destination for retirees, baby boomers and snowbirds. However, the concept of Nikki Beach is quite distinct from these other groups. Nikki Beach is focused towards an exclusive market: People over 30 with purchasing power that want to have a good time in an exotic, unique environment.

Nikki Beach is exclusive property of Michael Penrod and his family, though at some of their clubs and hotels they do maintain strategic alliances with local investors. Also, they own their own magazine, music division, clothing line and television station.

How did Nikki Beach arrive in Panama? Raul Almeida, Puerto Vallarta’s Nikki Beach representative, reveals that they were in search of new markets when they met Rugiere Galvez, president of Destiny Real Estate, who proposed the ideal. After they visited Panama, the rest was a matter of sorting out the details.

Panama could be the new destination for this exclusive market of “jet setters.” Almeida, stressing the positive economic impact that these projects have on a region’s tourism industry, spoke about the group of individuals that travel to other countries for a weekend’s entertainment, and that Panama could soon become a hit destination for this distinct crowd.

Penrod, who spent his entire visit signing contracts with 5 new hotels that will operate under Nikki Beach, added that they plan to offer a place where tourists and personalities can come during the winter to have a good time.

Pendrod has seen in Panama an “international environment” and believes that Nikki Beach will complement those characteristics. His aspiration is to make “something big” in Panama, such as celebratory parties for film or fashion festivals, such as those in Cannes and Venice.

From panamarealtor. com

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Panama Arbitration Panel Rules in Favor of Foreign Property Buyers

A decision from a Panama arbitration panel upholds rights of foreign property buyers against local real estate developers.

Panama City, Panama ---- The Panama Center of Conciliation and Arbitration rendered an interesting decision regarding a purchase contract involving local companies as sellers and U.S.-resident foreign nationals as buyers of an apartment in Panama City. The decision is an exception to a string of abuses committed by local developers against foreign investors.

The economic group which developed and sold the residential apartment project and its individual architect as member of said economic group were condemned indistinctly to pay to the foreign promissory buyers the price of the property plus interest until the actual day of its payment, as remedies for damages caused by the defendants for an unilateral breach of the contract, with bad faith being found in their behavior.

The promissory sellers failed to communicate the promissory buyers when the construction of the project began in order to collect the second installment of the purchase price of a condo unit, as required by a promise contract which only stated “second payment must be made 30 days after construction begins”.

Instead, the sellers disposed of the condo unit and sold it to a third party –when the promissory buyers were on time to make the second payment. The promissory buyers later received a letter from the developer informing of their unilateral decision to end the contract because payments were not received in a timely manner which allowed for early termination. The developer offered to return the deposits only if the promissory buyers signed a liability waiver.

Lombardi Aguilar & Garcia in Panama served as legal counsel for the promissory buyers. The legal team of the firm included Guadalupe Martinez-Casas, an attorney with experience in international arbitration cases before fora such as the Court of Arbitration for Sport (CAS) in Lausanne, Switzerland. Ms. Martinez-Casas is a foreign law consultant in Argentine law, who previously served as attorney at the Buenos Aires firm of Llerena & Asociados. She is a graduate of Universidad Latina de Panamá (MBA), Universidad Torcuato di Tella (LLM and Economics), and Universidad de Buenos Aires - UBA (LLB).

About Lombardi Aguilar & Garcia
Lombardi Aguilar & Garcia was created as an alternative for clients worldwide who seek fast, innovative and effective solutions to their legal problems. The firm currently provides services to individual and corporate clients in Panama as well in the Americas, Europe and Asia. Its partners maintain a commitment with professional ethics and social responsibility by participating in the board of directors of groups such as the Panama Bar Association, the German and the American Chambers of Commerce (AMCHAM) of Panama, and the Association of Chinese-Panamanian Professionals (APROCHIPA).

The firm centers its law practice in private client services and asset protection (Private Interest Foundations, Trusts), business structures (Offshore Corporations), tax planning, real estate and e-commerce. It also advices in areas of Law such as Corporate, Commercial, Intellectual Property, Maritime, Tax, and Immigration Law as well as related litigation that may arise.

For more information, contact +507 340-6444, +507 66388707, e-mail aaguilar (at) nysbar.com, or see: Lombardi Aguilar & Garcia http://www.laglex.com/

Keywords: Panama, real estate, property, investment, litigation


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See also Lawsuits against developers increase
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Movement at former Ice Tower construction site

A building crane is being set up and work continues at the site of the former Ice Tower. The builders of the former project refunded the down-payments to prospective buyers or consigned the deposits with local courts in order to wind-up the former project.

Ice Tower Reader

Panamanian law gets you financing at 2% to 3% interest rates until 2008, or later ...

Banks granting residential mortgages for new residences below US$62,500 receive a negotiable tax credit equivalent to interest reduced in 2 to 4 points below the prevailing rate (see http://mypanamalawyer.blogspot.com/2006/10/buying-your-real-estate-in-panama.html).

This has made financing the construction of houses an attractive business for banks, who after earning the tax credit can assign or transfer it to another company which has to pay a lot of taxes, but at a discount. The benefit stems from a little-known Panamanian law that gets you financing at 2% to 3% interest rates. The law expires this year 2008. http://mensual.prensa.com/mensual/contenido/2005/01/09/hoy/negocios/102717.html

For the buyer, this translates into having to repay a mortage loan at interest rates 3.2% to 4% less than what the government considers as the "Reference Rate", under Law 65 of October 29, 2003 , as long as the home is the main residence of the borrower and its purchase value does not exceed US$62,500.

What is more, if the home has a purchase value below US$16,000, the final interest rate to the borrower can be of 2%. http://www.martesfinanciero.com/history/2005/07/19/columnas/nacional_3.html

For example, the government Superintendencia sets the Reference Rate (TRM) at 8.25% http://www.pa-digital.com.pa/archive/11122003/finance01_slim.html A bank would get a 4% credit rate for financing the purchase ofa US$62,000 home, so the borrower would repay at a 4.25% rate. For a US$24,000 home, the bank gets a 5% credit, so the borower gets a 3.25% rate loan.

With the current TRM at 6.5% under Memo CFL 3-85 2-2008 you can use this formula to calculate the final loan rate:

TRM - Bank Tax Credit points = Final Loan Rate


This means that the law does NOT provide benefits if:
1) The home was purchased for more than US$62,500 (this may get you a 700 sq. foot apartment or studio in the banking area, or a 2 bedroom house in a working-class commuter town),
2) The borrower expects to buy the property under a corporation,
3) The borrower already has more than 1 home under his/her own name.
4) The borrower is a foreigner buying a home to apply for a Solvency Visa (which requires an US$80,000 home)

Developers are recommending to increase the cap for benefits to homes up to US$85,000, since the US$62,500 limit was set under the first preferential interest rate law 3 of 1985. This benefit is regularly renewed thanks to the construction lobby, although many developers and real estate agent are expected to push buyers into signing the dotted line with the story that interest rates will go up.

If anybody misses the 2008 deadline, it is a good thing to know that the 5-year laws have been renewed like clockwork under Laws 3/85, 11/90, 5/94, 28/95, 30/99, 50/99 and 65/2003.

23 developers fined for deceptive advertising

A block to speculation has been the prohibition to advertise residential projects for which no construction permit has been issued. As the Ice Tower project showed many investors, reservation fees are kept by the developer for a number of months and the builder deems the project "not viable" or if not enough units are sold, the fees are returned to buyers without any interest.
According to the Panama City Municipality website, the builders of 23 projects have been fined for up to US$100,000 per project for infringing municipal urban development regulations, incurring in deceptive advertising and deceiving buyers ("infringir las normas municipales de urbanismo, incurrir en la práctica de publicidad engañosa y estafar a los compradores"), as allowed by Law 6 of February 1, 2006, modified by law 45 of October 31, 2007.
According to the La Prensa February 1 print edition, some of the projects fined are:
Mystic Villas
The Plaza Costa del Este
The Plaza Obarrio
The Ritz
Altos del Golf Bijao
The World Gallery
Altos de Colina Campestre
Coral Hill
Park Plaza
PH Bambú
The Pavillion Tower
Alcalá Tower
The Municipal Engineering pointed out that all projects must have a pre-approved plan before advertising at home fairs, billboards or the media.

Clauses in real estate contracts confirmed as abusive

http://mensual.prensa.com/mensual/contenido/2007/12/01/hoy/negocios/1191494.html

After the 8th Circuit Judge rendered an initial May 31, 2007, decision in the Duque vs Neto S.A. case in favor of the buyer of a condo (see Tough times for sellers of Panama City skycrapers?), the Third Superior Tribunal confirmed the decision on appeal.

The Tribunal only considered as non-abusive a clause which allows the developer to charge 1% of the price until the registration of the sale, which leaves as abusive clauses:

• A 5% unilateral increase in the purchase price if the seller deems that building materials have increased in price,
• The seller to withhold all previous downpayments if it unilaterally considers that the buyer is in default of agreement obligations,
• The seller to unilaterally decide not to build and simply return all downpayments without interest and with the seller waiving all claims for said action,
• All disputes to be subject to arbitration excluding the consumer protection courts.

The defendants Neto, S.A., are entitled to file a cassation action before the Supreme Court. Although precedent is not fully binding on other judges and this case does not declare void clauses in other contracts, it provides powerful arguments to those buyers suing developers with contracts that have similar clauses.

This consumer protection case serves only those buyers - foreign or locals - who have a single home in Panama. Those who are buying several properties for resale are not protected by the concept of abusive clauses. Needless to say, the expense of having a contract in Spanish translated into the buyer's language goes a long way towards avoiding running into an abusive clause.

You can sue a builder after 1 year

Many contracts drafted in Spanish by Panamanian builders - and gladly accepted by many real estate agents claiming to act in best agent of the foreign buyer - have a clause which says:
THE APARTMENT shall include the following warranties FOR REPARATIONS: one (1) year from the date of the certificate of occupancy, except in cases of negligence due to THE PROMMISORY BUYER’s use or abuse.

The term may vary to read 1 year from the date of signing of the promise agreement or registration of the final deed.

When faced with claims for tiles popping up from the expansion of poorly dried floors, leaks into penthouses during heavy rains, plywood kitchen furniture bulging because of water dripping from substandard plumbing, many builders point to said clause to tell the buyer to go somewhere else.

Enter the old 1917 Civil Code, which in Article 1343 states:
"The contractor of a building which was damaged for construction defects ("vicios de la construcción"), is liable for the damages and injuries if the defect ("ruina") occurred within a term of 10 years, counted from the date when the construction ended; the same liability, and for the same time, will have the architect who directs it, if he knows that the defect is due to the soil or the management.
"If the cause was the breach of the contractor to the contract conditions, the action for indemnization may last 15 years."

An essay RESPONSABILIDAD CIVIL POR DEFECTOS EN LA INDUSTRIA DE LA CONSTRUCCIÓN by Dr. Pedro Barsallo points out how the Spanish Supreme Tribunal has been holding that the developer must also be liable for thos contractor liability, under Article 1591 of the Spanish Civil Code, which has the same text as Article 1343. This is specially important in Panama, where a buyer may sign a promise to purchase agreement with one corporation (for example: LANDHOLDING, S.A.), at the offices of a developer (PROMOTOR DEVELOPMENTS, S.A.), which in turns hires another company to be the contractor and get construction permits (BUILDER ENGINEER, S.A.) and another corporation is subcontracted to do windows and/or kitchens (INCOMPETENT SUBCONTRACTORS, S.A.), usually all with the same directors and most likely the same shareholders.

The Panama Supreme Court has been quoting the essay in several decision against builders, such as :
ROBERT TOLEDANO et al v PROVENCO, S. A., VENTAS Y PROYECTOS, S. A., PROYECTOS Y EDIFICACIONES, S. A. and CIELO RASO, DIVISIONES Y AISLAMIENTO, S. A. (July 3, 2001): PROVENCO, S. A. and PROYECTOS Y EDIFICACIONES, S. A. were found liable for US$33,222K in damages, out of US$60K claimed for losses during 14 months of repairs at the Mar Plaza condo in Marbella.
PRODUCTOS DEL MAR Y DEL CAMPO, S. A. and PASTAS FRESCAS, S.A. vs BASTIDAS, S.A. and CONSTRUCTORA VILLARREAL, S.A. (January 30, 2003): CONSTRUCTORA VILLARREAL, S.A., was found liable for US$40K in damages caused to neighboring complainants while working in the land of BASTIDAS, S.A.

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Town hall meetings on new skyscrapers are open to property owners

Following the succesful lobbying by neighbors of El Cangrejo against skyscrapers, the Ministry of Housing (MIVI) is having a number of town hall meetings (cabildos) in order to have the opinions of residents for and against additional construction.
Neighbors rejected 3 out 4 zoning changes proposed in Bella Vista, where older homes in 2-lane streets are being demolished every week to make way for skyscrapers and restaurants with insufficient parking.
The calendar of meetings scheduled by MIVI are:
.27 AUGUST: San Francisco (includes Paitilla and Boca la Caja).
.28 AUGUST: Juan Díaz (includes everything at each side of the Southern Corridor starting from Costa del Este).
.31 AUGUST: Parque Lefevre (includes Panama Viejo).
.3 SEPTEMBER: Pedregal.
.4 SEPTEMBER: Las Cumbres (includes Cerro Azul).
.5 SEPTEMBER: 2nd Bella Vista meeting.
.6 SEPTEMBER: 24 de Diciembre (includes parts of Tocumen).
Foreigners cannot vote in Panama elections, but as property owners they can participate in these town hall meetings.

Tough times for sellers of Panama City skycrapers?

http://mensual.prensa.com/mensual/contenido/2007/07/15/hoy/negocios/1048739.html

120 draft construction proyects have been approved for buildings above 25 stories and 80 more have been applied for.

The value of construction permits in Panama City for Jan-Apr 2007 is of 321.9 million - 30% more than for the same 2006 period. 15 skyscrapers above 50-stories are already in the pipeline.

Ministry of Labor Executive Decree 15 of 2007 seeks to address the increasing number of worker fatalities in skycrapers by requiring that builders of projects above US$1million have an independent Safety Official. The issue was brought to the public's attention after several days of small demonstrations by trade unions.

The Executive Decree imposes a US$10,000 contribution to an Occupational Safety, Higiene and Health at Work for the Construction Industry Fund, run by the Ministry of Labor. Where I come from, that is called a tax, which cannot be enacted by Executive Decree, and is therefore unconstitutional.

Builders are not happy...

In a related story, the Minister of Housing signed July 13 a resolution imposing a 14-story limit on buildings around the Andres Bello park of the El Cangrejo neighborhood, as well as 5-meter clearance.

Residents of the 60-year old neighborhood lobbied the government for this limitation, being the first time residents succesfully curb the current construction boom. Destruction of sidewalks, debris (or workers) falling off construction sites, noise of machinery during evenings, cement poured unto streets and sewers (with the resulting overflow of fecal matter) and other inconveniences have made Panama City construction companies a very unwelcome corporate citizen, affecting current neighbors and even incoming snowbirds seeking their balcony in paradise.

In the meantime, the III Justice Tribunal has to decide on the appeal filed by a Panama corporation against a May 31 judgment of the 8th Civil Circuit Judge, whereby some clauses of a purchase agreement are deemed "abusive". The case started when the Consumer Protection Authority received the complaint of the buyer of a San Francisco apartment who signed a form agreement prepared solely by the seller with no negotiation. The judgment deemed as abusive 5 clauses which provide for:

• A 5% unilateral increase in the purchase price if the seller deems that building materials have increased in price,
• The seller to withhold all previous downpayments if it unilaterally considers that the buyer is in default of agreement obligations,
• Billing the buyer a 1% monthly charge on the amount outstanding after issuance of the occupation permit, whether the buyer uses the apartment or not,
• The seller to unilaterally decide not to build and simply return all downpayments without interest and with the seller waiving all claims for said action,
• All disputes to be subject to arbitration excluding the consumer protection courts.

We can expect that after the appeal is decided, the defendant sellers will file a cassation action before the Supreme Court, so a final decision will take years to be effective.

URLs (Yahoo registration required):
http://groups.yahoo.com/group/Live_in_Panama/files/Jurisprudencia/Sentencia_55_07_promesa_inmueble1.pdf

http://groups.yahoo.com/group/Live_in_Panama/files/Jurisprudencia/Sentencia_55_07_promesa_inmueble1.pdf
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Ice Tower Reader

For those following Panama real estate trends, here is a collection of links on what is to be the tallest building in Latin America:

http://biblioteca.prensa.com/contenido/2007/06/27/27-44a-noti2.html

F & F properties Ltd., Inc. The Century Tower Ave. Ricardo J. Alfaro, Tumba Muerto 9 floor, office 916 Panamá City Panamá Republic

Tel: (+507) 262 4978 / (+507) 262 0976
Fax: (+507) 279 0565
E-mail: Sf@sinfo.net
Web: http://www.ffproperties.net/

The company

The Successful promoters of Platinum Tower, Century Tower, Bellagio Tower (Ander construction), Ocean One (comino soon) and the Mirage, F & F Propierties, Ltd., Inc., that mixed luxury, security and comfort, a combination which favours the pleasures of modern living, at excellent prices.

Renown for our prestige, solidity and reliability, and creators of exclusively designed projects with trademark excellent quality, F & F Properties, Ltd., Inc., exceeds the expectations of our clients. We are well aware of the demanding tases of clients who wish to live in an exclusive area at competitive prices. Our track record is Prof. Of our capacity to respond to these demands.

Characterized by our innovate style, F & F Properties, Ltd., Inc., has developed in only a fer years, architecural creations valuing over US $ 250 million, a track record that provides a guarantee for every project we launch.ee also:
Interview with Saul Faskha, President of F&F Properties

...read more! (Spanish)

http://www.winne.com/dninterview.php?intervid=1678
Entrevista con F&F Properties

Lo que sí pretendo es ponerme en contacto con alguna cadena hotelera para crear el mejor hotel del país en la Avenida Balboa donde poseemos un terreno para construir un edificio de unos 104 pisos con apartamentos de entre 100 m2 y 200 m2 que podría albergar también un hotel, y cuyo nombre será “ICE”.

http://www.skyscrapercity.com/archive/index.php/t-299809.html
El reto de llegar a la cima
Pinzon Lozano architects assume the challenge of designing the Ice Tower.

http://www.sovereignsociety.com/offshore1611.html
Whereas amateurs continue to speculate in red-hot "bubble" markets across the American coastline, Panama City is truly one of the greatest real estate investment deals of the decade.... The plans are even in the works for Latin America's largest hotel and condominium project - the 101-story Ice Tower, now under construction on Panama City's prestigious Avenida de Balboa bordering the Pacific Ocean approach to the Canal.... As the city continues to draw yield-hungry investors and bargain-seeking residents, Panama City is quickly becoming the next "big" thing for international real estate investors. ... (Sovereign Society, April 7, 2006)

The Mossfon Report
Another mega building project in Panama City comes with the recent announcement of the construction of the ‘Ice Tower’ by Saul Faskha. This residential skyscraper with more than 100 floors will be a landmark structure, being the tallest residential building in the world and the tallest building in Latin America. Ice Tower will have the same altitude as the Empire State Building in New York City. This project is also slated for completion in 2009. (May 2006)

http://primapanama.blogs.com/_panama_residential_devel/2006/12/is_the_ice_towe.html
Is the ICE Tower on ICE?
The developer has somebody to write letters to him...

http://biblioteca.prensa.com/contenido/2007/06/23/23-25a-noti1.html

Mario A. Muñoz, La Prensa

The dream of a US$37.5 million, 104 story and 381 meter-high work vanished. “We are acknowledging buyers' rights and we are reimbursing our clients”, said Verónica Ng, engineer in charge, on behalf of the project, owned by F&F Properties.
Another building will be made "with prices in accordance to market reality."

http://www.panama-guide.com/article.php/20070624132843583
Pilotec and Cemex Execute 1,150 m3 Concrete Pour at the Ice Tower

http://primapanama.blogs.com/_panama_residential_devel/2007/06/ice-tower-vanis.html
Ice Tower "Vanishes" in the local press.

http://biblioteca.prensa.com/contenido/2007/06/27/27-44a-noti2.html
The Real Estate Agents Association called for changes to the law which reduce the risk of buyers when a project is not built. The Consumer Protection Agency is analyzing some of the clauses in real estate contracts.

http://www.autoridaddelconsumidor.gob.pa/pdf/NP_INMOBILIARIAS_AJUSTAN_CONTRATOS_%2028-06-07%20MAF.pdf
Consumer Protection Agency informs that real estate companies are modifying their contracts, after Circuit Judge 8 deemed as "abusive" clauses which allow unilateral increases of 5% in price and charges of 1.5% from the moment the occupation permit is issued.

http://biblioteca.prensa.com/contenido/2007/06/27/27-44a-noti2.html
On May 31 the 8th Circuit Court declared "null as abusive" a clause similar to that in Ice Tower contracts which gave preferences to the seller to unilaterally terminate a contract.

http://mensual.prensa.com/mensual/contenido/2007/07/15/hoy/negocios/1048730.html
Ice Tower sellers only will refund downpayment to promissor buyers who sign quitclaim.

http://www.prweb.com/releases/2007/8/prweb543861.htm

Homes Real Estate announces new Miami office and "their latest exclusive mega project at the party, the Iron Tower, which is set to be located on the trendy Avenida Balboa in downtown Panama City. F & F Properties latest signature construction project will stand 75 floors in height and come complete with a 250 room Hilton Hotel on site. Residential units in the Iron Tower will range between 100 square meters to 200 square meters in size making this one of the largest developments in Latin America. This star studded Grand Opening gala will be held at the Vizcaya Mansion in Miami with a special guest appearance by the face of the Iron Tower project, Paulina Rubio."

http://mensual.prensa.com/mensual/contenido/2007/07/15/hoy/negocios/1048730.html
Javier Arias reveals that :

Ice Tower denies ever sending a letter to buyers of Ice Tower notrifying of the cancellation of the project,
The project is being reduced to 85 stories because of cost increases,
Buyer Bruce Young was forced by the sellers to sign a quitclaim in order to have his downpayment refunded,
Eng. Veronica Ng denied that a quitclaim was been forced on buyers to get their refunds,
Architects Pinzon Lozano designed a plan for the morphed "Iron Tower" dated July 17, 2007, but the sellers deny their validity.

http://mensual.prensa.com/mensual/contenido/2007/08/09/hoy/negocios/1074918.html
Mario Munoz from La Prensa reports that one of the projects not approved by the Municipality, "the Iron Tower, the skyscraper which was to replace Ice Tower, was going to have its official launching in Miami this week, but the event was cancelled. The organizers said it had been a mistake.