Panama is a country that continues to garner growing interest from leisure enthusiasts and ex-pats from across the world. As the southernmost country in Central America bordering Costa Rica and Columbia, it is the most industrialized nation in the region.
Possessing 25,590 square miles (74,046 square kilometers), Panama has a population of 3.4 million people, with over 1.5 residing in and around the capital of Panama City. Known for its famous canal, considered one of the seven modern wonders of the world, the county’s lifestyle attractions include snorkeling, whitewater rafting, and birding.
Its biodiversity is considered to be three times higher than the United States, Canada, and Europe combined. Over a quarter of the country’s landscape consists of national parks, wildlife sanctuaries, and forest reserves.
Panama has the distinction of being the first Latin American country to adopt U.S. currency as its own. In addition, it has a progressive stance toward cryptocurrency. On the heels of El Salvador’s 2021 official adoption of Bitcoin, Panamanian
Congressman Gabriel Silva introduced legislation proposing "legal, regulatory, and fiscal certainty to the use, holding and issuance of digital value and crypto assets in the Republic of Panama."
The bill, entitled "Crypto Law: Making Panama Compatible with the digital economy, blockchain, crypto assets, and the internet," was announced on Twitter by Silva. It aims to encourage the use of cryptocurrency and other digital assets along with government use of blockchain technology for citizen identity and transparency.
Cryptocurrency aside, Panama has long had a favorable tax and business-friendly mentality — a major factor in attracting US expats to live, invest, and do business in the country. Through its territorial taxation model, income generated outside of the country is exempt from taxes. As a result, Panama is a highly regarded global financial hub that serves as a safe haven for real estate and other forms of financial investment.
Here at Gokhshtein Media, we had a chance to talk with Evie Brooks, Former "Rich Dad Poor Dad '' Advanced Trainer, Real Estate Educator, Investor, and founder of My Panama Vacation Realty. Here are her thoughts about what makes Panama such an appealing locale for vacationers, ex-pats, and real estate investors.
Why, for years, has the Panamanian lifestyle held such a high appeal to many?
Evie: The Panama lifestyle holds appeal for a number of reasons. The most obvious is the stable government, which is a democracy, the U.S.-based dollar economy, the strong GDP year-over-year, laidback lifestyle, party environment that so many love, the Panama Canal, and ease of owning real estate with a title to your property. Each of these benefits are things that are crucial to those looking to have a Plan B exit strategy from their home country or a second or retirement home.
Who does Panama appeal to the most?
Evie: Ten years ago and longer Panama really appealed to those looking to retire in short order, under five years or so. However, since the pandemic started, Panama is appealing to people of all ages who are looking to have a "safe haven" in the event they need a backup plan. Panama has also been a great destination for those looking to diversify their investments, and own real estate outside their home country. This global business hub is a great place to accomplish both of these objectives.
In what ways has Panama been economically impacted by the Covid pandemic?
Evie: Panama has had the same hurdles to overcome due to the COVID pandemic that most countries around the world faced. There was a total shut down and residents were quarantined to their homes for weeks, which definitely hurt the economy. However, the bounce back is expected to be one of the strongest with a projected 9+% growth for 2022. Panama is strong and resilient.
Can you share more about the county’s economic recovery?
Evie: Panama recovered and stood the test of time despite the economic challenges of the 2008 Great Recession, and is expected to do the same after COVID. To visit Panama now, you would not even realize they suffered during this time as they are moving forward with infrastructure investments, as though nothing ever occurred. There is construction everywhere, cranes, traffic, and ships rolling through the Panama Canal 24/7. Panama is here to stay! The world needs Panama.
What sorts of emerging trends do you believe we’ll see in Panama over the next 12-18 months in terms of ex-pats and investors?
Evie: Panama is watching ex-pat wannabes come in by the droves. COVID opened doors in ways that I never expected to see. Our company, My Panama Vacation Realty, has clients from Israel to Germany, Asia to Europe, and of course North Americans. They are looking for the best Residency Visa options, the quickest options for becoming a resident and many are buying property sight unseen. I have never seen anything like this upswing. Potential clients find me online, and call to ask what are the best opportunities. Once they find a great investment, they sign a contract and send their funds to buy a property. It is unlike anything I've ever seen.
Why is there such a rush of people relocating there?
Evie: Many are so concerned about a government "money-grab" in terms of "taxes" in their country over the next five years. They are looking at options for stashing assets that cannot be stripped away from them. This trend is no different than those jumping into crypto to do the same thing, but there are so many that have made so much from crypto they want to put it into a hard tangible asset. Panama is definitely the place to invest in hard assets now.
Describe the cost of living, taxation, and healthcare landscape in Panama?
Evie: The cost of living in Panama is substantially lower in many aspects of life, including the cost of labor. I can hire a full-time (maid, cook, driver, etc.) for about $500/month. They can also live with you if you want for this salary. In addition, the same comparable home in Panama would be twice as much in markets like Atlanta or Dallas-type markets, and 3-5 times higher in Miami, New York, Los Angeles, Montreal, Ontario, and other major metropolitan areas.
If you like to eat at nice places, you will find high-end restaurants with prices just like in your major U.S. cities. Or you can go to the Panamanian-style restaurants and get a full chicken plate with rice and beans, plantains, drink, and dessert for $10. Grocery shopping is similar. You can find what we refer to as U.S. grocery stores or Panamanian grocery stores. The main differences are the building, locations, and presentation. And you pay for all the glitz of course.
What about the healthcare system?
Healthcare is available and of high quality. We refer to the John Hopkins affiliated hospitals as the American hospitals, and the difference in bedside manner from the doctors is like night and day. They even give you their personal cell number when you have surgery so if you need them, you can call them directly. It is very patient-centered with great doctors.
Can you share a bit more about taxation?
There are many attractive tax benefits and perks, depending on whether you’re a business or personal investor, the location that you choose to invest in, and more. Property taxes are low between 1/2 - 1% and work on a sliding scale. For more information on tax-related issues, please contact a licensed financial planner or CPA.
Why is real estate investing such a hot development in Panama these days? And what does the future look like in terms of rental properties, vacation properties, Plan B properties, subsidized housing investments, and agricultural investments?
There are so many opportunities for real estate investing in Panama. Education of not only real estate strategies, but also the local economy. Identifying locations that thrive and finding the "real" deals are the keys to success.
Diversifying your portfolio is so crucial, and if you are looking to invest in more than one project, putting funds in different strategies is definitely the route to go. So if you think vacation rentals are what you prefer, then start with that, but move to other strategies such as government-subsidized housing opportunities that have guarantees or agricultural investments where you own the dirt.
Also, you definitely want to learn to leverage your funds, and instead of investing 100% cash, let someone else carry the debt and you gain the benefit. In other words, let's say you had $500,000 cash to invest, would you prefer to own $500,000 worth of real estate or would you prefer to own 2.5 mm worth of real estate? If you do not understand this, you need to schedule a strategy call with me to help you learn how to build wealth through real estate. I would be honored to do a real estate education call with you to discuss Panama's opportunities.
