Panama is seen as a country linking North and South America, making up the thin parcel of land between the two continents and providing the famed trade route between the Atlantic and Pacific Oceans. But Panama in the modern world is much more of a link than just trade and physical geography. Since the end of the dictatorial reign of General Manuel Noriega in 1989, Panama has become a shining example of how a country that was previously seen as old-fashioned and closed has developed and opened itself up to the economies and investment of international business and retained its character and traditions.

This development of the country and its potential has led to an influx of overseas property investors seeking to take advantage of the growth of international business and also the tourism opportunities that are available in a country that has coastlines on both the Caribbean Sea and the Pacific Ocean. Popular buying locations For UK buyers in Panama, the first forays into the market were ubiquitously in Panama City, where the safest investments were available and where the market for rentals had the highest potential returns. Since then more resort-based developments have come onto the market, and Panama is now seen as much as a lifestyle destination as an investment one.

That said, Panama City is still a great hub for the overseas property buyer to explore initially, and many expats are choosing to settle there as well. The capital has the business drive that has welcomed large numbers of multinational companies to the city, and with that builders have developed high-end apartment complexes to cater for the workforce. This was the initial investment opportunity spotted by overseas investors. The development of more tourist resorts in the coastal areas has since spread outwards from Panama City, combining properties on the sandy beaches of both the Caribbean and Pacific coastlines. Amador, just outside of Panama City on the Pacific side of the country, and the towns of Portobelo and Maria Chiquita on the Caribbean Sea are resorts to watch out for.

With the focus of property in Panama now shifting towards lifestyle alongside the investment angle, there are a number of retirement developments now on the market. Given that the tax breaks for private investors in Panama are valid on any property purchase, the incentives for US and even UK retirees to move to Panama are strong.

Legal issues There are no restrictions for British nationals buying in Panama, and if buying in the country Brits have the same rights and protections as Panamanian residents. As an offshore haven, it is also possible for purchase property through a company should you wish to set one up.

The buying process There are two principal methods of buying property in Panama, which effectively translate to the freehold and leasehold systems we are used to in the UK. The ‘Right of Possession’ properties are primarily in areas which are protected for some natural or historical reason, and allow buyers to become effectively a custodian of the property for the period of the lease. ‘Titled’ properties are the more common option, which gives the owner outright possession of the property in question. Panama is blessed with one of the most effective and comprehensive land registry systems in the world. The system for buying a titled property is relatively simple and straightforward, and as long as buyers follow the steps of the transaction, they should be protected and the sale should be easy to complete.

Once you have carried out the appropriate ‘due diligence’ checks on the property, you can proceed to the Promise to Purchase agreement which secures the property through a deposit of between 10 and 20 per cent. This agreement sets down the terms and final purchase price, as well as giving the buyer time to take care of their administration and checks. This agreement is recorded in the Public Registry. Next comes the Purchase and Sale agreement, which then allows for the final transfer of deeds and the handing over of keys as the final amount of the sale is paid. All of the terms of this part of the transaction have been laid out in the preliminary contract. At this point all of the paperwork, fees and taxes need to be taken care of, and once the deeds have been registered under your name with the Public Registry, the property is legally yours. As much of the property being offered for sale to overseas buyers is new-build or off-plan, the process of buying should be simple and easy to complete. In any case, with any kind of property purchase, it is strongly recommended that you take independent, expert legal advice before entering any form of contractual agreement.

Finance As the property buying process in Panama is well-established and organised, it comes as little surprise to learn that there are many banks based in the country itself offering financing options for overseas property buyers. The country uses the US Dollar as currency, and operates a generally low rate of inflation. Mortgages are typically offered at up to 80 per cent LTV (Loan to Value).

Fees and taxes There will be a cost involved in making sure your legal costs are covered so you are satisfied the contracts you are signing are legitimate and protect you fully, which will depend on the amount of time taken and the company you use. Often this can equate to five to 10 per cent of the property price. As a buyer you will also be required to pay the real estate transfer tax of two per cent of whichever is higher of the purchase price or the registered property value. Registering the property deeds in your name at the public registry can take up to 10 working days. Income tax is not payable on any income from outside of Panama, including pensions.

Visas, residency and permits There are a number of different temporary and permanent visa and residency schemes that have been created by the Panamanian government in order to facilitate emigrating to, and investing in Panama. All of these offer tax incentives, and pensioners are as welcome as young investors.

Investment potential Property prices in Panama are rising quickly, and have been doing so for at least the past year, making it one of the best destinations for overseas property investment currently available. The combination of new foreign direct investment in the country, a Dollarized economy and tax incentives for investors mean that there are plenty of opportunities to make money. The economy and government are now stable, and have been for some time with the support of the US. The Panama Canal is also scheduled to be widened over the next few years to allow the latest breed of supertankers to pass through easily, which will bring increased prosperity to the country as a whole.

Health and education The healthcare system in Panama is generally regarded to compare favourably with the most advanced countries in the world, and therefore stands above most of the countries in the immediate vicinity for the standard and availability of care. It is said that you are rarely more than 30 minutes from a hospital and private healthcare is very reasonably priced and world-class. In a similar vein, the private education system in the major cities of Panama is of a very high standard. International schools are available to fit in with the cosmopolitan nature of the country.

Transport As you might imagine with a country that is one of the most important trading hubs in the world, international transport links to major destinations are good. The widening of the Panama Canal over the coming years is set to bring yet more prosperity to the region and keep the shipping lane at the forefront of world trade.

And finally… Panama is one of those rare overseas property destinations where property is expected to double in value in the next three to five years, and the cost of living is up to 75 per cent cheaper than in the UK. All this is combined with a lifestyle and landscape to rival the best of the Caribbean. Beaches and palm trees abound in the coastal areas and with crime rates low and a stable, respected government, there is good potential for both investment and emigration.

This article originally appeared on the website www.buyassociation.co.uk. Please see external link.