In order to make the most of any land or property acquisition you are well advised to place your investment in the path of progress. If you do this, the profit potential can be huge. The multiples achievable on land appreciation regularly eclipse anything that that can reasonably be realised on any other form of investment. Parcels of land, which previously might have sold for a few cents per square metre, can easily appreciate to $100 or more once the infrastructure has been put in place. Buying at that lower level can yield as much as a two hundred fold increase in value over a relatively small time scale of say seven to ten years.

Hitting that land investment jackpot may involve a degree of luck but for certain you need to have a clear vision. For instance, who would have guessed 45 years ago that an area of coastal swamp land on the Caribbean coast of Mexico would turn into Cancun, one of the largest beach resorts in the world as it is today with hundreds of International flights arriving every week.

There are areas in other parts of Central America particularly Costa Rica, which have turned from inaccessible tracts of farmland into trendy chic playgrounds for the rich and famous, making enormous amounts of money for those with vision along the way.

So where do we go now in order to position ourselves ahead of the next path of progress? In the past Panama has been somewhat ignored, but this has all been changing over the last decade. The massive expansion of the city which has been building momentum for ten years or more appears to have peaked in the last 12 months. The numbers of cranes breasting the skyline are not as prolific as they were. It is now the Pacific coastline to the west which is receiving greater attention and quite rightly so.  

The opportunity for the greatest gains along the immediate coastline may have already been realised, as much of the infrastructure has been in place for a number of years and it was only ever a matter of time before development would proceed. With the announcement of the New International Airport at Rio Hato, development is now going ahead at a massive pace, with the inevitable consequence that areas nearby will benefit from the knock on effect.

So where is it now possible to place yourself in a position to profit from the path of progress, which is sweeping all before it in Panama?
Inland areas are by their nature more plentiful than those with direct coastal access. It is therefore crucial to be selective and acquire a spot which either benefits from an outstanding natural beauty or which possesses a unique selling point in the form of a priceless amenity.  

The area around Penonome is still eminently affordable in spite of the fact that it has already begun to blossom from a development viewpoint. But for how long will this hold true. In all of Panama, this is the area where these staggering multiples remain a medium term probability. Furthermore, of all the parcels of land currently available in the area, Cascadas del Tué meets all the criteria in order to profit from the path of progress.

Do you have the vision to take this forward to fruition?

For further information go to the home page of this website or visit my other blogs: -

http://www.developmentlandpanama.com/blog/new-international-airport-in-panama

http://www.developmentlandpanama.com/blog/las-cascadas-a-priceless-amenity

Las Cascadas – A Priceless Amenity

Recently I had the opportunity to take a couple of real estate professionals to view Cascadas del Tue. The visit had been planned a month or so in advance, which gave me an opportunity to correct the small amount of erosion damage done by the record amount of rain which had fallen since May.

Last year, (2010) we cut a rough road in to make it simpler to show off the property to potential investors. Whilst broadly following the construction plans, we omitted two of the illustrated drainage areas, in order to see what the effects the winter rains would have in practice, before committing additional finance to the project, which may or may not have proved necessary.

To my delight, when I made my assessment earlier this year, following a particularly wet and prolonged rainy season, I found that the damage from erosion had been slight. This was because I had made sure that sufficient sideways slope had been worked into the longer and steeper slopes of the road in order to drain the water directly sideways into the jungle. The first cut and the first rain last year had produced devastating effect, as the local foreman had insisted on following what he assured me was normal practice, which seems to be to encourage the rain to follow the length of the road downhill. This ensures an accumulation of gallonage the further the water runs, and the maximum resultant erosion as rainfall turns into a veritable river, scouring the soft spots as it goes and cutting impassable trenches into the road surface.

I might be making cynical assumptions here, but perhaps the access road to the Millennium Bridge has suffered the accumulative effects of similar tons of advancing water.

Along the public but unmaintained track, leading to my private concealed entrance, a tree had fallen. The offending lateral branches had already been removed so that any car or SUV could drive beneath the fallen trunk which spanned both banks of the track; but in order to gain access with a bulldozer the tree would need to be removed. 

So, just in time for my visiting delegation, at the inevitably gringo inflated cost, the tree was removed and the essential road repairs put in place.

All was worthwhile. My visitors were thrilled with what they saw; describing the “Cascadas” as a priceless amenity with additional fascination for geologists in the shape of the unique rock formations which surround it. I have always thought the same, but it is reassuring when a potential buyer is so awestruck as to undermine his own bargaining position with such unbridled enthusiasm.

Excellent suggestions were put forward as to development possibilities, which had not previously dawned on me; not only for capital appreciation and alternative exit strategies, but also for methods to secure a long term income stream.

I have now put in plan a revision of the second stage application in order to incorporate these suggested conceptual improvements.

New International Airport in Panama

At last, after some years of rumour, discussion and delay, the government is about to deliver us with a New International Airport at Rio Hato, in close proximity to Panama’s Pacific beaches.

The New International Airport serving the centre of the interior in Panama, and in particular the Pacific beaches, will be built around the old American built runway at Rio Hato, which spans the PanAmerican highway. Strategically, this is not the best place for it. Flights will inevitable have to overfly the beaches, which the airport is set to serve; and from information I received 18 months ago, this was not President Martinelli’s first choice. However the consortium of Italian billionaires, who arrived in Panama shortly after he had assumed the Presidency in 2009 are reputed to have advised him that building a new international airport on a green field site in Panama's interior would be vastly too expensive and would not be financially viable for many years to come, putting it out of court from any practical investment viewpoint.

So he was faced with a chicken and egg situation. The incoming flights are required to boost the tourism industry in the area, but you first need a large tourism industry to make an airport viable. Santiago and Aguadulce both made strong representations in the hope that the decision would come down in their favour, but the ideal choice was always going to be closer to Penonome. Taking any particular vested interest out of the equation, I always thought that the runway should have run parallel to the PanAmerican highway somewhere south of Anton. The land is flat, the orientation of the runway would be correctly North/South for the prevailing winter and summer winds, and it would be close to, but not interfering with, the Pacific beaches it is intended to serve.

The only upside of Rio Hato, which clearly influenced the decision, is that the runway is already there, making a huge cost saving.  Clearly a major resurfacing needs to take place, and a tunnel has to be constructed under the PanAmerican highway. But at least we can have an airport up and running in a very short period of time, which must be good for all investors in the area.

I would hope that this would prove to be a temporary expedient, and that once the tourism industry in the area has grown sufficiently to support the additional investment, a proper long term new international airport is built in the location longtime preferred by both this Panama government and its predecessor, overflying the mangrove swamps south of Penonome. Who knows?

The First Step

Following the acquisition of the land we first had to clear the undergrowth. Up to ten local labourers under the command of a foreman, gathered each morning six days a week equipped with machetes. The instructions were quite clear. Leave everything standing which is larger than a man’s wrist.

We wanted to be in a position to select the specimen trees which would remain and those which would have to be removed at a later date. The short term aim was to provide a clear field of vision for the surveyor to take sights and prepare a topographic map.

The clearance process took considerably longer than envisaged and therefore cost 60% more than it should have done. I had a clue to the reason for this at the end of the first week, when I was surprised to find that according to the time sheets, the same men had turned up for work every day of the week and worked identical hours. This would be practically unheard of in the UK at this level, and a sure fired certainty here in Panama. This was confirmed to me some time later by one of the disgruntled labourers who enquired how much he should have been paid for an eight hour day.

It came to light that not only was the foreman booking for more men than had been working, but on occasions he had taken them to work on another property altogether. Worst of all was that he had been withholding 30% of the men’s pay for himself over a three month period. I short sighted act that signalled an end to his brief period of employment and did nothing for his local popularity.

The silver lining in this particular cloud has been that by placing me in the same position as the local labourers, Sr. Julio has ensured the co-operation of all in the locality who are as smiling and friendly as can be; plying me with delicious freshly squeezed orange juice to slake my thirst on a hot day.

On a recent occasion, I borrowed a pickup truck on a very wet Saturday to erect the ubiquitous green sign, which signals to any enquiring official that the earthworks you have embarked upon have met with the necessary approvals.  They deserted their recently prepared lunch, turning out in force in flip-flops and shorts in the pouring rain, to help push the bogged down truck out the ditch into which it had slithered.

Perhaps Sr. Julio did me a favour after all.

Introduction

Obtaining planning permission in Panama can be a time consuming, tortuous and frustrating business, with any number of unpredictable obstacles along the way. When it comes to weaving your way through the intricacies of the planning process, it is hard to establish at the outset what the whole of this process is going to involve. Panamanians are known for being non-confrontational, which is a charming facet of their personality, but often impacts negatively when you are trying to acheive a specific objective. There is a tendency to feed you the bad news little by little, so as not to offend you by confronting you with it all at once. The cynic in you might suggest that this stems from the belief that if you had been appraised of the total costs from the beginning, you might have baulked at ever embarking on the process in the first instance.

However well intentioned or otherwise their methodology might be, it tends to make a mockery of any budgetary forecasts that you might have made. Furthermore, any time scale that you might from the outset have been led to believe, is likely to become extended; if for no other reason than that someone somewhere along the way manages to dream up an obscure technicality or supposed law change which has been enacted since you embarked on the process, and which you didn’t find out about until much later on.

The good news is that as long as you can maintain an advanced sense of humour or indeed sense of the ridiculous then all is not lost.

Indeed, in spite of the aforementioned frustrations, the many hours of work that I put in to this process were actually quite enjoyable, because before I had even purchased the land I was given an introduction to my architect, who has acted as my agent throughout and has proved to be a joy to work with.

Ulises Quiros, This e-mail address is being protected from spambots. You need JavaScript enabled to view it and his staff work with great professionalism, always to an acceptable time scale, and show the unerring attention to detail of people who clearly enjoy their work.