Thread: Where is the Panama real estate market going to go?

Let me start by saying I'm NOT a prophet. Not even close...

That being said -- I have been here for 5 years and I've predicted most of what has happened until now.

However, for the 1st time... I have no clue where it's going to go in the next 6 to 12 months. There's a strange blend of little-known X-factors that could change the fate of the market.

Americans that have just witnessed the absolute collapse of Florida, California and other "hot markets" all say the same thing...

"It's got to bust!" -- "It's just like Miami was before it blew up". "The economics just don't add up!"... "Nobody is buying, if they want it to sell they need to drop!"

I AGREE WITH ALL OF THE ABOVE!

If we lived in a "perfectly logical world" where markets behaved "perfectly" we would already be in a busted market. However, there is NO perfect world and there's certainly no perfect market.

However there's 7 "hidden factors" that most foreigners can't see. And these invisible elements are what is holding up the market. Here they are:

1. The black market factor

Believe it or not: THIS IS THE BIGGEST. Panama has been one of the world's hubs for laundering BILLIONS in black market funds for decades. According to lawyers I know... and Panamanians in the know -- nothing has changed.

What do you think is financing these buildings? Why are 70% of apartments empty at night with nobody living in them and nobody cares?

It's simple: the world's drug lords use CEMENT to park their money. They can afford to wait YEARS... DECADES... to get their money back. They do NOT care what the market does.

They were the MAIN REASON why the boom started in the first place!

In Dubai -- it was the OIL MONEY. In Panama -- it's the drug money.

This is the secret that either nobody wants to talk about... or they aren't deep enough in the trenches to know yet.

Do you think "Know your customer policies" stop these guys?

These guys OWN BANKS.

2. Lack of transparency

This one has been talked to death in other articles. There's not much to add. Bottom line is: there's ZERO standardization of prices. You have to go hunt online for yourself to see someone selling his unit for 40% more per meter in the same building!

Everybody is operating in their own little bubble with very little care about what anyone is doing (more on that in a minute).

3. The endless optimism element

People who have invested here have endless optimism about the market. They think the next wave is just around the corner.

Whether or not they are right or wrong does NOT matter. This optimism is what keeps them from selling. Their belief is "I'm going to make more money soon. I don't need to sell now."

4. The thick roll factor

This is another thing that most foreigners aren't tuned into unless they really know the culture.

There's a group of Panamanian families that have MEGA WEALTH. They are known for controlling the country on a business level and even political level. They own most of the businesses, including almost all the franchises... many of the banks... airlines and more.

Their bank roll is SO thick that they can sit and wait for 30 years before selling their units.

They are LIGHT YEARS away from desperation. They can afford to wait for the "next wave".

5. The unmaximized leverage component

One of the biggest reasons why the USA fell as hard as it did is because too many people MAXIMIZED their financial leverage. They over borrowed. They had zero room for error. When the market turned: BUSTED...

In Panama... where you have a hodge podge of wealthy foreigners that have second homes here -- they are NOT leveraged anywhere near what some Americans did.

They will most likely choose to weather the storm until it gets better. Remember, you only lose if you SELL.

One of my friends owns 8 apartments in the city. He's got enough cake to wait for another wave while he's making money renting them out.

I have quite a few friends that sell real estate here. The ONLY HOT DEALS are mainly for Americans who are in a squeeze because they can't pay the balance due on their apartment because they are over leveraged and they are hurting States side.

6. Lack of Awareness

This is another interesting phenomenon. Panamanians haven't gone through enough "booms and busts" to be sophisticated enough to know what's going on.

As some say "Ignorance is bliss."

During the boom -- there was a large group of people that were 6 months to 12 months BEHIND the boom (they were selling their apartments too cheap).

We're seeing the same thing after the boom -- there is a large group of people that is 6 months to 12 months BEHIND the bust.

7. The Canal Expansion

Estimates are 10,000 families are coming to Panama for 5 to 7 years to work on the canal. This COULD create a spike in rental demands.

These families need to live somewhere...

Personally -- the lack of clarity means one thing: RISK. It go easily go BOTH WAYS. I'm still on the sidelines (for now).

So I ASK YOU THE QUESTION:

Where do you think the market is going to go?

Ed Bowers?
JustSayWoohoo?
BelAir?
Everyone else?

Matt

Matt, after reading your 7 hidden factors ,I'm starting to think that the bust may never happen.
But it's safer to say "who knows".

I personally think that Panama will probably do better than most places in Latin America since this is such a business hub. I will say after witnessing the massive real estate slow-down this past year due to the economic crisis in the US (and the rest of the world) I do have doubts things will be bouncing back in Panama. In the short-term things may get a little better but the US economy is in bad shape and "when the US catches a cold, the world gets the sniffles". I hate to say it and I sincerely hope I am wrong but the US economy is in serious trouble and it will effect the world when the #1 consumer economy stops consuming. Now I will say, after the years of research I did on Latin America there probably is not a better place than Panama to invest.

Well Matt....

I gonna wait before I buy...

I think that the west is gonna go in another huge down turn sometime in the next 24 months, to much debt unemployment etc, everyone will suffer... Usa and England exspecially are basket cases, including the banks, govements, individual persons with no jobs and high debt.

Also the only reason things did not crash more was the lowering and the near zero intrest rates around the world.

So prices stayed high, since price did not matter, it was what are my monthly payments gonna be.

open 1 year mortages are like only 2.4% in Canada, now and most people around the world have open mortages, since they are cheaper rates, but if your rates go up, you are not locked in, your payments will go up big time, and others will not be able to afford the same house price anymore. If rates go to just a little, [2.55] open mortage rates will go up alot, so your monhtly payments will double, so people will have to pay half for a house to get the same monetly payments as before, and the rates do not have to go up lots for this to happend, exspecially if we go through hyperinflation...

Many will be forced to finally sell.... and cheaper when they do, it is a crash wating to happen, even USA prices will fall even more I beleive...

FOR MORTAGES

BMO Bank of Montreal - Mortgages


FOR INVESTMENTS

BMO Bank of Montreal - GICs and Term Deposits

In Canada you get 0.4% on a one year bond or cd.... crazy low...

Yes the rates are higher in Panama, but they will go up to... In fact Austraila and other are now raising rates, this is the key thing to watch as far as I am concerned since these low rates is the only thing that kept real estate from falling off a cliff...

But if you will be borrowing money to buy in Panama, it might be counter productive to you to some degree...

So many things in the last few months that happend in Panama that is anti panama investing and anti real estate, just read some of my last poast over this time period...

Example...

Anti renting laws, many people wanted to rent out there condo, but who is gonna buy a condo now if it is so hard to rent out with all the new ant condo renting laws?

Also Panama is signing tax sharing, and they will also be sharing info with OCED, DEA and govements around the world for money laudering, drugs, terroism etc under the Patroit act...

So you can say goodbye to Panama as an place to hide drug money, or any illegal money...

I seen many reports that they will be going over old bank depsots etc in Panama by the banks themselves, all to comply with the patriot act and anti laundry laws...

They will be passing that info onto the DEA, since the USA have a list of TENS OF thousands of guys who are in drug dealing and looking were they hid there money from all diffrent nationalites, not just USA nationals, but from colombia, mexico nationals ect... So it is not just a tax issue with the iRS, but also money laundering...

New accounts being opened or new money being brought into the country will not be easy like before, they will have to prove funds...

What is the point of bringing money into Panama now? I can't think of any actually. you might as well have it insured in the USA, and keep it there, regardless of nationality.

All this will effect prices, since there will be less easy money out there to buy at these inflated prices, we just have to wait perhaps another 12 months...

So if you look at it all, real Estate is still way way to high in Panama...

Sometimes bubbles take awhile to deflate... took a few years to go up, so awhile to go down to...

Just my thoughts...

If 10k families are moving to Panama for the canal expansion, it means 10k apartments or houses to be rented or bought for the next 4-5 years. By then the world recession probably will end. So is it possible that Panama will weather this storm better than others and the real estate bust wouldn't be so severe?

Yes and No...

Yes they will be rented in the short term. This should definitely create demand for RENTALS (not necessarily purchases) for 4 to 7 years. I don't think people coming here for a job will buy when their companies will give them a free rented place.

However, when they're job is finished most (95% to 99%) will move back to their home countries. Some guys in the real estate market are already saying that the market will BUST HARD when that happens. That's when we should see rental prices coming down to new lows (20% to 50% lower than the crazy prices we're seeing today). By then they're will be A LOT more inventory... and a HUGE number of people leaving.

The real question is: what will happen until then?

Matt

Bel-Air -- I agree with you're points EXCEPT for "stopping money laundering". That's like saying they're going to "Win The War on Drugs". It's NEVER going to happen because it's unstoppable.

There's hundreds of easy ways to launder money. ANY business that deals in cash can become a vehicle for money laundering -- including real estate projects.

And here's the biggie: these guys OWN banks. I actually know a guy who used to be "the man" for setting up your own bank. He set up 6000 banks around the world when he was working. He's now retired...

The point is having your own bank is one of the biggest ways to protect yourself and do "to what you want to do and get away with it". And then you can do all the "due diligence paperwork" you want on yourself to please the authorities. I'm pretty sure that those guys are NOT going to "come clean" and roll on themselves.

Again: this is the "invisible money" that's fueled Panama more than anyone cares to admit... and even one of my friends that are lawyers says that it's keeping the market from truly coming down.

Matt

Going by what No Nonsense Matt says and by the youtube video from Panamax, it is very difficult to judge. More people to come and work on the canal expansion, and more tourism associated with that, but more condos on the market.

Interest rates, going by central bank data, are 1% or under. We can reasonably assume that this interest rate range will be relatively long term as we have already had massive inflation with the credit expansion associated with housing in world markets. We are now in a period in which all this debt is being written off or paid off, and in a period of government borrowing to support the wounded system - so arguably we could say that the intention of governments is to combat catastrophic deflation - even to the extent that we cannot rule out negative interest rates such as is the case in Sweden.

Under the assumption that condo purchase prices have fallen already in Panama and there are good deals to be had, then in the medium term of 4 to 7 years there are reasons why investors should buy to rent in Panama because their return would be better than bank savings accounts or bonds or shares. I estimate a range of 7% to 11% yearly return on condos for renting out. But then once all that demand from the canal workers and associated tourism falls away the value of the condos will fall also.

Problems come in terms of dollar value. Will it rise or fall in the currency markets? Many have argued that the dollar will fall for many years, and yet it actually got more valuable in the last year and then fell away again a bit. In fact there have been arguments made for many years that the dollar will fail completely and have to be replaced by another currency. Worldwide there has been a balancing act of goverment stimuli by the major economies. It is hard to judge how that will affect the overall picture. Germany argued against these economic stimuli but then had one of its own. The idea appears to be to make the various national recessions more shallow but longer in duration. This suggests to me a global situation that will last a decade at least. Governments cannot withdraw support for the banking system because the banks would become insolvent without the support. Banks cannot lend out the money because of the risk in a recessionary time. Negative interest rates would force banks to lend more money to support asset prices, and that time may come. So to my mind a 7 to 11% return is a good return when compared to the alternatives.

The dollar value is a big concern of mine. I have read that the BRIC countries have been and are currently working with Persian oil producing countries (including Saudi Arabia) to unhinge the dollar from the purchase of oil. It seems as though many of the worlds governments are worried about the massive printing press known as "The Fed". If oil producing countries start accepting Euros (or anything else for that matter) instead of dollars say "GOODBYE" to the value of the US dollar. If you are collecting rent in US dollars there goes your %7-%11 return on investment. I did some "Googling" and found a little bit older article but still pretty informative: Economics Essays: US Dollar Collapse?

If you Google "US dollar devaluation" you will find a lot of information.

Well, latin american countries are also seeking to have their own currency. but panama could tie its balboa to any currency it liked. nothing to stop a policy of accepting euros or yen or whatever. what about silver?

USA is still the biggest economy in the world by a fair margin, and that means the US dollar is still an important currency. If there are problems the US has balancing the books then it needs to reduce the size of federal and local government spending. Returning to a defensive stance of militarism instead of offensive stance would help reduce costs - an isolationist policy would also be rather popular in the world.

Well you guys can buy, I gonna wait....

I been in the house building all my adult life, and things are just to high.... Exspecially in Panama....

Also the USA is gonna have to print more money to cover all their spending, this creates inflation... At least $1.2 to $1.5 trillion a year they need to run there massive spending programs....

Finally in the end, no one will buy t-bills unless they get more than 0.20% per year.. So look at rates to rise eventually.....

I mean Look at the risk people who are taking holding USA bonds, t-bills, and all that for a puny 0.20% return per year.....

Many many people say the next big crash will be USA bonds.... I for one agree....

Panama banks are gonna have the same laws as American banks in the next few months, there is just no way that unaccounted cash can flow into these accounts anymore, those days are over.....

It is not possiable to take huge amounts of cash to the bank anymore, or buy a $600,000 condo in all cash, you would be reported.....

Under the Patroit act all cash depsoits must be reported by the banks themselves, including were it came from, how much etc... and the banks themselves are audited on a regular basis.... The authorites then check to see what accounts that cash went into, and who owes the accounts....

Banks are also auidited by the panama goveremnt branch of banking as well. {SUPERINTENDENCY FOR PANAMA BANKS}

http://www.superbancos.gob.pa/aspec_leyes/index_eng.asp

If they get suspicous they check account by account, deposit by deposit, all cash deposited must match depsoits in all bank accounts.. And it is pretty hard to do anything then..... It is like the bank is being audited...

It's just not so easy to hide this cash anymore....

Before it was easier, but this last while, the world of banking has changed alot since 9/11, and every year gets harder...

To launder money, I guess you could run the money through another buissness, like a bar for example, but then you would have to pay and sumit sales tax on that income, as well as like 50% tax on that amount of money, and after awhile it would get suspicous as well.

So alot of things have changed in this world over the last few while....

Things were easy before, buy getting harder...

The loss of banking secrecy and tax sharing is some of the biggest....

In the closing costs of a real estate transaction in Panama, other than the attorney and notary fees, there is something called escrow services fees(0.5-1 % of sale price). Is that something obligatory? Do you always have to pay that?

And it is not just the Patroit act, Panama has it's own laws, that are making things harder, and they now have to enforce them.. It's gonna get harder and harder....

Superintendencia de Bancos de Panamá

Decree-Law # 41

OFFICIAL GOVERNMENTAL PUBLICATION
STATE INSTITUTION
YEAR XCVI PANAMA, REPUBLIC OF PANAMA TUESDAY THE 3rd OF OCTOBER, 2000
N° 24,152-A

LEGISLATIVE ASSEMBLY
LAW No.. 41
(October 2nd, 2000)
Whereby Chapter VI entitled Capital Laundering is added to Title XII, and Title XIII entitled Final Dispositions is added to the Book II of the Penal Code, and other dispositions are established

THE LEGISLATIVE ASSEMBLY
DECREES:

Chapter VI
Capital Laundering

Article 389. Whoever receives, deposits, trades, converts or transfers monies, titles, securities, goods, or other financial resources knowing that the origin of the activities is related with drug trafficking, qualified embezzlement, illegal weapons traffic, human traffic, kidnapping, extortion, embezzlement; corruption of civil servants, terrorism, robbery or international vehicle contraband established in the Panamanian Law, with the purpose of hiding or covering their illicit origin, to assist evasion of juridical consequences of such punishable acts shall be sanctioned with prison from 5 to 12 years and 100 to 200 days of fine.

Article 390.
The same sanction as specified in the previous article shall apply to:
1. Whoever knowingly hides, or covers the real nature, origin, location, destination, ownership, or assists to facilitate the benefit of the monies, titles, securities, goods, or other financial resources, whenever these are derived directly or indirectly from any of the illicit activities stipulated in Article 389 of this Code.
2. Whoever knowingly carries out transactions directly or through third parties, natural or juridical, in banking, financial, commercial institutions or institutions of any other nature, with monies, titles, securities, goods or other financial resources derived from any of the illicit activities stipulated in Article 389 of this Code.
3. Whoever directly or through third parties, knowingly supplies to banking, financial, commercial institutions, or institutions of any other nature, false information for the opening of accounts or to carry out monetary transactions with titles, securities, goods or other financial resources, whenever these are derived or have been obtained from any of the illicit activities stipulated in Article 389 of this Code.

Article 391.
Whoever knowingly uses his position, employment, profession or occupation to authorize or to allow the crime of capital laundering, described in Article 389 of this Code, shall be sanctioned with prison from 3 to 8 years.

Article 392.
Whoever knowingly receives or utilizes money or any other financial resource, resulting from crimes related to drug trafficking or capital laundering, for the financing of political campaigns or campaigns of any other nature, shall be sanctioned with prison of 5 to 10 years and shall be disqualified from holding public office for an equal term, after completing the term of prison.

Article 393.
Any public official who hides, alters, retrieves or destroys evidences or proofs of crimes related to drug trafficking, or capital laundering, or seeks the evasion of the person apprehended, detained or condemned, or receives money or others benefits for the purpose of favoring or harming any of the parties in the process, shall be sanctioned with prison of 5 to 10 years of prison and shall be disqualified from holding public office up to 10 years.

Article 4.
Title XIII, entitled Final Dispositions, comprising articles 394, 395, 396, is added to Book II of the Penal Code, as follows:


Title XIII

Final Dispositions

Article 394.
The terms of days, months and years referred to in this Code shall be computed in accordance to the Civil Code.

Article 395.
This Code revokes the Penal Code approved by Law 6 of November 17, 1922, and all the stipulations of reforms, additions or complementaries.

Article 396.
This Code shall become effective one hundred and eighty (180) days after its authorization. The Executive Branch shall make an official edition, as a book, without delay, for distribution in all governmental offices and will be on sale for the general public all over the Republic.

Article 5.
Article 31 of Law 23 of December 30, 1986, amended by Law 13 of 27, July 1994 (Single Text), shall read as follows:

Article 31.
In the case of other assets, excluding money or securities, the bank or crediting agency may declare the debt as past due and request judicial auction of the assets, in order to compensate the obligation.
The instruction official shall be notified personally of these processes, if this is not done, the process shall be void. Any surplus shall remain under orders of the pertinent district attorney office.

Both the actions of domain, as well as the petitions for the release of provisional seizure of instruments and other goods that be temporarily seized under orders of the pertinent district attorney office shall be resolved by the pertinent court which shall decide over the tenure or temporary administration of the goods, after receiving the opinion of the instruction official.

Article 6.
In reference to the indictment aspect of the investigations, monies, goods, titles, securities or other financial resources related to the crime of capital laundering, Articles 28,29,30,31,33, and 34 of Law 23, of December 30, 1986, amended by Law 13 of July 27, 1994 shall be applied wherever compatible (Single text).

In the case that the crime of capital laundering is a product of crimes related to drugs, all the indictment procedures will be applied whenever they are compatible and contained in the laws indicated in the paragraph above.

Article 7.
When the confiscation of assets, instruments, monies or securities, resulting from capital laundering has been judicially ordered, the Judge upon sentencing will order that these be placed at the disposition of the Special Fund for Retired and Pensioned created by Law 6 of June 16, 1987, amended by laws 18, of August 7, 1989, 15 of July 13, 1992 and 100, of December 24, 1998.

The monies seized which are product of the crime of capital laundering shall be immediately placed under disposition of the Special Fund for Retired and Pensioned subject to a sentence that orders their definite incorporation into the Fund or its return to the processed party or the victim, whichever is the case.

The dispositions of this Article do not apply when capital laundering originates from drug related crimes.

Article 8.
This Law adds one paragraph to Article 170, Chapter VI, Title XII and Title XIII, both of Book II of the Penal Code; amends Article 31 of Law 23 of December 30, 1986, amended by Law 13 of July 27, 1994 (Single Text), as well as Article 190 of the Penal Code; and revokes Articles 263 A, 263 B, 263 C, 263 CH, 263 E, and 263G of this Code, and any stipulation to the contrary.

Article 9.
This Code shall be effective upon its promulgation.

COMMUNICATE AND COMPLY.

Approved in third debate, in Justo Arosemena Palace, Panamá City....


This is the Laws for handling cash In Panama, they are very strict...



http://www.superbancos.gob.pa/aspec_...ecreelaw42.asp


Which Establishes Measures for the Prevention of the Crime of Laundering of Capitals

THE LEGISLATIVE ASSEMBLY
DECREES:
.
Article 1.

The banks, fiduciary entreprises, houses of exchange or of remission and persons either natural or juridical that exercise activity of exchange or remission of currencies, whether it is the main activity or not, financiers, savings and loans cooperatives, stocks exchanges, stocks centers, stocks houses, stocks brokers and investments administrators, are obligated to keep, in their operations, the diligence and care which are necessary to prevent, that those operations are performed with funds or over funds that arise from activities related to the crime of capital laundering and to prevent its perpetration.
The persons, natural or juridical, here mentioned, are under the following obligations:

1. To adequately identify their clients. To that effect they shall require from their customers all due references or recommendations, as well as the corresponding certifications that attest the incorporation and effectiveness of societies, and also the identification of officials, directors, proxies and legal representatives of those societies, in a manner that enables them to adequately document and determine the real owner or direct or indirect beneficiary.
2. To render declarations to the Financial Analysis Unit and/or require from its clients, proxies or representatives, the declarations that are necessary to achieve the ends of the present Law and the ends of the regulations prepared for its application, particularly in case of:

a. Deposits or withdrawals of money in cash for an amount exceeding ten thousand balboas (B/.10,000.00) or successive transactions in close dates that, even though individually they are for an amount lesser than ten thousand balboas (B/. 10,000.00), all together exceed that amount of ten thousand balboas (B/.10,000.00).

b. Change of bills, lottery tickets, checks, cash checks, traveler checks or orders of payment, or drafts of low amounts for others of high amounts, or viceversa, for an amount exceeding ten thousand balboas (B/.10,000.00).

c. Change of checks (cash checks, traveler checks, or others), and orders of payment, issued to the bearer, with blank endorsement and issued in the same date or in close dates and/or by a same issuer or by issuers of the same office, for an amount exceeding ten thousand balboas (B/.10,000.00).

.
Paragraph. The Executive Branch may vary the amounts of money in cash over which the obligation to declare is established.

1. To examine with special attention any operation, without regard to the amount involved, that may be particularly linked to laundering of capitals arising from illicit activities described in this law.
2. To furnish to its respective organisms of supervision the declarations related to the transactions refered to in the numeral 2 of this article, as well as any additional information related to such transactions for their proper analysis.
3. To communicate directly and by their own initiative, to the Financial Analysis Unit, any fact, transaction or operation on which there is suspicion of involvement with the crime of laundering of capitals. Bylaws will determine the suppositions or specific transactions that, obligatorily, must be communicated to the Financial Analysis Unit, as well as the persons that must convey the information and the way to do it.
4. To refrain from disclosing, to the client and to third parties, that information has been transmitted to the Financial Analysis Unit, according to what is set forth in the present Law, or that a transaction or operation is being examined for suspicion that could be involved in the crime of laundering of capitals. Compliance with this disposition is under the protection of the exemption of responsibility refered to in the article 3 of this Law.
5. To establish procedures and mechanisms of internal control and communication to prevent the perpetration of operations linked with the crime of laundering of capitals. The competence of such procedures and mechanisms of control, will be supervised by the organism for supervision and control of each activity, which will be able to propose the suitable correcting measures, according to the viability of the customary operations of the legitimate usuaries.
6. To take the suitable measures for the employees of the entity to have knowledge of the requirements arising from this Law. The measures will include the elaboration of plans for education and courses for the employees, to enable them to find out the operations that may be related to the crime of laundering of capitals and to know the appropriate procedures in such cases.
7. To keep for a five years period, the documents that properly attest the performance of the operations and the identity of the individuals who accomplished them or who had established business relations, when the obtention of such identification was obligatory.

The Executive Branch is authorized to vary the period of time for keeping documents refered to in this numeral.

Article 2.
The Superintendency of Banks, the other organisms for supervision and control of each activity, as well as the obligated persons, are expressly authorized to collaborate with the Financial Analysis Unit, in the exercise of its competence and to furnish to it, at its request or by own initiative, any information that they have, which is of help to prevent the perpetration of the crime of capital laundering, so that the Financial Analysis Unit may examine and analize this information.



Article 3.

All information that is communicated to the Financial Analysis Unit or to the authorities of the Republic of Panama, in compliance with the present Law or the dispositions for its regulation, by natural or juridical persons or their dignataries, directors, employees or representatives, will not constitute a violation of the professional secret, nor a violation to the restrictions over disclosure of information, derived from the contractual confidenciality or from any legal or regulatory disposition, and neither will it imply any responsibility for the natural or juridical persons mentioned in this Law nor for their dignataries, directors, employees or representatives.



Article 4.

Public sevants who receive or have knowledge of information, according to what is set forth in this Law, must keep it under strict reserve and may only furnish such information to the competent authorities, in conformance to the law.
Pecuniary sanctions, established in the article 8 of this Law, will be applied to the public servant who violates this disposition; and these sanctions shall be imposed by the competent authority, without prejudice to the sanctions set forth in the Penal Code for the crime of violation of the professional secret.



Article 5.

The respective organisms for supervision and control are expressly empowered to inspect the procedures and mechanisms of internal control, of each one of the juridical or professional persons that are subjected to their supervision, to verify the proper compliance with the dispositions established by the present Law.


Article 6.

The activities of the persons obligated in conformance with the present Law, will be supervised and controled by the respectives public entities or organisms of supervision and control, established by law for the correspondent activity.


Article 7.

The following entities will be obligated to furnish, to the Financial Analysis Unit, as the Executive Branch determines by regulations, declarations over transactions in cash and cash equivalent (defined in the Executive Decree 234 of October 17, 1996, article 3, numeral 3) refered to in the numeral 2 of article 1, for an amount exceeding ten thousand balboas (B/.10,000,00):

1. Enterprises established in the Colon Free Zone, other free trade zones and processing zones.
2. National Lottery of Beneficence
3. Casinos and other establishments for gambling and games of chance
4. Promoter enterprises or enterprises for real state brokerage
5. Insurance and reinsurance companies, and reinsurance brokerage companies
6. The entities refered to in this article shall mantain in their registers the name of the client, his/her address and his/her identification number.
7. The Executive Branch may vary the amounts of money in cash or cash equivalent over which the obligation to declare is established.

Article 8.

Without prejudice to the measures set forth in the Penal Code or in other laws, decrees or regulations in force in the Republic of Panama, non compliance with the dispositions established in this Law or the ones prescribed for its application by the respective organisms of supervision and control of each activity, shall be sanctioned only for this deed with fines ranging from five thousand balboas (B/.5,000.00) to one million balboas (B/.1,000,000.00), depending on the importance of the violation and the degree of the recurrence, that will be imposed by the respective entities or public organisms of supervision and control of each activity or the jurisdictional authority, at their own initiative or at the request of the Financial Analysis Unit, which must report to them any evident non compliance.



The amount of the fine will be send to a special account for the Financial Analysis Unit, as part of the budget of the Security Council, and will be used for the only purpose of training and educating personnel and the acquisition of information equipment and tools and other resources that allow them a high degree of specialization.


For the exclusive effect of this article and the regulations that are adopted in its development, the deeds and behavior of the directives, dignataries, executives, administrative or operations staff of the juridical persons established in the article 1 of this Law, are imputable to the juridical persons on whose behalf they perform.
The natural persons who perform such deeds and and exhibit such behavior will be subjected to the civil and penal responsibilities, in the terms set forth by law.



Article 9. Article 153-A is added to the Law Decree 1 of July 8, 1999, thusly:

Article 153-A.

It will be a requisite for the offering, purchase or sale of securities through any public organized market, such as the stock exchange in or from Panama, the previous deposit of the securities in a center for custody and liquidation, agent of the transference or another financial institution duly registered in the National Securities Commission.

This Commission is authorized to establish the requisites of the register, mentioned in the above paragraph.

The previous deposit may be performed through the immobilization of physical securities, of global titles or macro titles representative of the securities or through the dematerialization of the securities and instrumentation of a system of entries in account, in the way and terms established by this Law Decree.

Article 10. (Temporary).

It is recognized the validity of the Agreements No. 5-90 of March 19, 1990; 1-91 of January 15, 1991, 2-96 of October 31, 1996, 2-97 of February 27, 1997 and 3-97 of June 12, 1997 of the National Banking Commission; as well as the Executive Decree 234 of October 17, 1996, which will continue to be effective, in those areas that do not contradict the letter and the spirit of this Law, until they are replaced by the new regulations dictated for the development of the present Law.


Article 11.

This Law adds article 153-A to the Law Decree 1 of July 8, 1999 and annuls the Cabinet Decree 41 of February 13, 1990, the Law 46 of November 17, 1995, as well as any disposition that is against it.


Article 12.

This Law shall become effective thirty days after its promulgation.

I'm with you Bel-Air...

However, it's always an evolving cat and mouse game where they keep upping each other's level of sophistication and strategies... and until now the "dark mouse" have been a head of the cats. LOL

It might be more difficult... but I doubt it's going to change anytime soon.

Rock on!
Matt

Tell them that you will pay cash.

That being said, I would never pay the fee you mention regardless.

Originally Posted by HOSEM1

In the closing costs of a real estate transaction in Panama, other than the attorney and notary fees, there is something called escrow services fees(0.5-1 % of sale price). Is that something obligatory? Do you always have to pay that?

In respect to the laws used to crack down on illegal money, one thing that you can count on in Panama is things don't change quick. It's one thing to have laws and it's another to enforce them. Let's face it, drinking and driving is illegal here but $10-$20 can fix almost anything on the street. When it comes to government then the price goes up, that's all. I will say the new Prez, Martinelli, appears to be a pretty straightforward and honest (as far as politics goes in general). But, corruption in this country has been there for so long.

Since this crack-down on illegal money is being primarily driven from US influence, if economic problems really go to hell (and I don't wish this) the US could really loose it's international standing and influence. Ta-Dahhhhhhh, no more worrying about what Uncle Sam thinks? Why, because Brazil, Russia, India, and China (BRIC) combined can swing a larger economic stick.

---------- Post added at 11:56 PM ---------- Previous post was at 11:49 PM ----------

I hate to admit this but I kinda got the feeling many world governments have gotten tired of US influence and they are waiting for the US to crash and burn economically.

It feels like the Panamanian real estate market is a Ponzi scheme run by Jabba the Hutt.

I wouldn't mind buying something to live in at 20-30 % off the current prices, but I don't want to be the only person in the whole building for the next 3 years.

If the buildings fill up Panama will look like this afterwards:
http://www.swedetrack.com/lagosbus.jpg

Lol, like the pic. You would also have rolling blackouts and water rations daily.

---------- Post added at 02:12 AM ---------- Previous post was at 02:10 AM ----------

You would have to time your shower and daily P&*P.

Don't take this the wrong way guys....

But perhaps the world will be a free'r, happier place, not to mention more safe once the USA does crash and burn....

Then alot of peoples and countries can be free again, and we can go back to sound economic principles with liberties...

Gee, I gonna miss it when they used to search my laptop at the airport for hours, and all the tax audits...

You've had your laptop searched?

That's another level...

Matt

I didn't take my laptop with me last time I went back for a visit to the US. So help you god if they find an illegal .mp3 file on your laptop. You'll wind up doing 5 years and fined $250K.

One worry about a dollar collapse would be war to prevent it and secure the petrodollar. USA is already in iraq - securing democracy or securing oil? In afghanistan to secure democracy or help a pipeline get built? 911 was largely a saudi arabian adventure so there maybe is reason for regime change there to secure democracy - or oil? And you have Obama getting the Nobel Peace prize. usually you have to be implicated in some kind of mass murder to get that prize

Bloomberg Article: TIPS Show Bernanke Isn’t Whipping Inflation Concerns (Update2) - Bloomberg.com

"After getting bludgeoned by the subprime mortgage collapse, investors are preparing for another potential crisis: a surge in the cost of living spurred by the $11.6 trillion the Federal Reserve and the government have lent, spent or guaranteed to shore up the economy and the financial system. While inflation is tame now, they see danger signs in the doubling of crude oil futures since January, gold trading at record highs and the 14.5 percent tumble in the trade-weighted Dollar Index since March."

Bel-Air....you indicated you were in the construction business...what are construction costs like/sf or m2? Particularly in the rural areas?

I owned a house building company in Canada, and also in the USA for some years, never in Panama....

At least in Canada, construction costs are still high, at least in western Canada..... I have no idea about Panama, sorry.

One last thing, there will be few americans buying in Panama, with banks making it hard or even refusing to open accounts... also with homes being given away in america and they still can't sell them, doubt they would pay big $$$ in Panama then...

Read the latest from the USA, and the housing crisis goes on....

At foreclosure auctions, broken dreams on sale

• On 11:52 am EDT, Thursday October 15, 2009

• 
  
  • Buzz up!
  • Print

By James B. Kelleher
Reuters - An unidentified employee of Zetabid, which organized a September 19 auction of foreclosed properties in the Chicago area, ...



CHICAGO (Reuters) - The seven-bedroom, three-bath house in this city's West Garfield Park neighborhood had once been someone's American Dream.

But at a recent auction of about 100 foreclosed houses and condos, it was just Property No. 20 -- and drawing no bids from a roomful of buyers despite its bargain-basement price.

"Any interest in this home at $7,000?" fast-talking auctioneer Renee Jones asked the crowd. "If not, we'll move on."

Saddled with swollen portfolios of foreclosed and unsold properties in the housing crisis, U.S. lenders and builders are turning to professional auctioneers to help them unload the unwanted real estate in a hurry.

It is an open question whether the auctions indicate that the U.S. real-estate market is recuperating or is still in intensive care.

But the rapid-fire, under-the-hammer sales -- usually resorted to only after every other effort to market a property has failed -- are on the rise across the United States, providing a colorful burst of activity in a corner of the weak economy that needs all the life it can get.

"Over the last two years, we've progressively seen more and more of these," said Chris Longly, the deputy executive director of the National Auctioneers Association trade group. "It's a sign of the times."

Hard data on the number of foreclosed properties being sold at auction are hard to come by. "The foreclosure market is a moving target right now," said Dave Webb of Hudson & Marshall, one of the biggest auctioneers in the market.

But Hudson & Marshall and its rivals say they are gearing up for more in the coming months, convinced that a moratorium on foreclosures earlier this year only postponed what they believe is an inevitable avalanche of new repossessions.

"The foreclosures are going to explode again," said Webb.

DREAMS ON THE CHOPPING BLOCK
The cadence and rhythm of the auctions, and the great deals that many buyers walk away with, make the events exciting to watch -- and make it easy to forget the heartache that lies behind almost every forced property sale in a country where home ownership is often equated with "The American Dream."

At the weekend Chicago event, Jones managed to race through the 100 properties up for bid in less than two hours.
When a home did not immediately attract interest or the minimum price, Jones, wielding her gavel in front of a giant tote board, wasted no time moving on.

Kendi Kiogora, a 28-year-old first-time home buyer, said she felt like she "won the lottery" when she bought a one-bedroom, one-bath apartment in Chicago's trendy South Loop neighborhood, with skyline views and heated parking, for just $105,000 -- $62,000 less than its last listed price.

Real-estate professionals in attendance were less euphoric.
Antonette Taylor, an agent at a brokerage that plans to start holding auctions this fall, said the low prices -- most sold for 30 to 50 percent below their last deeply-discounted list price -- made her "a little nervous for my sellers."


Other troubling signs: buyers passed on almost half the properties offered in Chicago and fewer than 100 bidders showed up for the event, which also attracted some online buyers.

"We're having a difficult day," said Tom Atkins of Zetabid, the company holding the auction. "There was a $1,000 property that no one bid on. You'd think a slum lord at the very least would buy it and put a (federal housing assistance voucher) renter in there for $600 a month."

Atkins said bidders at auctions are generally evenly split between first-time homebuyers and veteran investors. Zetabid has a special VIP area near the auctioneer's dais so bidders can raise their paddles with one hand even as they sign contracts with the other.

Among the investors was Thomas Smith, 48, who paid $16,000 for a five-bedroom, three-bath home in Englewood, a notoriously violent neighborhood on Chicago's South Side he called "the murder capital of the world."

Smith figured another $15,000 in repairs would render the place rentable and said his ideal tenants would be "people...who fell off the ladder a little bit. I'm not trying to make a million dollars or anything."

BETTER THAN NOTHING
Later, when the nine-bedroom, four-bath property that David Kosak's boss had been trying to sell for a year went under the hammer, it fetched just $15,000 -- less than one-third its last list price but a figure the 23-year-old broker's assistant called "better than anything we've gotten."

Asked if he thought the auction activity might be a sign the property market was improving, Kosak was less upbeat.

"If it's getting better, we're not seeing it," he said. "We only do foreclosures, and we're only getting busier."
Whitney Tilson, a managing partner of T2 Partners and Tilson Mutual Funds and the author of "More Mortgage Meltdown: 6 Ways to Profit in These Bad Times," said there is a reason Kosak's office is getting busier.

After Barack Obama's election as U.S. president last year, Fannie Mae and Freddie Mac, the two government-sponsored mortgage giants, imposed a foreclosure moratorium that lasted about four months. Many private banks followed suit.

As a result, there was a gap in the pipeline of foreclosed homes that pushed into late spring. That helped auction prices stabilize for a few months and permitted some analysts to claim the market had found its bottom.

But the moratoriums have now expired. With the mortgage modification and foreclosure prevention efforts championed by the Obama administration unable to keep pace with defaults, as many as 7 million homes and condos may eventually enter foreclosure before the dust finally settles, according to a report by Amherst Securities Group issued in September.

"There are a lot of things that have temporarily stabilized the market," Tilson said. "But those things are going away ... Delinquencies are spiking. This is going to be a mess."

I just looked at craigslist and there were 70 units posted for Thursday alone.

As far as the drug trade and dinero that flows through Panama:

According to the United Nations Office on Drugs and Crime (UNODC), drug trafficking through Panama has more than quadrupled over the past decade: In 2000, the Republic seized just under 6,000 kilograms of cocaine. In 2007, that number jumped to more than 32,000 kilos with the unreported numbers in 2008 and 2009 staggering. Concerns that Mexican and Colombian cartels are increasingly using Panamanian turf are prevalent among foreigners and locals alike, particularly with express kidnappings, a cancer in nearby Costa Rica, becoming more common everyday.

The key point is: UNREPORTED NUMBERS STAGGERING. They catch maybe 1% (or a lot less) of what's goes through. When you use your calculator to figure how much money this might be... you quickly understand why this "hidden factor" is supporting the market.

Matt

Interesting read...

I purchased a condo-hotel in 2006 on Naos Island. I did because the location is great (view on the canal, bridge of america... and on the other side of the amador you have the view on Panama City).

It's a big project, with a Casino, Hotel... plus the units that you can enroll into the Hotel pool to rent if you don't live there.

It was worth 150k at that time... and went up to maybe 350k until the economic crash. Now, I guess it's worth 250k or so.

Problem is the renewal of bank letter for the 100k mortgage, which expires every year. Since the project is still not completed after 3 years, I need to renew that letter and give it to the promoter.

You contact the bank, they don't reply... hardly write or speak english and simply want to ignore you. This is HSBC. I did not really understand why it was so complicated until I noticed how bad the real estate is in Panama.

Plus, the broker does not help at all with the mortgage. They don't care for foreigners EXCEPT if you are looking to buy again. I'm not sure what to do right now... since the project will probably be delayed again for another year, I guess I'm better preparing myself to have 100k cash in hand at time of closure. But I would not feel safe that way... having a mortgage with a bank sounds safer to me. I heard bad things about people paying cash.

I don't want to give away the project, since it can be rented by business men, tourists or canal workers. The balance is pretty low too and the rentals will easily cover the mortgage.

Last time I went to Panama (March to May 2009), the buildings were still empty at night, but it was hard to rent quality apartments under $1200/month.