A year and so of recession has passed and some investors have started to show signs of optimism. Depending on where you are in the globe, situations might have been a bit different. What has happened in Latin America, and specifically in Panama and its micro- niche Casco Antiguo?
While most countries in Latin America (with a few exceptions such as Brazil and Chile) strugled, the effects of the recession in Panama where deep but not deadly, as the economy managed to keep afloat at a 3% (taking a dive from a 10% growth just the year before). This year, Panamanian government has announced the country will grow close to the 4.5%. Several mega projects back up this statement: from the expansion of the Panama Canal to the recently announced Metro system which would transform Panama´s obsolete public transportation system.
Mega projects in Panama have usually been fertile soil for scams. The Panama Canal Authority, however, has been known to manage their administration with transparency and has been one of the few government related institutions that has kept a high level of trust from Panamanians and a sense of continuity. Panama´s last administration completed the Cinta Costera, a mega project that in less time ever expected added six lines of traffic and a mega park along the coast line of Panama City formely known as Avenida Balboa. Almost half year into it, the City seems to have changed its attitude towards social life, using the Cinta to excercise, chat, meet and cultural events.
Casco Viejo, Panama´s Colonial Quarter has been one of the areas that has felt the positive impact of this project. Generally considered to be a difficult place to access due to its peninsula – shape, it is now more than ever considered an option for nightlife or residence. A second stage of the Cinta Costera project is extending the access to the historic city, making access and exit even smoother.
Still an undiscovered niche, Casco Viejo has been a bastion during 2009 difficult economic climate. The site is currently undergoing a heavy restoration process: visiting its 300 year old streets you would think construction just didn´t slow down. The rental market during 2009, especially for commercial property, was stronger than ever. About 20 new businesses opened while only 5 did the year before. Hotel projects, some of them controversial, have gone forward and in three more years it seems that this UNESCO World Heritage Site will have about 500 rooms, which will provide the right setting to increase foot traffic and value throughout the site.
The question remains, where and how to invest. Casco Antiguo isn´t a fast return investment. There is a lifestyle component to it and a patience component as well. It isn´t for everyone. As most historic cities, restoration takes time and value builds organically. The same fundamentals that produce longtime value and avoid bubbles are the ones that will keep investments from tripling in a year.
However, the opportunity lies in Casco Antiguo now more than ever: right before the hotels open. Choosing from a residence or a commercial space will depend on the character of the investment. Commercial space tends to increase more in value as they are rare and well located, but it also depends on foot traffic. Residencial investment should be tied also to a lifestyle goal. Some of them are being built with features that are unique within historic cities. Researching about them and knowing the contractors behind each project become essential.