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Panama is seeing another bite taken out of inflation. Panama’s president, Martin Torrijos announced the elimination of Panama’s surcharge for fuel cost on electric bills. With continuing reduction of the price of oil Panama is eliminating to its fuel surcharge and expects to see a 20 to 25% reduction in electric bills starting in January of 2009. Panama may be seeing the inflation clock turned back to where foreigners moved here to take advantage of a low cost of living in the tropics.

Panama, Low Cost of Living, and Real Estate Investment

Panama has experienced a real estate investment boom over the last decade. Much of the growth of the high end of the Panama real estate market came from foreign home buyers. Retirees, second home buyers, and expatriates looking to do business in Panama were all attracted by the low cost of living in Panama. Inflation associated with boom times hit a lot of Panamanians hard and raised real estate prices.

ABPanama believes that Panama real estate investment will be getting a second wind as the global financial crunch brings down commodity prices and the flight to the dollar raises the value of Panama’s currency, the Balboa. Not only will electricity cost less but so does gasoline already. Economists expect to see a reduction of prices across the spectrum in Panama within the first six months of 2009.

The fact that Panama’s conservative banks did not get into sub prime mortgages means they will not have the same degree of financial difficulty as the US banking system. Credit will still be available in Panama for real estate investment although under the same conservative rules.

Panama City has many large real estate projects on the drawing board. Because of the conservatism of Panama’s financial community many of these projects may be put on hold as everyone watch how the world’s financial mess sorts itself out. Compared to rest of the world, however, Panama is doing rather well. Panama has added jobs in 2008. Panama’s gross domestic product will have grown by 9.2% by the end of 2008. Worst case projections are that Panama’s economy will only grow 6% in 2009.

Panama real estate investment has done well for a decade. Part of the initial equation was the low cost of living in Panama. With rapid growth, as well the high cost of oil, came inflation. Now, with oil running around $40 a barrel and commodities down across the board ABPanama believes that we can expect to see the clock turned back to a degree recreating the conditions of a decade ago. Panama has first world services in a country of great natural beauty. Panama has North American quality shopping malls a hour’s drive from virgin rain forests. Panama, and Panama real estate investment, offer renewed opportunities of retirees as well the investment oriented.

If you have an interest in living in Panama or Panama real estate investment, come to see us at ABPanama. We have over 23 years experience managing real estate portfolios and do business throughout the country.