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A Panama Trend - Socially Responsible Investment

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Written by Matt   
Monday, 06 October 2008 09:19
Bala Beach ResortReal estate and humanitarianism, illness two worlds that once collided ruthlessly on a moral scale are now showing signs of harmony in Central America's boom-nation of Panama, pills where the trickle down effect of development is being defined in remarkable new ways. It's long been a notorious business real estate, one characterized by a slash-and-burn mentality: by money-grubbing land developers and cutthroat super agents who'd do anything, and that meant anything, to make a sale. In the past, principles and ethics have taken a dark back seat to dollar signs and high rises, but things are starting to change.

Recently the industry has been softened by harsh publicity of environmental degradation; a trend that in turn gave way to a new wave of green construction. But socially responsible investments (or SRIs) aren't just sherpas, smart growth and solar panels any more. The intensity and depth by which real estate entrepreneurs are practicing sustainable development techniques is expanding.

Gary Pivo "Despite there being over 300 real estate investment trusts," writes Dr. Gary Pivo, a professor in Urban Planning and Natural Resources at the University of Arizona, "I have yet to identify a single one that makes social responsibility or sustainability an explicit goal."

This oversight revealed by Dr. Pivo in a November, 2004 work entitled A Call for the Creation of Socially Responsible Real Estate Investment Products, stirred the imaginations of both the real estate and humanitarian groups the world over: a new trend for which criteria is now being constructed.

The concept of supporting companies that share one's worldview politically is nothing new to consumers, seeing as though most consumers practice this patronage inherently. But the real estate world-having seen negative backlash from Cancun-like bubbles in which poor social planning has led to the degradation of local communities-is now starting to develop strong criteria for SRIs evaluating ethics and operational habits as well.

"Until now," claims Steve Schueth, president of First Affirmative Financial Network LLC., "socially responsible investors who wanted to invest in real estate didn't really have a way to do it." In one of the world's fastest-growing segments in asset management, certain Central American countries like Panama are beginning to cater to this valuable clientele.

Bala Beach PanamaAccording to principles at Bala Beach Resort, a real estate development on Panama's evolving Caribbean Coast, the concept of being socially responsible was very new to the local communities. Their process started with bi-monthly town hall Q&A sessions in Maria Chiquita (Colon Province, Panama) in which locals were encouraged to voice their concerns and express their doubts. Among topics discussed in these meetings were authenticity, sustainability and community changes: an effort to welcome in, not confine out.

"It was hard because the locals were very hesitant to trust anyone, much less foreigners," revealed Mayds Levy, a principal at Alchemy Group, the group developing Bala Beach Resort. "From doing the census to consulting the mayor of nearby Portobello, we got a feeling for what these people wanted and what they needed. Attendance for those meetings, as locals began to understand our philosophy, increased each time. It surprised me actually."

Some may think there's nothing socially responsible about a high-end beach resort, but considering projects like Bala participate heavily in community building (like improved roads, sewage systems, schooling and recreation centers) such opinions are starting to change. "We will also be providing on-site hospitality training for locals," claims Levy, a Toronto native, an effort to maintain and burgeon the local flavor of Panama's Caribbean Coast. This training will also empower locals with jobs elsewhere in a region that's a blank canvas for growth: a factor that experts like Dr. Pivo highlight as socially responsible.

To investors in socially responsible real estate projects, the reward is not solely charitable either. SRI mutual funds such as The Calvert Social Investment Equity Fund saw an average three-year return of over 22%. The Social Investment Forum in Washington, showed that SRI assets grew by 18% in 2005 and 2006 to $2.7 trillion: growth which is starting to raise the eyebrows of investment experts who once considered such trends to be just a fad.

"A lot of the traditional Wall Street players are now trying to get involved (in SRI) because of the obvious marketing opportunities," says Phil Kirshman, the director of business development at Progressive Asset Management Inc., a publicly traded broker dealer specializing in SRI.

Bala Beach ResortBut beyond the specialists, everyday investors see the rewards of investing in projects like Bala Beach Resort in Panama as duo-fold: financially, their units have increased in value nearly 12% in 6 months, and from a fulfillment aspect, the ability to enjoy a piece of beachfront property and embrace a local culture is a no-brainer. Experts say projects like these will increase in number over the coming years as investment for investments sake seems to be losing its strength in the world.

Comments (3)Add Comment
Organized Retail and Real Estate – Booming Together
written by riathareja , October 07, 2008
The world is now looking at India as the nation of the future. More significantly, India is well on its way to emerging as a first-world economy in the fields of information technology (IT), biotechnology, pharmaceuticals and the automotive sector, pushing the thrust now on to the retail sector to facilitate the creation of a new surging modern India. The real estate boom in India will not only propel the economy to sustainable heights, but will also generate employment for several millions. It is strongly expected that the growing Indian economy and growing opportunities will ensure that the foundation is laid for India's tryst with destiny and for it to be fully integrated into the world economy.For more view-
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I like this
written by richard , October 10, 2008
I like this concept...Where are some photos of the townspeople and work in nearby Marita Chiquita?
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Isn't this the only viable solution?
written by Lamer , January 06, 2009
It is a no-brainer indeed. If you start building a resort in an under-developed area something is bound to fail because most investors and the vast majority of toursists cannot bear the sight of poverty, degradation and filth. Helping the community is a win-win situation, it's helps the particular business and is good for the local people as well. If the Bala beach initiative is true and happening (roads, school and training new local staff), it is something to applaud and to follow closely. But why, why we hear so much on the side of the developer and nothing on the side of the locals through independent journalists? Maybe there is and I don't know about it? I went to visit the Maria Chiquita site this past December. It's still very early in the process but I can see how much can be done for and with the locals and I can see how both parties would benefit. Isn't this the only viable solution? Anyway, the government should impose such clauses on developers.
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Last Updated on Thursday, 09 October 2008 12:43