Investment propels a real estate boom for Panama

Stability and a steady growth rate are helping to transform this regional hub.

from the November 26, 2007 edition

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The nation's airline, Copa Airlines, is marketing itself as an alternative to Miami for travel throughout Latin America. Multinational firms such as Caterpillar Inc. have moved or are moving their Latin American operations to Panama.

"Today it's probably the Switzerland of Central America. It has a stable, democratic government that is passionate about business," says Ian Livingstone, managing director of British firm London & Regional, which is managing the 3,500-acre Air Force base project outside Panama City that is to be a self-sustaining city.

Growing too fast?

Beyond a glittering skyline and barrage of blueprints lie troubling signs, too. Many caution that Panama is growing too quickly, and that the benefits will not trickle down to the nation's poor.

One result of the boom has been a dramatic rise in prices. Median apartment prices for those sold by Empresas Bern, for example, jumped from $150,000 for 1,000 square feet to $350,000 for the same space in just three years, says Mr. Bern.

Many are concerned that this will squeeze the poor even further. "I think economic growth is good, but it has to go hand in hand with some planning and some policy, so that growth does not overcome the capacity of the country to respond to people's needs," says Carlos Guevara-Mann, a Panamanian political analyst who teaches at the University of Nevada, Reno.

He says that the boom, while temporarily providing jobs in construction, will not trickle down to the nearly 40 percent of residents who live in poverty, and that they will be the hardest hit if it busts.

Carlos Lopez, a taxi driver, represents the two sides of changes taking place in Panama.

He is fed up most days, as traffic inches along the main waterfront avenue during rush hour. His father and brother, however, both work in construction and are seeing more employment than they have in a long time. "That's now," he says. "What is going to happen when it's over? They will get rich, and our neighborhood will still be just as poor."

One thing is for sure: The city will never be the same. "Panama has come into its own," says Sandra Snyder, author of "Living in Panama," whose recently published second edition reaches out to the growing number of American retirees moving to Panama City and the beaches and mountains throughout the country.

The impacts are both imperceptible and as obvious as they come. On one recent day, Ms. Snyder sat on her porch, with a sweeping view of the bay, counting 25 new buildings since she and her husband moved into their apartment five years ago. "No," she says, pointing to a high-rise she missed. "Twenty-six."

But at least she can keep count still – for now.

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