Latin Real Estate Boom

Latin America's real estate sector is booming, thanks in large part to a growing number of US retirees buying homes. Panama, Mexico and Costa Rica are leading the way, but also Argentina is seeing a boom.

Donald Trump is busy these days. Apart from running his real estate empire and planning another reality TV show, he is preparing to develop a 62-story hotel and apartment tower in Panama City, Panama.

The planned Trump Ocean Club International Hotel and Tower will feature more than 300 hotel rooms and 500 luxury apartments as well as a casino, yacht club and its own private beach.

But Trump isn't the only one developing highrise towers in Panama. "In Panama City thereare new skyscrapers going up all over," says Robert Baker, president of the American Chamber of Commerce in Panama.

Panama is seeing unprecedent interest from U.S. retirees, partly asa result of positive media coveragein Conde Nast Traveler and magazines published by the American Association Retired Persons (AARP). And CBS filmed three Surivivor series in Panama, more than any other country, Baker points out.

Panama is one of three real estate markets in Latin America seeing heightened interest, according to Rogerio Basso, Latin America real estate specialist at US-based consultancy Ernst & Young.

"In general, markets that provide a good combination of air lift from major destinations, proximity to key source markets and coastal locations are experiencing explosive growth," he says. "In discussions with our clients and the investment community, we are observing that there is heightened interest in Mexico, Costa Rica and Panama."

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The Trump project, with a total cost of $220 million, will start in the second half of the year and be ready by 2009. Construction firm Arias Serna y Saravia SA and real estate marketing company Espacios Urbanos S.A., both from neighboring Colombia, are also involved in the new project.

"With this development we will set a new standard of luxury in Panama," Trump said in late April. "The Trump Ocean Club, International Hotel & Tower, will be a magnificent and distinctive contribution to Panama City, one of Latin America's most dynamic cities."
Meanwhile, Panama City has also seen a race between two rival projects aimed at becoming the tallest building in Latin America. The 104-story residential and hotel building, Ice Tower, is slated to be completed in 2010. The building is being developed by F&F Properties LTDA., Inc, from Panama, while the design is being done by local architecture firm Pinzon, Lozano & Asociados.

Spain-based Olloqui Group is constructing a 93-floor building, Palacio de la Bahía, located on the Bay of Panama. It is expected to be finished in 2009 and is being designed by local architect Jesús Díaz & Asociados. The two projects were originally smaller, but subsequently started adding floors to obtain status at the tallest building in the region.
And Grupo Mall, another Spanish developer, is building a multitower center of apartments, hotel and commercial mall. The project, scheduled for partial completion in 2009, is designed by UK architect Chapman Taylor LLP.

And the real estate boom isn't only limited to the capital. The K Group, Trump's local partner on the new tower, is also developing Emerald Bay on Isla Contadora and Coronado Country Club Resort, a major development consisting of 300 apartments and houses, near the main tourist areas of Panama. A new project similar to the Miami Seaquarium is going up in San Carlos and even the Wal-Mart heiress is looking for land in Panama, Baker says.

European real estate investors are also developing luxury beach front villas in the Azuero Peninsula, Isla Viveros in the Pearl Islands and Montañas de Caldera near Boquete, according to the International Herald Tribune.


"You have a real boom going on here," Baker says. "Land prices are going up fast and some of the big condos in the city are increasing in price by $25,000 per month."

He expects the boom to last at least five more years, if not another decade. Apart from the existing demand, future developments will also be helped by such factors as the planned expansion of the Panama Canal, a planned refinery by U.S. oil giant Oxy and a new mega port near the Pacific entrance of the canal. Combined these will inject $11.8 billion into the Panamanian economy, Baker says.

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