Free Trade Will Boost
Panama's Property Market
Panama has been making
the headlines recently.
There is much furore as
the Bush Administration
applies pressure on
Congress to approve free
trade agreements with
Panama, Peru, Columbia
and South Korea. The
U.S. and Panama signed
the Trade Promotion Act
(TPA) in June last year
and it was ratified by
Panama in July 2007.
Despite the current
pressure on Congress
from the Bush
Administration it is
unlikely the agreement
will be signed before
September, as there is a
major stall: believe it
or not the President of
Panama's Legislative
branch the National
Assembly is wanted by
the U.S. in relation
with the death of a U.S.
soldier in 1992, and it
is highly unlikely that
Congress will ratify the
TPA until his term ends
in September this year.
However as that is the
only thing stalling the
agreement it is likely
that the agreement will
be ratified in or
shortly after September.
America is so keen to
open up its trading
channels with the
world's emerging
markets, as America's
continually expanding
export industry has
offset the housing
market correction.
Continued export growth
is highly necessary to
avert fears of a U.S.
recession. There is the
possibility though, that
the agreement may not
get signed before
congress breaks up in
November, in which case
it would not get signed
until sometime next
year.
The agreement will do no
end of good to Panama's
emergence as a property
investment hot-spot.
According to research
based on the average per
square metre price early
2006, and the average
per square meter price
now, property prices in
Panama City have gone up
by 50% in just under 2
years, putting capital
appreciation at a strong
25% for the past two
years. The economy is
currently seeing major
growth in tourism and
real-estate sectors,
with GDP growth reaching
9.4% in the first three
months of 2007. The TPA
will increase the
economy's stability and
make it a safe country
to invest in.
Increased stability in a
time of such massive
growth is the best thing
an economy can hope for,
and even better for
Panama when viewed in
the context of the canal
expansion to be
completed in 2014, which
is likely to see GDP
growth in Panama
increase by 25% - maybe
more.
Panama currently has the
highest GDP per capita
in South America, but
the wealth is very
poorly distributed in
the country, and there
are high levels of
unemployment and
poverty. None the less
and even without the
agreement, for
American's Panama is the
equivalent to Spain, and
more U.S. residents are
buying their second
homes, holiday homes and
retirement homes in
Panama than any other
country in the world.
Hilton Hotels and Donald
trump have both built
sky-scraping hotel
complexes in Panama
City, and rental yields
are among the highest in
the world: 10% average
and reaching 18% on
smaller properties. |
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