Foreign investment surges in Panama

Panama City, Panama Photo: Matthew Straubmuller

Foreign direct investment in Panama has surged this year. FDI jumped over 32 per cent year-on-year in the first quarter of 2015 to total $1.7 billion, according to new figures from the National Institute of Statistics and Census (INEC).

Two thirds of the FDI came from reinvested profits, with one fifth from purchases of Panamanian companies’ shares by overseas investors. Companies operating out of the Colon Free Trade Zone contributed $123.7 million  to the growth, 17 per cent up from the same quarter in 2014.

The INEC report shows that capital was injected into property, energy, banks and hotels, with the increase attributed to growing confidence among investors and the country’s favourable outlook. Panama offers “high rates of return on public and private projects being developed domestically”, the Economic and Financy Ministry said, while the economy has also enjoyed steady growth.

In the past three years, foreigners have invested more than $11.2 billion in Panama’s economy, Rogelio Alvarado, the ministry’s Director for Social and Economic Analysis, told The Costa Rica Star.

Indeed, in January 2015, one agent in Boquete told The New York Times that the property market is “doing very well”, with a “steady influx” of foreign buyers. Americans make up the majority of buyers, followed by Canadians, Venezuelans, Russians, Italians and French investors.

In March 2015, Punta Pacifica Realty announced that the area had seen prices rise 14 per cent annually and sales jump by an even higher 35 per cent, with Venezuelan and American buyers particularly active.

Now, Panama Link Property Management Corp has an optimistic outlook for the rest of the year.

“Despite a slow 2014, Panama’s been off to a great start economically in 2015. It’s a critical point in the Varela administration to show sustainable progress, and so far this is a good sign,” Stefano Bertoli, President of Panama Link Property Management Corporation , tells TheMoveChannel.com.

Indeed, Panama’s economy grew 5.9 per cent in the first quarter compared with the same period in 2014, driven by construction activity and the service sector, the economy ministry said on Monday. The government predicts that the Central American economy will grow by between 6 and 7 per cent in 2015.

“In the real estate world, there’s a natural ebb and flow when it comes to supply and demand. But there are some global markets that get hot, and stay hot, due to a sustainable shift in demand for the long run,” adds Bertoli.

“Panama City was also recently named as a “City of the Future” by the Knight Frank organization, which studies wealth growth and global wealth/investment trends. According to the report, Panama City is attracting a growing number of multimillionaire residents, as well as investors, who are planning future projects within the city. This means big business for the local Real Estate market, as they have, and continue to develop some of the most ambitious large-scale construction projects in the region.”

He highlights the Panama Canal as a “golden ticket” for the country, with expansion set to boost the economy and “attract further migration and investment” from foreign entities.

“This will be a game changer for the region, and global shipping as a whole, giving Panama a strategic advantage for trade going further into the 21st century,” he comments.

“Bigger trade equals bigger investments, and that makes Panama perfect for large-scale luxury and affordable Real Estate development.”

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