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Author: Klaus Happ
Beach for Panama City
In recent days, the new mayor of Panama City has presented the 120 million USD plan for Panama City to have its own city beach. Following the example of Rio de Janeiro and Barcelona, a large beach with various other leisure attractions is to be built directly on the city’s promenade over the next few years.
Until the 1960s, the citizens of Panama City had their city beach, which was lost in the following years in the city and population development.
According to the Smithsonian Institute, the plan is feasible since there have been major efforts and projects since 2006 to improve water quality in the Bay of Panama City. The greatest challenge is to continue improving the city’s sanitation situation. Such a prestigious project naturally also offers many opportunities for international companies interested in participating in this project.
On the title photo you can see a visionary picture, how such a city beach could look like and on the following photo how attractive Panama City looks already now.
If this project really is successful, it would significantly upgrade the attractiveness of Panama City as a real estate location.
FRAPAN-Invest
Klaus Happ’s company “FRAPAN-Invest” advises investors who want to invest in real estate in Panama. Furthermore, Klaus Happ will be happy to advise you personally on the subject of “Plan B in Panama”.
The real estate market in Panama is internationally one of the most interesting for investments. We would like to be your trusted local partner and assist you with the initial purchase. Additionally, we can take care of your real estate in Panama in a sustainable way.
Profitable, safe and beautiful:
Investments in Panama
Ban of plastic bags in Panama
With the immediate ban of plastic bags Panama makes a big step forward in the protection of the environment. This makes Panama the first country in Central America to ban plastic bags.
In Panama there is currently no functioning recycling system in place, which unfortunately means that household waste ends up in large landfills. Here you can see waste children commissioned by companies who try to select “valuable” garbage and then hand it over to creative companies for pocket money. The recyclables are then cleaned, sorted and shipped to industrialized countries in order to be sold there for a lucrative fee. In the middle of last year I was in Panama City talking to the recycling and environmental representatives. These have set themselves the goal of introducing a sustainable recycling and waste management system and, in doing so, also relying on the support of internationally experienced waste companies.
A first major step by the Panamanian government was taken on 20 July 2019 by banning the distribution of plastic bags with immediate effect. Supermarkets and retailers must comply with the ban from now on. Smaller suppliers still have time until 2020.
There is still a lot of work to be done, but at least we are beginning to make progress on the important issue of environmental protection. Perhaps we will succeed in convincing international “environmental companies” of the possibilities in Panama as a “Hub of the Americas” and in helping them.
FRAPAN-Invest
Klaus Happ’s company “FRAPAN-Invest” advises investors who want to invest in real estate in Panama. Furthermore, Klaus Happ will be happy to advise you personally on the subject of “Plan B in Panama”.
The real estate market in Panama is internationally one of the most interesting for investments. We would like to be your trusted local partner and assist you with the initial purchase. Additionally, we can take care of your real estate in Panama in a sustainable way.
Profitable, safe and beautiful:
Investments in Panama
Why Panama?
Investors and entrepreneurs frequently ask me why they should invest in Panama. The background to this question is often that people don’t know much about this small country at the Panama Canal and that they have concentrated on their home market. And this although there is much competition and falling yields. In this article, I will look at the reasons why our investors invested in Panama. The main reason for them is often “diversification outside the euro zone”. This involves both investments in entrepreneurial projects and real estate in Panama.
(All info links with blue background are clickable)
Most people know exactly three things about Panama. Namely the Panama Canal, the story “Oh, how beautiful is Panama” and the Panama Papers. All three have something to do with Panama, but Panama is much more important for the world economy and has much more to offer investors.
Diversification
The economy, the real estate market and the stock market have performed well since the end of the financial market crisis in 2009. Especially the German market. This was the reason for many investors and entrepreneurs to concentrate on the domestic market, as yields were correspondingly attractive. For some time now, however, yields on German government bonds and first-class real estate have tended towards zero, and the stock market has also become more volatile in recent months. If you consider the weak growth forecasts of the European economy and the problems of individual European countries (Italy, France, Brexit, etc.), this is quite logical. In general, our investors all have a common reason for investing in Panama: Diversification outside the Eurozone. This involves the diversification of assets, the entrepreneurial portfolio and, in some cases, the life plan. Some of our investors no longer feel comfortable in Europe and are therefore establishing a Plan B. This means that they obtain a residence permit for Panama with our help and then often buy a property that can be rented out and used later by themselves. Panama has the USD as its national currency and is a very interesting country due to its political and legal security, which is why more than 250 multinational companies are based in Panama and most of them even have their headquarters for Central and South America. Companies such as Nestle, Adidas or the United Nations have done their country research and ultimately decided in favor of Panama. Under the following link you will find a good report on “Diversification”.
Diversification always makes sense, especially in politically and economically uncertain times. The only investor who should not diversify is the one who is always 100% on the right track! (John M. Templeton)
Yields
In Panama City in the prime locations the gross rental yields are approx. 6-7% p.a.
Modern apartments in Panama City on the Pacific Promenade are priced at approx. 2,500 USD per square meter and are rented at approx. 15 USD per square meter. Here you have an amazing view of the Pacific, the islands and the old town. This unique location naturally also applies to the historic UNESCO Old Town. In both parts of the city, the multinational corporations are looking for rental apartments for their employees so that you can achieve regular and attractive rental returns in USD. Population growth and average age are important aspects of investment, as both have a major impact on future purchasing power and demand. In Panama, population growth is about 2% p.a. and the average age is 26 years, which is very positive compared to Germany (0.2% / 44 years). The following links provide an overview of yields on international real estate markets and historical price trends.
Economy
- One of the fastest growing countries in the world
(GDP growth since 2002 approx. 8% p.a. average / IMF forecast 6% p.a. for the next 4 years) - Local currency is the USD
- There are 250 multinational companies in Panama; most of them have their Latin American Headquarters (e.g. Nestle, Roche, Adidas, DHL, but also the United Nations)
- Second largest free trade zone in the world
- Government debt is very low at 38% of GDP (vs. 86% in the euro zone)
- Panama’s economy is shaped by the service sector (about 75% of GDP) and benefits strongly from the mega infrastructure projects and the Panama Canal, which has another record year.
- In May 2019, the IMF reports on Panama’s economic quantum leap
- S&P raised Panama’s rating from BBB to BBB+ in April 2019
- Key economic figures for Panama
Politics
Panama is a democratic country where elections are held every five years and is considered politically stable. That is one of the reasons why international investors and companies have decided to invest here, because “an investment is only as safe as its country”. On 05 May 2019 the presidential elections took place in Panama. These elections have a big influence on the start of new major projects in Panama and are therefore very important for companies that are interested in doing business in Panama. Panama has made great efforts in recent years in the fight against money laundering and enacted various laws, so that Panama no longer appears on a black list. The European Union recently even decided to establish its diplomatic headquarters in Panama City.
Safety and security
Life in Panama is usually safe and normally you won’t get in touch with crime because Panama is considered the safest country in Latin America. This is also an important reason for the large corporations mentioned, because for them it is important that their thousands of employees feel safe in Panama. The following is still relevant in connection with security in Panama:
- Panama does not have its own military, because the USA protects the borders of Panama.
- Panama’s constitution protects private property for both domestic and foreigners
- The land register of Panama and the purchase procedure are very similar to the procedure in Germany.
- There are no hurricanes and no major earthquakes.
Life
In 2019, the company “International Living” once again voted Panama the best country in the world when it comes to the question of where to retire. They justify it with the unique combination of natural beauty, climate, standard of living, medical care and safety, which no other country has to offer in its entirety. In Panama City you will find hospitals at a high international level, as many doctors have been trained in the USA. You can find the full report at this link.
Besides all the advantages there are of course a lot of things that Panama should do better. These can be found in the previous link.
FRAPAN-Invest
Klaus Happ’s company “FRAPAN-Invest” advises investors who want to invest in real estate in Panama. Furthermore, Klaus Happ will be happy to advise you personally on the subject of “Plan B in Panama”.
The real estate market in Panama is internationally one of the most interesting for investments. We would like to be your trusted local partner and assist you with the initial purchase. Additionally, we can take care of your real estate in Panama in a sustainable way.
Profitable, safe and beautiful:
Investments in Panama
Presidency Elections in Panama
On 05 May 2019 the presidential elections took place in Panama. The new president of Panama is Laurentino “Nito” Cortizo (66), candidate of the center-left-oriented party “Partido Revolucionario Democrático” (PRD). The former Minister of Agriculture and businessman was the favorite. Panama is a democratic country where elections are held every five years. These elections have a big influence on the start of new major projects in Panama and are therefore very important for international companies that are interested in doing business in Panama.
Laurentino Cortizo has set himself the goal of fighting corruption in the country, improving the public education system and giving new dynamism to the economy. Panama’s economy has been one of the fastest growing in the world since the early 2000s, but last year it grew by only about 4% below the average of previous years. With new investment programs, the president will focus on further boosting economic growth. The fact that one of the largest copper mines in the world went into operation in Panama at the beginning of the year will also help. According to the IMF, Panama’s economy will grow by about 6% p.a. in the coming years. It will also remain interesting to see who will win the new major projects, especially on the Panama Canal, under the new government. These were often Chinese companies under the last government after Panama and China established diplomatic relations and chose Panama as the country in Latin America for their silk road policy. Here, of course, the US and Europe will also try to get more access again.
In summarizing, we can say that the business-friendly politics and focus of Panama will not change after the elections.
We would like to briefly describe the characteristics of the electoral system in Panama and its effects.
In the Panamanian elections, a new president and the governing parties are elected. The major political parties in Panama are called “Panameñista”, “Cambio Democratico” (CD) and “Partido Revolucionario Democrático” (PRD). The political direction of the three major parties is basically similar, namely “democratic-center“. Left-wing parties have no great significance, since they have learned to appreciate free market economy by living closely with Americans for a hundred years and do not want to follow the mistakes of many South American left-wing countries.
Panama’s law stipulates that presidents may only be re-elected after a break of 10 years. Their parties can again be re-elected. Panamanian presidents often come from economically influential families who run large companies in Panama.
In this context, we are currently in an interesting and good phase for entrepreneurs who are interested in Panama as a business location. Over the next few months, the focus will be on looking for lucrative projects in Panama and finding local joint venture partners.
Klaus Happ advises and supports international companies that want to become entrepreneurs in Panama. Based on his experience and contacts, he finds partners and interesting business opportunities for companies.
Information on the business consulting Panama
FRAPAN-Invest
Klaus Happ’s company “FRAPAN-Invest” advises investors who want to invest in real estate in Panama. Furthermore, Klaus Happ will be happy to advise you personally on the subject of “Plan B in Panama”.
The real estate market in Panama is internationally one of the most interesting for investments. We would like to be your trusted local partner and assist you with the initial purchase. Additionally, we can take care of your real estate in Panama in a sustainable way.
Profitable, safe and beautiful:
Investments in Panama
Taxes in Panama
In Germany, you sometimes get the impression through the media that you don’t have to pay taxes in Panama…this is wrong. Panama has a progressive tax system in which tax rates and rules are clearly defined. Generally you can say that the taxes in Panama are lower and easier to understand for investors, entrepreneurs and citizens compared to Germany. And the tax system in Panama has a positive feature.
Panama has a territorial tax system, which basically means that Panama only taxes the income that is earned within Panama’s borders. For companies and investors resident in Panama, this means that foreign income is taxable in the other country, but not in Panama. This is a significant difference to the German tax system, where you also have to pay tax on foreign income.
Here is a brief overview of the tax rates in Panama (as of 10.2022):
- Corporate tax 25% (small and medium-sized companies have lower tax rates / multinationals negotiate their own tax rates)
- Income tax ( salary, rent, etc.), progressive
- 0 – 11 TUSD annual income: 0%
- 11- 50 TUSD annual income: 15%.
- > 50 TUSD annual income: 25%.
- Capital Gain tax 10%
- Interest income is tax-free
- Inheritance tax does not exist in Panama
- Real estate sales tax: 2% on the sales value
- Property tax (valid from 2019, based on real estate value, valid for investors):
- up to 30.000 USD / exempt
- 30,000 – 250,000 USD / 0.6% p.a.
- 250,000 – 500,000 USD / 0.8% p.a.
- over 500,000 USD / 1.0% p.a.
- Value added tax 7%
Especially in the field of property tax in Panama there are many (mostly very positive) exemptions to the above mentioned rules. For example, real estate completed before 31.12.2011 is usually exempt from property tax in Panama for 20 years. Furthermore, the “first real estate” that you occupy is tax-exempt up to 120,000 USD real estate value. And there are very special tax benefits for investments in the UNESCO old town “Casco Viejo“ in Panama, such as a 10-year exemption from taxation of rental income.
The beautiful Panama doesn’t make everything perfect, but it tries with its own resources to attract investors and people to the country.
As we are no tax advisors, we are not responsible for the accuracy of the information and you should consult a tax advisor. We would like to give you a good overview and are available to answer your questions with our team of specialists.
FRAPAN-Invest
Klaus Happ’s company “FRAPAN-Invest” advises investors who want to invest in real estate in Panama. Furthermore, Klaus Happ will be happy to advise you personally on the subject of “Plan B in Panama”.
The real estate market in Panama is internationally one of the most interesting for investments. We would like to be your trusted local partner and assist you with the initial purchase. Additionally, we can take care of your real estate in Panama in a sustainable way.
Profitable, safe and beautiful:
Investments in Panama
Pope in Panama
In January the World Youth Day with the Pope took place in Panama. 300,000 visitors celebrated the Christian festival with the Catholic population. Panama invested about 50 million USD in the organization of the event. Economists expect a positive impact of an additional 1.5% GDP growth for 2019 through direct revenues and the international awareness of the country, which among other things supports tourism.
This should also have a positive effect on the real estate market in Panama, so that investments in real estate in Panama are still very interesting. The real estate prices in Panama are cheap in international comparison, because in best location the real estate prices in Panama City are about 2,500 USD / sqm and the rents about 15 USD / sqm.
FRAPAN-Invest
Klaus Happ’s company “FRAPAN-Invest” advises investors who want to invest in real estate in Panama. Furthermore, Klaus Happ will be happy to advise you personally on the subject of “Plan B in Panama”.
The real estate market in Panama is internationally one of the most interesting for investments. We would like to be your trusted local partner and assist you with the initial purchase. Additionally, we can take care of your real estate in Panama in a sustainable way.
Profitable, safe and beautiful:
Investments in Panama
China’s President Jinping visited Panama
China’s President Jinping visited Panama in December to discuss economic agreements with the government. China has chosen Panama as the country in Latin America to continue its policy of the Silk Road. Panama’s geographical location makes it an ideal partner for a free trade agreement, investments in infrastructure and tourism. Further information on the infrastructure projects (Link).Infrastructure projects are good for the economy, create jobs, improve the quality of life and are important elements for the attractiveness of the investment location and the real estate in Panama.
Infrastructure projects are good for the economy, create jobs, improve the quality of life and are important elements for the attractiveness of real estate market in Panama.
With the establishment of diplomatic relations between Panama and China in 2017, Chinese real estate investors will now also receive a visa for Panama for the first time and will find attractive real estate prices in Panama. In prime locations, property prices in Panama City are approx. 2,500 USD / sqm and rents are approx. 15 USD / sqm.
FRAPAN-Invest
Klaus Happ’s company “FRAPAN-Invest” advises investors who want to invest in real estate in Panama. Furthermore, Klaus Happ will be happy to advise you personally on the subject of “Plan B in Panama”.
The real estate market in Panama is internationally one of the most interesting for investments. We would like to be your trusted local partner and assist you with the initial purchase. Additionally, we can take care of your real estate in Panama in a sustainable way.
Profitable, safe and beautiful:
Investments in Panama
Copper mine in Panama
The largest new copper deposit in the world was found in Panama and the copper mine will go into operation in 2019. This will have a positive impact on the real estate market in Panama. Panama’s economy is dominated by the service sector, which accounts for about 77% of the economy. Now the raw materials sector has been added as an important new component, giving the booming economy further momentum and diversifying it.
After the largest new copper deposit in the world was found in Panama years ago, the copper mine will go into partial operation in 2019 and be fully operational in the following year. The mine is a $6.5 billion project managed by Minera Panama, a subsidiary of First Quantum Minerals Ltd, Canada. The mine is located 120km west of Panama City in a lonely area on the Caribbean side of Panama where 11,000 (7,500 Panameños) people are currently employed. Once fully operational, the mine will, according to experts, be one of the largest copper mines in the world and one of Panama’s largest export sources. As a result, the mining business will be Panama’s fastest-growing industry, representing approximately 5% of Panama’s GDP. The homepage of Minera Panama and its presentation give a deeper insight into this megaproject.
The copper mine will have a positive influence on many economic sectors (infrastructure, trade, construction, etc.). The real estate market in Panama will also benefit from this, as this new economic activity will bring new manpower and demand for housing. Many of the copper mine employees live and rent their homes in Panama in the nearby beach area of Coronado. This is located on the Pacific side (i.e. on the other side of the narrow country) and is about an hour’s drive from Panama City. Investors of us buy profitable and beautiful beach apartments in Coronado (Link) and generate rental income from short and long term rentals.
No matter whether you want to use your apartment in Coronado yourself or as an investment property, we are happy to help you with your real estate in Panama. The real estate prices in Panama are still relatively cheap, because in prime locations you buy real estate in Panama for about 2,500 USD / sqm and rent for about 15 USD / sqm.
FRAPAN-Invest
Klaus Happ’s company “FRAPAN-Invest” advises investors who want to invest in real estate in Panama. Furthermore, Klaus Happ will be happy to advise you personally on the subject of “Plan B in Panama”.
The real estate market in Panama is internationally one of the most interesting for investments. We would like to be your trusted local partner and assist you with the initial purchase. Additionally, we can take care of your real estate in Panama in a sustainable way.
Profitable, safe and beautiful:
Investments in Panama