“The area is still very secluded and in its early stages,” says Frank Morrice Arias, a real estate agent with Century 21 Semusa Realty.

For anyone who envisions Panama as a sleepy, bucolic country, the first view of the capital city may come as a shock. The skyline of Panama City, which edges the Panama Canal, bristles with high-rise business towers and residential condominiums—and construction cranes that signify more buildings are on the way. The country's reputation as a hot new destination (there are frequent comparisons to Costa Rica a dozen years ago) is based as much on the capital's high-energy urban lifestyle as it is on the beautiful beaches of its Pacific and Caribbean coasts or its lush, mountainous interior.

“Panama City is like Manhattan.” Says Terry Theodorou, a certified international property specialist based in Southern California, who adds that luxury goods in Panama (“high-end products, like Jimmy Choo shoes”) are easy to find.

The building boom in Panama City, the country's banking center, began in the 1990s. Panama is known for being very friendly to foreign investors and would-be homeowners from the United States, offering tax incentives and a dollar-based economy (the currency is the balboa). “We love Americans.” Theodorou says, emphasizing Panama's “low inflation, good infrastructure, cheap phone rates and good cell phone service.” And the Panamanian government has worked hard to overcome a national image that many still associate with the Noriega years.

Some of the recent development can be traced to land that became available after control of the canal was transferred to Panama in December 1999. “In the Albrook and Clayton areas [around U.S. military bases that closed at that time], prices are rising 25 percent a year,” says Theodorou. “In the surrounding areas, developers have been buying and developing.”

Most of the upscale real estate in Panama City consists of futuristic high-rise condominiums, which are attractive to foreigners for their security and convenience, notes Morrice Arias, and which cost roughly $120 to $150 per square foot. The apartments tend to be sizeable: In the central Balboa Avenue area, for instance, the 44-story oceanfront Vista Marina development has 7,009 square-foot, four-bedroom penthouses that range up to $950,000.

In the Punta Pacifica area, once the site of the local airport, 10 different developments are going up, Morrice Arias says, comprising 15 to 20 buildings in total. In one, the Bellagio tower, four-bedroom apartments are 6,500 to 7,000 square feet and cost $800,000 to $850,000.

The Costa del Este, at the eastern edge of Panama City, a single “first-world-type development” on 800 acres, includes both condominiums and individual residences. “Houses sell quickly there,” Morrice Arias notes. “The area has the highest valuation in the country.” One 6,141-square-foot Costa del Este home with wood and marble interiors are four bedrooms on about one-third acre is listed for $1.1 million.

Finally, in the northern section of the city, within view of the proposed expansion of the canal (a referendum on the project will be put to a vote in late 2005) and where the new U.S. embassy is being build, developer Lincoln Garcia is building the luxurious PanCanal View. Phase one, expected to be completed in June 2007, includes two 35-story towers, with three-bedroom, 2,981-square-foot junior penthouses that start at $289,000, with the possibility of combining two of these units to yield a 6,000-square-foot residence.

Most of Panama's coastal development has occurred on the Pacific side. About 75 minutes southwest of Panama City, beachfront projects extend from Playa Blanca to just past Rio Hato, says Morrice Arias. Of these, two communities stand out: Vistamar Resort, which will have 1,000 homes and a 72-hole golf course, and Buenaventura. At Vistamar, a two-level ocean-view home that measures 7,340 square feet with four bedrooms and five baths on almost half an acre is on the market for $785,000.

Architect Gustavo Arango, who designed a private 15,000-square-foot residence at Buenaventura (the largest house there is 25,000 square feet), says that building along this stretch of the beach gained popularity about six years ago, when people started buying lots, condos and villas. The Buenaventura development includes 156 beachfront and lakefront estates, villas and apartments. The oceanfront lots have all been sold, but there are two four bedroom Spanish style homes—5,000 square feet on about one-third acre—in the beachfront Riviera del Mar section of the development. They are listed for $575,000 and $595,000.

Away from the beach, in lush highlands about 80 miles southwest of Panama City, is El Valle. “this was traditionally the mountain home retreat for affluent members of Panamanian society,” says Arango. This is still the case. “Everything grows there,” says Morrice Arias. “The landscaping is beautiful.” The climate is 65 to 75 degrees Fahrenheit year-round. “The land itself is relateively inexpensive,” he adds, “but the properties are large.” He points to a 3,905-square-foot house of stone and wood construction on about two acres that is listed for $425,000.

Another highlands area that has gained the attention of foreign real estate investors is Boquete, which is situated in a cool coffee-plantation region. After the American Association of Retired Persons called this the top foreign retirement destination in the Western Hemisphere in 2002, projects have multiplied and prices have risen—even quadrupled, according to some estimates. Here, the gated Valle Escondido community of about 150 homes (developed by Sam Taliaferro) is expected to be completed by 2007. According to sales manager Kiersten Van Horn, only eight available lots remain, ranging in size from one-fifth acre to one acre, from $96,000 to $198,000. They include riverfront and wooded lots, most with views of the golf course or waterfall. Construction (houses are a minimum size of 2,152 square feet) ranges from $50 to $65 per square foot.

South of Boquete, on the beach about four and a half hours from Panama City, former Dell executive Gary Elmore is creating Istana Plantations. Elmore, who says he fell in love with Panama on his first visit in 2002, bought a 1,200-acre former ranch, among other properties. Though initially he had no plans to develop the ranch, he was persuaded to commission a master plan for 200-plus acres, which became phase one of Istana Plantations. He has begun marketing a handful of villas and lots; out of 45 waterfront parcels, more than half have been sold. A 1.9-acre waterfront lot on a point of land is listed at $349,000, and Elmore estimates construction in this area at $60 per square foot.

Eco-tourism to the marine park at the Bocas del Toro archipelago—a cluster of islands on the Caribbean coast not far from the Costa Rican border—has also spurred real estate sales in that area, but several experienced brokers urge using caution when investing here. One calls the region “the wild west,” because of unclear title to property. “Deals are more subject to conflicts,” concurs Lincoln Garcia.

An area worth watching, however, is the Pearl Islands, site of the seventh season of Survivor. “There are 120 islands in all,” says Matt Landau, “and only four are occupied.” Among those occupied is Contadora, which has an airport. “It's only 15 minutes by air from Panama City, and in a year there will be development,” he predicts. “Watch for Isla del Rey, the largest of them all,” he adds. “You have rivers there, and you need that for water.” For the time being, the beaches there are picturesque, untouched expanses of white sand. But no one—least of all those involved in Panamanian real estate—expects them to remain that way for long.

This article was found in the Winter 2006 issue of The Robb Report: Vacation Homes Edition. It was written by Joan Tapper and the bit on the celebrities like mick jagger panama real estate I found to be very interesting.

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