Panama is a city of contrasts. Boasting Latin America’s most sophisticated skyline, it clearly has a bright future as a financial and business hub. Yet Casco Antiguo, the city’s Unesco-protected historic centre, is a stunning reminder of its colourful past.
Casco Antiguo now sits among Santo Domingo in the Dominican Republic, Cartagena in Colombia and Quito in Ecuador, as one of Latin America’s most impressive historic centres. Rundown and dilapidated in the 1990s, Casco Antiguo is undergoing great restoration since it was designated a Unesco World Heritage Site. Local entrepreneurs took the initiative, with a group of Panamanian businesspeople forming Compañía Inmobiliaria San Felipe a real estate developer that began restoring historic sites. International investors also played their part, recognising the value of the historic centre and paying premiums for restored buildings.
After 25 years of investment the challenge for developers is no longer to save Casco Antiguo but rather to find premium sites that need restoring. One of the last major projects is Plazuela de Alfaro residence, which is part of the Baluarte de San Felipe Master Plan – a project to restore seven buildings located at the historic entrance of the centre.
Founded in 1673, after pirates ransacked the previous Panamanian capital, Casco Antiguo has weathered many political and economic storms. Indeed, it looks well placed to ride out the current pandemic, better than other premium luxury real estate markets.
The Casco Reactivation Plan looks to help the historic site bounce back from coronavirus. There will be touristic routes, cultural routes, an agenda of events in public spaces and the opening of the restaurants onto the street. That will involve partially pedestrianizing Casco Antiguo – a welcome change made possible by the pandemic restrictions on traffic. Investors are expecting mobility will also be improved by new parking projects that local authorities have in plan.
Traditionally, rental yields in Casco Antiguo come in at around 10%. Clearly, they will be slightly lower in 2021 and 2022 because of the pandemic impact on the Panamanian economy, while the travel restrictions particularly hit the Casco Antiguo market, as many buyers are international. Yet rental demand should increase in the medium term. In an era where people increasingly work from home and want to improve their work life balance, Casco Antiguo is a charming small historic town, in a bustling financial hub.
Moreover that 10% figure doesn’t take rising asset prices into account. Over time, prices in Casco outperform the denser, newer parts of Panama City, because these historic buildings are unique and unrepeatable. Casco property prices vary depending on the architectural characteristics and location. The most prized sites are in the squares, with sea views and those with car parking. Generally, prices range from $3,500 to $4,500 dollars per square metre, although you can also find some above that price.
It is one of the most expensive zones in Panama City, but those prices are justified by the unique nature of these buildings. Restoring a historic building, which often has facades that need to be retained, is far more expensive than constructing a new apartment block. For example, Compañía Inmobiliaria San Felipe, had to invest in archaeological studies to ensure that Plazuela de Alfaro the preservation of the impressive historical patrimony within the properties´ premises. Moreover, strict planning rules in Casco restricts the height of buildings. That improves living quality – as it limits population density and creates nice views – however, by restricting supply it also makes property more expensive.
Another advantage of investing now in Casco is the Investment Incentives Law which was created by Panamania government in 1997 and will expire in December 2023. This law was created to boost investment in Casco Antiguo, and it gives discounted mortgages for property purchases. Under the scheme buyers can receive finance with rates that are 3% below the average Panamanian mortgage rate. Moreover, the property will then be exempt from land and building tax for up to 30 years.
Panama is a global trade hub that has always been welcoming to international investors. That’s reflected in the Panama Investor Visa – an incentive that offers permanent Panamanian residency to anyone who invests more than $300,000 in real estate. That threshold will increase to $500,000 by October 2022.
Plazuela de Alfaro
Designed by US-trained, Panamanian architect, Daniel Young Torquemada, Alfaro Plaza will be comprised of 23 apartments and nine commercial sites. Thanks to its location, Plazuela de Alfaro offers its future inhabitants spectacular views of the bay, the Barlovento Bulwark and the colonial wall. The main entrance to the residential area will be through the historic Casa Cordovez, which will connect with Plazuela de Alfaro through beautiful bridges. In addition, from the Avenida Eloy Alfaro the building will have another residential entrance and plus an extra trade entrance that will be completely independent.
One of the main appeals of this residential development is the contrast between the historic and the contemporary. Moreover, the connection with Casa Cordovez, will create a beautiful corridor – the Paseo Amurallado– with a vertical garden. In the courtyard of Plazuela de Alfaro we find one of the three bulwarks – The Barlovento Bulwark- that belonged to the historic wall of Panama City. Yet in the magnificent terrace, residents will be able to lounge in the pool while admiring the landscape view of Panama City’s modern skyline.