Panama: a perfect investment?

Those thinking of investing in Panama have had two pieces of encouraging news recently.

Influential international auditors, Deloitte Touche Tohmatus, published a report which predicted that the Panamanian economy will experience strong growth in 2008, the highest of all the Latin American countries.

In addition, the Panamanian government has reinstated the 20-year tax exemption for foreign property buyers in Panama, which expired last year.

The report predicts healthy GDP growth for Panama in 2008 with the economy expected to increase by between 7% and 8%. Analysts believe that the dynamic economy, with its range of important private and public investment projects planned for 2008, will help to offset the negative ripples from the U.S. economy.

The biggest plus for the Panamanian economy is the massive expansion of the Panama Canal, approved in a referendum in 2006 and due for completion in 2014.

The Panama government has decided to restore the property tax exemption on all new construction with building permits issued before December 31st 2009.

The decision was made to encourage Panamas booming property market to continue in the same vein. James Gonzalez, Market Analyst at Obelisk, says, Panama is a stable environment and it is perennially popular with retirees from the U.S. who are attracted by the mild climate and low cost of living.

Now that the government has reinstated the 20 year tax exemption for foreign buyers, the market will continue to boom.

Resale properties are also exempt from property tax, with the 20 year exemption starting in the year the property was built.

This means real savings for those buying off-plan or resale property or building their own property in Panama and is proof that the government is keen to encourage foreign investment with tax incentives.

The Heritage Foundation supports this in its Index of Economic Freedom, noting that Panamas investment climate is superior to those of its neighbours, with most sectors open to foreign investment.

A spokesperson for Obelisk International commented: "Panama's property market has been booming for around 5 years and this looks set to continue thanks to huge investor interest from the U.S.

"Rental yields are impressive, especially in Panama City where they reach just over 11% on small units of 190 square metres, according to Global Property Guide.

"With a favourable investment climate, tax breaks for foreign buyers, a booming economy and property market, Panama has the perfect property investment climate".