BOQUETE, PANAMA — New Zealand was too far, the south of France too cold and Colombia too unsafe for Casey and Susan Koehler. So the former Floridians settled quite happily on this mild and isolated coffee-growing town in western Panama for their retirement home.
A former U.S. government official, Koehler had the bucks to spend his golden years anywhere in the world. That he and his wife chose this hilly, horsy town of 20,000 over their three other "finalist" destinations speaks volumes about Panama's growing attraction to American retirees.
"I'm a heart-attack survivor, so I like the laid-back thing. And knowing that every day I wake up, it's going to be between 72 and 80 degrees," said Koehler, 66. Two years ago, he and his wife plunked down $192,000 cash for a three-bedroom, 4,000-square foot house in the Los Molinos subdivision. The purchase price was a third of what they would have paid in Irvine, Encinitas, Calif., or Naples, Fla., where they used to live.
The Koehlers' home is near a scenic canyon and waterfall, a typical Boquete tableau. But they and 1,000 other foreigners who have retired or bought second homes here have been lured by more than tranquillity, the weather and beautiful scenery.
For expatriate retirees, Panama offers big discounts on plane fares and hotels, good healthcare and shopping. All foreign income -- such as U.S. pension benefits or Social Security -- is exempt from tax. And for Americans, financial matters are simplified because Panama uses the U.S. dollar as its currency. The atmosphere is friendly and more pro-American than many other Central American countries.
"The cost of living is much lower and the roads much better than places like Costa Rica," said Shirley Bynum, a former Huntington Beach resident who moved here two years ago from Gracia, Costa Rica, after she was robbed. "And the tax system is more favorable."
Bill Schroff, a former investment banker who advises U.S. investors and firms moving here, said Panama's cost advantages over "Miami, San Diego or other nice-weather places that people want to retire to" are dramatic.
"Plus, Panamanians welcome us," Schroff said. "It's been an international banking and transportation hub for decades. They're used to having gringos around, and they like us."
Although Mexico and Costa Rica have been gaining popularity for several decades, Panama was "discovered" just a few years ago. Special retiree visas granted by the Panamanian government over the last 12 months exceed 1,300, triple the figure for all of 2004.
Schroff's company, Panama Real Estate Holdings, specializes in the Panama City high-rise market, in which foreigners are snapping up condominiums in the dozens of projects going up in the capital's frenzy of construction. Americans aren't the only buyers: The expansion of the Panama Canal and the booming economy are drawing multinational companies from around the globe whose executives need housing.
Panamanian developer Jose Antonio Bern said the boom was being fed by several trends, including Venezuelan President Hugo Chavez's socialism that has sent investors fleeing and the Sept. 11, 2001, terror attacks that have made travel to the United States more complicated for Latin Americans. "A lot of little things have gone our way," Bern said.
But some clouds are on the horizon.
Rapid growth -- there are 20 Orange County-style subdivisions under construction or in planning stages in the Boquete area -- has overloaded the streets with traffic and been a drain on the local water system. During the January-to-April dry season, Boquete residents now go days without running water, a period during which they have to rely on cisterns or delivered water. Crime, once unheard of, has raised its ugly head: The area now averages two break-ins a month, Mayor Manolo Ruiz Castillo said. To cope, the town, about 200 miles west of Panama City, will soon inaugurate a new municipal police force, he said. Until now it has relied on the national police for protection.
Line Vreven, director of international affairs at AARP, the Washington-based advocacy group for the 39 million Americans ages 50 or older, noted that Panama recently reduced the length of tourist visas to 30 days from 60 days, making shopping for a house more complicated and pressure-packed for newcomers.
But perhaps the most disturbing development for investors and officials at the U.S. Embassy in Panama is that there is an increasing number of complaints about shady dealings by developers and land sellers who take advantage of Panama's murky land-title rules to cheat foreigners.
Schroff said he knew of 150 cases of Panama City high-rise developers engaging in the unethical -- if not illegal -- practice of canceling preconstruction sales of condos to customers to take advantage of a rise in market prices by the time their projects reach completion.