BY JOACHIM BAMRUD
While concern about the impact of the U.S. crisis is spreading throughout Latin America, at least one country is still dominated by general optimism: Panama. While stock markets were crashing in the United States, Brazil, Mexico, Europe and Asia, the Panamanian agency that runs the Panama Canal last week managed to raise $2.3 billion in financing for the expansion of the waterway.
"Despite the meltdown in the rest of the world...the effects have not reached here yet," says David Hunt, the executive director of the American Chamber of Commerce in Panama.
Robert McMillan, the former chairman of the Panama Canal Commission and author of Global Passage: Transformation of Panama and the Panama Canal, is also upbeat. "The Canal expansion, coupled with tourism and second homes for Americans, signals only positives for economic and business development in Panama," he says.
Panama is expected to become Latin America's fastest-growing economy next year, the International Monetary Fund predicts in its latest outlook released this month. This year, it will likely end up just behind Peru as the fastest-growing economy, it estimates.
While there is sure to be a slowdown in the long-booming real estate sector, in part due to over-supply before the U.S. crisis, demand is still strong thanks to many Latin Americans - especially Venezuelans - buying up new or second homes. Many Latin Americans are also helping to fill up the hotels, avoiding previous destinations such as Miami.
"One factor I see in Panama’s favor is the number of people who now come to Panama City and avoid traveling to Miami because it has become extremely uncomfortable with the issues facing travel these days," says Thomas Brymer, CEO of Panama Advisory Group and a long term commercial real estate advisor in Miami. "If you look at Panama City and... Full story
With the rescue of Freddy and Fannie by the feds, some are recommending emerging markets bonds as an alternative to U.S. risks. Here's one for Panama bonds from Bloomberg.
Excerpt; Alberto Bernal, head of emerging-market research with Bulltick Capital Markets in Miami, recommended investors buy Panama's 6.7 percent bonds maturing in 2036 and sell Brazil's 7.125 percent securities due in 2037. Panama's credit rating is likely to rise to investment grade and will be less vulnerable to declining commodity prices and a global slowdown, Bernal wrote in a research note.
The expansion of the Panama Canal will boost economic growth, helping make the country a "likely investment-grade candidate by late 2009,'' according to Bernal. Panama's economy will grow 8 percent in 2008, down from 11.2 percent last year, he said.
Panama's debt is rated Ba1 by Moody's Investors Service and BB+ by Standard & Poor's. Both ratings are one level below investment
The yield on Panama's 2036 bond rose 4 basis points to 6.58 percent, according to JPMorgan.
The competition for cellular telephone service heats up further as Digicel Central America starts operations in Panama. They will employ about 350 people and 1000 indirectly.
From the Observer; through its Panama operations, to be headquartered in Panama City, Digicel Group is "seeking to replicate its past success in the Caribbean and the Pacific throughout the Central America region".
A key challenge for Digicel, according to the IFC, a private financing arm of the World Bank, is the "high cost of rural network deployment is a key barrier to increasing rural penetration in many developing countries including Panama".
The IFC says it plans to assist Digicel in developing further new initiatives around increasing access in rural and low income urban areas.
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South Florida faces a rising rival in tourism: Panama.
Investors are pouring hundreds of millions of dollars into hotels into the small Central American country, which posted the fastest growth in international arrivals in the hemisphere last year: up 30 percent to 1.1 million.
Some now dub the tropical nation, long known for its canal and banks, the "new Miami" and hottest spot for new hotels outside the Middle East's Dubai.
Panama competes with South Florida largely for visitors from nearby South America and the Caribbean, including many interested in waterfront condo-hotel units. It also lures some U.S. travelers and retirees who like its use of the dollar and proximity, less than three hours' flight from Fort Lauderdale.
Florida companies are cashing in. The Seminole Tribe's Hard Rock International plans its first Latin American hotel in Panama. Miami-based Nikki Beach Hotels & Resorts plans an oceanfront resort and a city tower. Plus, Florida designers, architects and other service firms are working on projects in the tropical nation of 3.2 million residents.
Spurring growth are several factors: recent Panama incentives to encourage hotel investment; the $5 billion expansion of the Panama Canal; costs and taxes lower than South Florida; and increasing air and sea links for travelers.
Panama also is gaining from tough U.S. security rules after Sept. 11, 2001, which make it more cumbersome for foreigners to obtain U.S. visas and cross U.S. gateways.
"A lot of our international customers refuse to come to the United States now because of the hassles. It's so much easier to get into other countries," said Gary Sims, president of Nikki Beach Hotels, which has no hotels planned to date in the U.S.
Just three years ago, few would have predicted that Panama would come on so strong in tourism. But a 2006 vote for a massive canal expansion and government incentives helped fuel a real estate boom, including luxury towers in the capital with condo-hotels.
Panama became so vibrant that hotels could not keep pace with demand, especially from business travelers.
City hotels that averaged $120 a night three years ago now run $170 a night or more. And occupancy at top-tier hotels jumped from less than 70 percent to roughly 85 percent, with rooms often full weekdays, said Rogerio Basso, a hospitality analyst at Ernst & Young in Miami.
At least 8,000 new hotel rooms are planned, most in shopping center-studded Panama City and on Playa Blanca beach on the Pacific coast. That's about 50 percent more rooms than Panama's current tally — or an increase equal to about one-fourth of all the hotel rooms now in Broward County.
Still, Panama remains relatively small in tourism. Even with double-digit growth again this year, it attracted fewer than 800,000 air and sea arrivals in the first half. That compares with more than 7 millionguests who stayed overnight in Broward County in the same period.
Panama also faces challenges to sustain its rapid growth. Roads and infrastructure lag, with traffic already a problem in the capital. New luxury hotels must focus on employee training. And analysts question whether the country can attract enough upscale guests to fill the many luxury hotels proposed, including the first Buddha-Bar Hotel & Spa in the Americas, linked with the Paris nightclub.
But hoteliers such as John Issa of Jamaica's all-inclusive chain SuperClubs, now opening his first Central American resort on Playa Blanca, see opportunity first.
"Panama is becoming a sort of crossroads" luring North, Central and South Americans and increasingly, Asians doing business in the hemisphere, Issa said. That's much like South Florida, which bills itself the gateway to the Americas.
Doreen Hemlock can be reached at dhemlock@sun-sentinel.com or 305-810-5009.
Company |
Hotel |
Rooms |
Benchmark Hospitality International |
The Orchid |
170 |
Buddha-Bar |
Buddha-Bar Hotel & Spa Panama |
156 |
Hard Rock International |
Hard Rock Hotel in Farallon |
445 |
Renaissance Panama Hotel Financial District |
300 |
|
Marriott International |
Courtyard by Marriott Panama |
150 |
Marriott International |
Residence Inn Panama |
100 |
Nikki Beach Hotels & Resorts |
Nikki Beach Resort & Spa |
240 |
Nikki Beach Hotels & Resorts |
Nikki Hotel Panama City |
200 |
SuperClubs |
Breezes Playa Blanca |
330 |
Source: Hotels, Sun Sentinel research. By the numbers8,000New hotel rooms planned for Panama in 2009 85%Current occupancy at Panamanian hotels |
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This article is about wealthy Russians taking advantage of the warm climate, cheap dollars and investment opportunities in the Caribbean, Costa Rica and Panama.
Excerpts: The stage was in Moscow, but the ribbon cutting was for the opening of an elite condominium with Versace-designed interiors in Panama.
As more Russians move into the top tier of the world's rich, they are beginning to dive from one sea to another. Leaving their traditional stomping grounds of the Mediterranean, rich Russians are slowly making their way to the islands of the Caribbean.
"Russians are looking for the Caribbean dream that they've seen in the movies and on music videos," said Steven Ankrom, vice president of sales for Group Metro real estate, speaking by telephone from his office in the Dominican Republic. "Even the Russians dream about a white beach and a pina colada."
To cash in on the trend, projects such as Isla Moin in Costa Rica, Costa Blanca in the Dominican Republic and Vita Tower in Panama have begun springing up -- all appealing to the wealthy by piling on superlatives and tax break.
Dmitry Shevchenko, a broker for Trump Ocean Clubs, which is opening a complex on the Pacific side of Panama, described Panama as a tax haven, "Buyers get a 20-year property tax exemption," Shevchenko said. Besides this, he said rental incomes are also attracting buyers.
The government comes out with the latest numbers for economic growth that show Panama continues to lead the area in economic growth and is experiencing significant inflationary pressures.
Excerpts: Panama's economy, as measured by the Índice Mensual de Actividad Económica (IMAE), grew 8.2 percent in the first half of 2008.
Overall, the country's economic activity increased by 10.58 percent last year. “The slowdown we have had is not a cause for alarm.
According to the Colegio de Economistas, Panama's inflation rate for 2008 will be 8.7 percent.
Panama's economic expansion contrasts with the slowdown being experienced in many countries, most notably the United States.
“Our estimates indicate that Panama will continue to grow between 5 and 8 percent per year over the next 10 years,” said Nicolás Ardito Barletta, president of the Centro Nacional de Competitividad.
Construction in Panama City continues at a frantic pace and it is showing little signs of slowing. Even though the rest of the world is in a funk and the demand for re-sales of the many condo's bought by speculators are not selling, the developers continue to build. They are cheered on by the heads of the various real estate associations who “see no end in sight to the construction boom in Panama". Seems to defy logic doesn't it?
The value of building permits issued by the government for the first six months of the year amounted to $829.8 million dollars, a 54.5 percent increase over the same period last year, according to a report published by the Contraloría General de la República.
The bulk of the projects are concentrated in the district of Panama, with $675 million worth of construction, a 58.1 percent increase from the previous year. Arraiján, the area with the second-highest number of works planned, had the largest increase in the country. Work in that area totaled $44 million, a 161 percent increase from the first half of 2007.
This is a consequence of movement toward outer areas by Panamanians looking to escape high prices for real estate in the city, said Walter Medrano, president of the Cámara Panameña de la Construcción.
Regarding the overall results, Medrano said he hoped that the increase is maintained in the second half of the year.
José Boyd, president of the Asociación de Corredores y Promotores de Bienes Raíces, said he sees no end in sight to the construction boom in Panama.
“What may happen now is that sectors such as commercial real estate will gain more prominence now,” he said.
Boyd estimated that the industry will continue to grow over the next five years, driven by public works and coastal tourism developments within the country.
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Panama, Tuesday, October 30, 2007
Ruben Blades: To private sector, invest more in hotels
Raul Bernal rbernal@prensa.com
The minister of Tourism, Rubén Blades, requested to the private sector do not invest so much in apartments and houses for people in search of second residence, but in hotels and rooms, that is what it is needed right now. "There are people who complaint there are no rooms, but have money and what they do is to build houses and apartments. We are going to make the hotels and rooms that we needed, because more and more people are still going to come", Blades said. The govt official revealed that between 2008 and 2009 they will be being been constructing between 5 thousands to 6 thousand rooms with the hotel projects that are planned, but that this amount is not sufficient for the tourist boom that it anticipates increases in the coming years.
The also salsa composer and singer has said in reiterated occasions that the second residence is not tourism per se, since the foreigner settles down itself like resident in the country. Investments Representatives of the industry also have indicated in diverse occasions there is a need to build more hotels, to provide with accommodations to the great number of visitors who enter every day the country.
Panama had 5 thousand hotel rooms in 1997 and in 2007 16 thousand, which he hopes that for 2020 they are constructed in the country more than 20 thousand rooms like result of the accelerated growth of the sector. The tourism generated last year thousand 445 million dollars to the national economy, which represents 9.5% of contribution the gross domestic product (GDP) of the country. According to estimations of the Panamanian Institute of Tourism, hopes that the income in the sector closes this year with an increase of 18% over 2006, as well as an increase of 15% in the number of visitors in comparison to last year.