The Republic of Panama is in Central America, which connects North and South America. It borders Costa Rica and Colombia.

What's so special about it?

The new government has been committed to developing the country and is planning to spend over $5bn upgrading the Panama Canal, the economy is growing by 8.1% and the focus on the property sector has meant the majority of the tallest skyscrapers in Latin American are now located in Panama. The 2007 Worldwide Quality of Living Survey, by Mercer Human Resource Consulting, reports that Panama City is the fourth-best city in which to live in Central and South America after Montevideo, Buenos Aires and Santiago.

Best kept secrets

About 25,000 US citizens live in Panama and the target audience for investment in the country is the retirement market, as around 78 million Americans are due to retire in the next 10 years. To attract these retirees, the Panama government has put into place a number of incentives. To qualify as a "pensionado" investors only need a guaranteed pension income and they can avail of a whole range of discounts, such as 30% off bus, boat, and train fares; 25% off airline tickets; 50% off hotel stays; 25% off restaurants; 10% off prescription medicines; 20% off doctor's consultations; 15% off dental and eye exams; and 50% off closing costs for home loans.

Who lives here?

Angelina Jolie and Brad Pitt bought a penthouse in the Trump Ocean Club project, Mel Gibson bought a condo in a project called The World, Mick Jagger bought a home in Pedassi, John Wayne owned an island off the coast and Bruce Willis, Tom Cruise, Eddie Murphy and Tommy Lee Jones bought properties on the Azuerros peninsula.

What's the property market like?

One of the biggest property stories in Panama was the launch last year of Donald Trump's $220m Trump Ocean Club tower development in Panama City. Irishman Mark Cox, from Cox Realty Panama and Irish Overseas Investments, believes demand for property in Panama will continue for five to 10 years as American baby boomers retire and the canal expansion, oil refinery and other projects get under way. According to the Global Property Guide, foreign ownership has surged in the last few years and property prices have risen by 25% per annum.

While many new projects have been launched, there have been some failures. In late June, La Prensa newspaper reported that one of Panama City's major projects, the heavily publicised Ice Towers . . . which was projected to reach 104 storeys and be one of the highest residential buildings in the world . . . would not go ahead. This follows the 97-storey Placio de la Bahia project, which also did not go ahead.

"We hold the opinion that these are not the only projects to fail. The official loss of Palacio de Bahia and now Ice Towers is certain to cool down what was a sizzling real estate market, " according to the Panama Legal Law Firm.

How do you go about buying property?

Sources of information on the Panama market include La Prensa newspaper and Panama Real Estate magazine. The best places to find agents in Panama are through the Panama Real Estate Group or ACOBIR . . . the Panamanian Association of Real Estate Brokers and Developers.

There are some minor restrictions on what you can buy in Panama. Foreigners cannot buy property within 10kms of the frontiers or islands under Panamanian rule. There are two types of purchases . . .normal titled properties and possession rights. When buying a titled property it is advisable to check its details with the public registry office and make sure it is not in the way of any planned developments. Properties with possession rights are similar except the property is in special zoned land so can only be granted a type of lease for a set amount of time.

Where are the best places to buy?

Cox believes the best area to buy land is along the Pacific beaches between Punta Chame and Farallon. Hotel groups buying up land here have created an established market and the government has plans for an international airport at Rio Hato. Pedasi and Canbutal, four hours from the capital, are also popular with celebrities and upmarket buyers. In the old area of Panama City called Casco Viejo, where properties date back to the 1600s, the government is offering incentives for people to restore properties here. The town of Boquete has been voted the number-one retirement location by International Living magazine and the American Association of Retired Persons.

What's the rental market like?

The Global Property Guide puts average yields at about 8% to 12.5%, with rents rising by about 12% a year. Rental yields are higher in Panama than in Mexico, Brazil or Costa Rica.

What's the resell market like?

With a strong emphasis on home ownership and demand for housing, the resell market should be strong. But as flipping becomes more popular, the Panama Legal Law Firm are warning that some buyers may get caught out as the market matures.

Average property prices?

Cox reports that in Panama City prices range according to the area. In Balboa Avenue and Costa Del Este prices are from 185,763. At the Trump Ocean Club prices are from 260,060. At Amador prices are from 111,454 and at San Francisco from 74,303. Beach houses are from 96,570 and condos from 133,713.

What are the tax breaks with Ireland?

There is no double-taxation agreement with Panama. There is property tax of up to 2.1% on properties over 22,283 and rental income is taxed on income tax on a sliding scale from 0% for income less than 22,283 to 30% on income over 148,558.

FAST FACTS

Getting there: : Delta Airlines, American Airlines, Aer Lingus, Continental and BA fly to Panama.
Area: 75,517sq km
Population: 3,320,000
Currency: Balboa (linked to the US$; $1 = 0.74)
Weather: Average temperatures from 22degreesC to 32degreesC.
Transport: International flights to Tocumen International Airport and Panama has a number of private stripways so flying is the easiest way to get around, although buses and taxis are cheap and frequent. It is easy to rent a car here but roads are not great.
Going out: Panamanians are very image conscious so dressing casual is considered lowly, or even disrespectful. Beers are not great but Seco, a white rum, is the national drink and Seco with milk is a popular tipple. There are many discos in Panama City and Calle Uraguay is the main party area.
Eating Out: The indigenous name for the country is 'abundance of fish' so seafood is common. They also like culantro, a local plant with a strong flavour. There are many restaurants and they like their food spicy.
Shopping: Panama is home to one of the world's biggest free-trade zones, so large malls with a range of cheap products are common. Balboa, in the city, is a good spot for traditional markets.

USEFUL CONTACTS
>> Honorary Consul of Ireland in Panama: 00507-264 6633; irishconspma@online. ie
>> Panama Embassy in London: 0044-207 493 4646; www. panaconsul. com
>> La Prensa Newspaper: www. laprensa. com
>> Panama Real Estate Magazine: www. panamarealestatemag. com
>> Panama Real Estate Group: www. panama-real-estate. com
>> Panamanian Association of Real Estate Brokers and Developers: www. acobir. com
>> Guide to Panama: www. panama-guide. com
>> Panama Tourism: www. visitpanama. com
>> Living & Working in Panama: www. businesspanama. com >> The Global Property Guide: www. globalpropertyguide. com
>> Association of International Property Professionals: www. aipp. org. uk
>> Federation of Overseas Property Developers, Agents and Consultants: www. fopdac. com
>> My Overseas Property: www. myoverseasproperty. ie
>> Overseas List: www. overseaslist. com