Panamanian's Scoff at the Effects of Credit Crunch - Now is the Time to Buy Property in Panama

South American property portal Encuerta25 has revealed the findings of its survey into the Panama property market. According to its report some 65% of respondents think the international financial downturn has had little effect on Panama, and a further 12% think it has had no effect.

I was surprised to find out that only 6% of all people currently buying property in Panama come from Europe, the rest come from the Americas, which isn't a surprise.

Panama became a massively popular destination with overseas property investors, which added to the massive market it had in American retirees buying property in the country -- more than anywhere else in the world.

Panama's impressive economic growth coupled with low property prices, high rental yields (18% not unheard of) and a favourable tax regime are among the reasons for its popularity with overseas property investors.

Now is most definitely the time to buy property in Panama, well actually 2 years ago was the time, but this is all we can do without a time machine. Make no mistake, between now and the completion of the Canal expansion in 2014, property prices in Panama will increase by at least 50%, and possibly even double.

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Panama Economic Activity in June Up on Last Year

Economic activity in Panama was 0.31% higher in June 2009 than it was in June last year, prompting optimism from the government that it could mark the beginning of an overall return to growth in one of Latin America's best performing economies.

After two consecutive months of falling economic activity the June rise brought the decline in Panama's economy down to 0.5% for the first half of this year. This is compared to an 8.44% growth in Panama's economy in the same period of last year.

However, the fact that Panama's economy was so strong in the first half of last year, makes the 0.31% June increase on last year's performance even more poignant.

Panama has average 8% GDP growth in the last few years, and even now, during one of the worst global recessions the world has ever seen, the median forecast for Panama is a 3% growth in GDP for 2009.

I agree that a 3% growth is entirely possible, with potentially even a 4.5% growth over the fiscal year. If this is indeed the turning point in the Panamanian economy then I believe we will be looking at a v-shaped recession/recovery track, with a strong return to growth and a return to similar levels of growth seen in previous years in the 2010/11 fiscal year.

I believe this because Panama is currently like a magnet for investment because of the expansion of one of the most important waterways in the southern hemisphere, the Panama Canal, which cuts Central America in two to link the Pacific Ocean to the Caribbean Sea and Atlantic oceans.

The expansion, due to be completed in 2014 will triple the Canal's expansion and has the potential to increase Panama's GDP by at least 25% in subsequent years. This is making it a hotspot for overseas property investment, with property values also forecast to grow massively.

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