Panama booms as retirement hot spot for Americans
PANAMA CITY, Panama, Oct 01, 2007
-- Retirees Jovita and Don Franco thought the home they bought nearly a decade ago in Palm Beach County would be their last. But after visiting this bustling Central American capital, the globe-trotting couple decided to move overseas.
The Francos, both in their 70s, this summer sold their Lake Worth home at a profit and settled in an upscale gated community in an area Jovita calls the "Palm Beach of Panama." They enjoy the tropical weather, cosmopolitan flair and low costs, including household help. And they're glad to be outside the hurricane belt and away from South Florida's rising property insurance and taxes.
"We look at life from a global perspective, so the adjustment for us is not as difficult," said Don Franco.
Now the fastest-growing economy in Latin America, once-sleepy Panama is attracting hundreds of retirees and second-home owners from across the United States yearly. The growth is contributing to a real-estate fever that has lured speculators and raised concerns of overbuilding.
It's the start of a wave of U.S. Baby Boomers retiring abroad, spurred by the ease of long-distance travel, Internet communications, well-trained doctors overseas and surging U.S. prices that have made traditional retirement sites like Florida less attractive.
Exactly how many American retirees already live overseas is unclear. Almost 442,000 people received U.S. Social Security benefits abroad at the end of 2005. But that number does not count people whose checks are deposited in U.S. bank accounts that they manage online.
Many countries now welcome the transplanted retirees, but Panama _ long known for its American-built shipping canal, international banking center and use of the U.S. dollar _ offers what is widely viewed as the world's most generous program for pensioners. The government provides tax-free entry for up to $10,000 in household goods and discounts up to 50 percent on hotels and health care.
Those benefits, as well as Panama's modern facilities, low crime and property tax exemptions, are among the reasons that the newsletter International Living ranked Panama for the past six years as the world's best place for Americans to retire and live abroad. This year, rising property prices and an end to automatic 90-day entry visas pushed Panama to No. 4, after Mexico, Ecuador and Italy _ but still a top draw.
Entrepreneur Paul McBride can attest to Panama's allure. From a high-tech office tower, the former California resident runs a travel-discount business helping foreigners interested in visiting Panama to invest or retire. He now counts 6,000 online subscribers to his Prima Panama service. The largest concentration comes from South Florida.
But concern over a speculative real-estate bubble and growing congestion is discouraging some would-be retirees from going to Panama City, including Gladys Castro of Coral Springs, Fla. A couple of years ago, she plunked down deposits on three condos in waterfront high-rises to be built in the capital, top-of-the-line apartments selling for less than half the price of similar units in South Florida. One of them, a 4,100-square-foot bayfront penthouse, cost about $500,000, compared with rates at least triple that in prime locations in greater Miami, she said.
Once the condos were finished, Castro figured she'd work in real estate in Panama and South Florida for a while and then relax in her new Central American home, signing up for Panama's pensioner program. Her daughter and son-in-law also put a deposit on a Panama condo, planning to move from New Jersey and start up a business, likely in fitness centers.
But spending time in Panama City this summer, she changed her mind. Developers of one high-rise, unable to secure funding amid overbuilding, returned her deposit. And while she enjoyed the top-notch shopping malls and restaurants, Castro was turned off by traffic jams on narrow streets not built to handle so many new residents, visitors and cars.
"With technology and globalization, you don't need to be in the United States anymore," said Colombia-born Castro, who has lived 25 years in Florida. "But for now, I don't see myself retiring in Panama City. I couldn't drive easily there."
Panama's leaders know their South Carolina-sized nation of 3 million people is suffering growing pains. They have a long list of mega-projects in the works to improve infrastructure, including a sewage treatment plant and new highways in the capital.
The U.S. housing crunch also seems to be deflating the property bubble. With speculators in the United States unable to flip properties and financing now tighter, developers can't build all the 40,000-plus units approved for Panama City anytime soon, experts say. Even the proposed Trump Ocean Club, slated to cost more than $260 million and feature a 68-floor tower, is behind schedule.
More measured growth appeals to the bulk of Americans who are retiring or buying second homes outside the capital _ by the many beaches or in the mountains approaching Costa Rica, especially in the coffee-growing highlands around the town of Boquete.
Among the newcomers from South Florida: the Wells family, who now run Hostal Boquete, a simple inn about a mile from the area's first gated community developed by Americans mainly for Americans, the Mediterranean-style Valle Escondido.
Richard and Barbara Wells spent the past eight years renting out vacation homes in the Florida Keys to travelers they rarely met. But seeking a new adventure overseas, they left their oldest son to run that business and, last September, bought a hostel in the mountains.
Now, Richard Wells enjoys his time expanding the inn to 12 rooms and relaxing on its wooden porch, listening to the rushing river and talking with backpacker guests from Israel, Germany, Australia and other lands. The 52-year-old also coaches a local baseball league in which his youngest son plays. And he's helping an older son develop a tour company, with start-up costs in Panama a fraction of U.S. rates.
"This is a great place for young people to start a business because in the Keys, the risk would be too high for the price," Wells said.
Of course, moving or retiring abroad, even to a nearby nation with a strong American presence for more than a century, is not for everyone in the United States. Many U.S. transplants to Panama were born outside the United States, relocated frequently for work and simply enjoy new living experiences. Cultural sensitivity and flexibility are key to adapting, for instance when customer service may be slow, product selection limited or Spanish language an issue, retirees said.
"I miss the ocean. I miss Home Depot dearly, and I miss Costco, but I don't miss the crime, the traffic and the hassle," said Richard Detrich, 65, who left pricey Ventura, Calif., three years ago with his wife, Nicola, 58, to retire and stretch his income in lower-cost Boquete. "And we have friends here, real friends, not just business and professional relationships."
New technology helps ease the transition. Transplants here often have satellite TV, high-speed Internet and voice-over-Internet for cheap phone calls. They use South Florida "air-box" addresses, where items often bought online are shipped, consolidated and then flown to Panama. For banking, many receive deposits into U.S. accounts, check them online and take money from bank machines.
The Francos, formerly of Palm Beach County, figure they'll also fly regularly to visit family and friends across the United States.
In the meantime, Jovita relishes the slower pace of life and affordable full-time household help in Panama. Don is looking to teach part time, possibly at one of several Florida university programs in Panama's "City of Knowledge" research and high-tech center.
"The next place (to retire) they say is Uruguay," Jovita joked with Don. "Don't be that curious," he chuckled back.
(c) 2007 South Florida Sun-Sentinel.