LATIN AMERICA
BY CHARLES W. THURSTON
LATIN AMERICAN CORRESPONDENT
THURSTONCW@RODPUB.COM
Foreign investors fuel Panama
construction boom
Panama city
is a hotbed for
construction
activity,
creating
a healthy
market for
paint and
coatings.
Panama City’s skyline is being pierced by
hundreds of new commercial and residential projects in what may be Latin
America’s fastest growing real estate boom,
expanding by an estimated 25% during 2007,
according to the Panamanian Chamber of
Construction. The boom is expected to increase
the demand for a wide range of construction
materials, including paint and coatings, providing opportunities for U.S., Mexican and other
Latin American suppliers.
Real estate investments are hot in Panama
City now, particularly for upscale residential
buildings, which are attracting foreign
investors to a country where U.S. foreign
investment already is estimated at over $25 billion. Close to 30,000 living units were completed in Panama during the twelve months up to
July 2007, and another 40,000 units are being
developed, according to one estimate.
While more plans may be afoot now than will
actually be financed and built, one estimate of
the market suggested Panama City would have
nine out of the ten tallest buildings in Latin
America by the end of the decade. The boom
would produce over 10,000 new apartments in
Panama City alone. Indeed, the development of
one project, the $200 million Ice Tower, in
downtown Panama City, would be the tallest
structure in Latin America at 104 stories, and
sell residential units priced at $300,000 and up.
Trump Associates, among other U.S. real estate
companies, is developing a $220 million
hotel/resort on Panama Bay.
The building boom has tightened materials
supplies and inspired foreign products manufacturers to increase investments. Mexico’s Cemex,
for example, is building a $200 million cement
plant in Panama. The private sector demand for
construction materials and qualified contractors
reportedly has led the national Ministry of
Public Works to pressure domestic builders to
complete projects with the threat of opening
more new work to international builders.
Paint and coatings suppliers also have
been active in helping restore the historic
areas of Panama City. Glidden Paint, for
example, has donated paint for the restoration of the National Theater. The architectural splendor of Panama City’s Casco Antiguo
area earned its designation as a World
Heritage Site by UNESCO in 1997, as well as
a loan from the Inter-American Development
Bank for reconstruction assistance.
Part of the boom in construction in Panama
also is coming from the $5.2 billion widening
of the Panama Canal, which voters approved
in late 2006. Industrial and marine coatings
demand will increase with this work, benefiting established providers like Akzo Nobel’s
International Paint. In addition, vast tracts
of land once controlled by the U.S. military
now are being converted to civilian use by the
InterOceanic Region Authority.
As U.S.-Panama trade increases, income
from the canal may soon rival tourism as
the country’s top source of foreign dollars. A
U.S.-Panama Free Trade Agreement has
been ratified by Panama, and awaits U.S.
Congressional approval.
Panama’s gross domestic product (GDP)
expanded by eight percent in 2007—the
fastest rate in Latin America—and is
expected to hold in that range during 2008,
according to a forecast by the United
Nations Economic Commission for Latin
America and the Caribbean, or ECLAC.
More importantly, with only 3. 3 million
inhabitants, the country’s per capita GDP
level is approximately $8,200, among the
highest in Latin America. Thus while the
expansion of the paint and coatings market
in other countries may be largely dependent
on lower-cost products, Panamanian consumers can be more oriented to higher-quality products. CW
