The Panama Pacifico Free Zone Housing Investment
The Developers
London & Regional Properties (L&R) and the Latin American firm Southstone Investment merged to create a sole entity London & Regional Panama (LRP). L&R offer real estate experience as the owner, developer, and manager of $20+ Billion USD in real property located in five continents. Southstone adds Latin American experience, financial backing and cultural insight.
The Development
The former U.S. Howard Air Force Base is being developed into a special economic zone (with special tax free benefits) for multi-national corporations and high technology companies. There are over 125 multi-national companies now established there, with over 50 more scheduled to come by the end of 2012.
The Panama Pacifico Special Economic Zone is a 1,400 hectare site with an 8,500 foot runway jet capable airfield. It will be a small city when completed including corporate offices, bank offices, call centers, logistics services, high tech products and manufacturing, offshore services, film industry, aircraft maintenance and repair services, transferring goods and services to ships and airplanes, and exporting goods. However, the residential housing supply is very limited in the areas inside of Panama Pacifico for the employees of these companies.
Vision
The Developer has a Master Plan which includes fiber-optic networks and the latest trends in green buildings and walk able neighborhood designs. The developer’s vision includes:
“Enter a new world that forms a bridge between tradition and innovation, country breathing space and big-city accessibility, private funding and government support. A true master-planned community that brings together people of all ages to live, work and play. A residential haven with a vibrant mix of walk able neighborhoods and smart homes. A global enterprise offering unprecedented business advantages. All set within a sustainable landscape linked by parks and trails.
This is Panama Pacifico: a new life that’s all about connectivity. A new destination unlike anything Latin America has ever experienced.”
Infrastructure
Much of Panama Pacifico’s infrastructure was already in place when it was the former Howard U.S. Air Force Base. Panama Pacifico connects to Panama’s leading suppliers of public works operating out of the Panama Canal. From state-of-the-art roads, potable water works, electrical networks and modern technological capability from 5 major submarine telecommunications loops, Panama Pacifico’s vigorous infrastructure accommodates present and future generations.
Panama Pacifico’s onsite shuttle bus system began in 2011. In 2012, additional elements of the new Transportation Demand Management system begin, including commuter buses, available to onsite employees.
Plans are in place to ultimately take the entire infrastructure system underground to preserve the community’s natural character and views.
Housing Investment
They are currently in the process of delivering 2 new condo buildings of 1 and 2 bedroom condos, as well as a high end housing sub-division of single family homes. While the 1 and 2 bedroom condos are good rental units, the opportunity to buy at below market values was 2 years ago during pre-construction phases.
The single family homes are selling between $600K to $800K and are mainly being bought by wealthy Panamanians looking to escape the Panama City traffic and live near the beaches on the West side of the Panama Canal.
River Valley Sub-Division
The best product in our opinion for a rental house or apartment is the River Valley sub-division, which will feature 3 to 4 bedroom single family homes, 3 to 4 bedroom town houses, and 2 to 4 bedroom garden apartments. Maintenance fees are minimal, property taxes are exonerated on improvements, and property taxes on the land value will be very low in comparison with other similar projects.
By the time this project is completed, they are estimating more than 200 multinational companies will be in Panama Pacifico. That will create a huge demand for rental properties, with limited supply. With these residential units it would be very reasonable to get an 8 to 10% CAP rate on your investment, plus the banks are financing right now at 4.5% interest rates, with as little as 10% to 20% down for locals, and 30 to 40% down for foreigners (depending on the banks risk assessment of the borrower).
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