The Panamanian economy retracted by as much as 14% in 2020 as a result of the COVID-19 pandemic. Approximately a year ago when the World Health Organization (WHO) announced a global crisis, Panama went from being one of the strongest economies in Latin America to one with the largest contraction.
But, of course, that kind of swing is, in part, because of Panama’s economic strength, and just as the pendulum swings, we are seeing incredible opportunities for growth and development, along with rapid recovery. One area that is solidly in the crosshairs of the Panamanian government to contribute to economic growth is tourism.
Panama Canal Defined The Country
There are many reasons Panama’s tourism has not been as developed as other countries such as neighboring Costa Rica. Historically the Panama Canal defined Panama in much of the world’s eyes. The beautiful beaches, excellent sport fishing, rainforest hikes and animal discoveries, birding, and a 500+ year history as one of the oldest European settlements in the Americas garnered little attention.
With an exceptionally strong services sector economy further bolstered by the Colon Free Trade Zone, insurance, logistics, flagship registry, and international banking, tourism didn’t need to carry the GDP like it did in other countries. Panama’s GDP has always been balanced and strong. With the recent opening of the huge Cobre (copper) Mine, the economy has become even more diverse.
Nonetheless, because Panama is so rich in tourism opportunities, the government has implemented a number of initiatives and infrastructure projects to better develop the sector. A twin cruise ship pier is being finished on the Amador Causeway in Panama City and will begin welcoming ships and passengers as soon as the cruise industry recovers from the pandemic. Gone will be the days when cruisers only traversed the canal and kept going without actually entering the country! Everything from Panama hats to molas are being readied to greet tourists along with guided city, rainforest, and coffee plantation tours.
Eighty-seven Direct Flights To 37 Countries
A new convention center is opening and will capitalize on bringing in attendees from around the globe. Tocumen International Airport has 87 direct flights to 37 countries including Istanbul, Amsterdam, New York, Toronto, and Paris. Single connections bring in the rest of the world. If you are coming to Latin America it is likely you are coming through Panama City. In 2019, more than 18 million people arrived at Tocumen International Airport, but only three million actually entered the country. Lots of connections!
To help increase visitors and develop tourism in Panama, the government recently offered tax abatements of up to 100% on projects that will build infrastructure or grow tourism. According to Roger Kinkead, Director of Investment Banking at MMG Bank, “Panama is sending a strong message to both national and international developers and investors with the announcement of new tourism incentives. These incentives, according to experts, show great potential in welcoming private investment in local tourism and infrastructure development.”
As tourism begins to develop, job creation will be one of the largest benefits for locals and foreign nationals alike. A Panamanian-owned company can only have up to 10% of their workforce as non-Panamanian, but many tour companies in Panama are owned and operated by non-Panamanians and there is no limit to the number of employees who can be foreign nationals. Opportunity abounds on numerous levels. Own a Bed & Breakfast, a small hotel in the Caribbean, run tours through the rainforest, develop a birding business, bake breakfast goods for tour groups heading off on a hike or open a bar and lunch spot for the surfers. Scuba lessons are a big draw along with the resulting retail store of swimsuits, masks, and other gear. Decide to serve some of the world’s best coffee, along with your new friend’s baked goods.
A more robust image for Panama as a tourist destination will be seen world-wide and the increased numbers of tourists will benefit the small investor as well as major players such as hotel chains and tour companies with big luxury buses.
Taking Advantage Of Multiple Incentives!
Couple the coming tourism push by the government with the recent incentives to increase foreign-owned real estate and you will find strong reasons to consider purchasing real estate in Panama. According to Airbnb, Panama enjoys some of the highest rental days with an average of 22 days a month (pre-pandemic). Consider a stunning one-bedroom condominium in Casa Bonita which not only has its own private club and spa but also has access to all the amenities of the adjacent five-star Westin Hotel, Playa Bonita. Multiple restaurants are available including a steak house, a sushi bar, pool grub, and an Italian bistro.
On a smaller scale and with a wider market, Royal Palm offers a family-friendly environment with five pools, an on-site restaurant, a sports court, and open-air social areas. These properties have been one of the most sought-after residential towers for Empresas Bern who has been building in Panama for over 40 years. Located directly on the Pacific Ocean, with a cash option, a one-bedroom can be secured for under $150,000.
Other pre-construction properties are coming on-line in time to capitalize on the 100% tourist tax abatement incentive and the ability to gain residency in 30-days with an investment of $300,000 in real estate. Property tax relief is also in effect and available to individual purchasers.
Medical Tourism Is In The Mix
Costa del Este is booming as medical tourism begins to accelerate with the nearing completion of the second Johns Hopkins International Medicine hospital. Procedures such as hip and knee replacements are being offered at a fraction of the cost now seen in the United States. Life-changing stem-cell treatments, not available in the US, are a booming business in the first Hopkins facility located in Panama Pacifico.
It doesn’t matter if you are considering a condominium for your own to capitalize on the residency incentive or an investment to build a revenue stream and equity by renting to tourists, I’d love to discuss with you the details and options available. Just drop me a line or phone call and let’s get together. These are very exciting times after a year of lockdown and uncertainty.