Panama City's Old Quarter

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The small district of Panama City known officially as San Felipe and referred to as Casco Antiguo or Casco Viejo, is rich in history and is now regarded as a national treasure. It was originally built around 1673, by the Spanish garrison, the Catholic Church and the settlers, after privateer Henry Morgan sacked the original site of Panama City (Panama Viejo). Next, the area housed the French officials during their attempt to construct the Panama Canal; what was left behind was a unique, culturally diverse neighborhood with buildings featuring a charming mix of Spanish colonial and French provincial architectures.

Since the 1920s however, Casco Viejo has gradually become to all intents and purposes, a semi-elegant slum. The inner city syndrome gripped the area. Maintenance and development stagnated and it was basically forgotten, except by those tourists wishing to see some of the historical landmarks that are interspersed throughout.

Over the years, attempts were made by various organizations and groups to stimulate the refurbishment of San Felipe. The hopes were to imitate the successful rejuvenations of Cartegena in Colombia, San Juan in Puerto Rico and Cuba’s Old Havana. Despite these attempts, up until the mid 1990s Casco Viejo remained slumped in its continuing deterioration —the vicious circle of poor tenants not paying the rent and landlords losing interest in maintenance.

The advent of the Ernesto Pérez Balladares administration in 1994 proved to be the necessary catalyst for the long-hoped for metamorphosis. With the passage of Law 9 of August 27, 1997, special restoration incentives were delineated. Coincidentally, UNESCO chose Casco Viejo as one of its 46 historic areas in the same year. Local and international investors liked the offer, and slowly but surely new life has become evident among the narrow, balconied streets.

The incentives apply to San Felipe, along with parts of neighboring Santa Ana, Salsipuedes and Terraplén. Under the law, buildings are classified as historical structures and the approval granted for restoration depends on the architectural characteristics of each individual building. ( Before the law, no such distinction existed).

The law seeks to accelerate the restoration process by providing incentives such as: preferential mortgage rates for investment into restoration projects ( financing available); no tax on rental revenue generated in Casco Viejo; no property tax for the first 30 years; no Transfer of Title tax; and no importation tax.

An investor usually must conduct an investigation in order to locate the owner or heirs of the owner in order to purchase a property. To do this, the identification numbers of the property must be obtained from the Ministry of Housing. This information must then be taken to the Public Ministry to see if any ownership and contact information exists, which is not always the case, since many landowners have moved away or have died without leaving proper wills. Once the requisite channels have been identified, the sale negotiations can be initiated.

The next major hurdle is tenant relocation. In theory, the district government offices are supposed to lend assistance in the transition process. But, in order not to upset their constituents, officials tend to be rather lax in this department. So, the bottom line is that it is usually up to the new landlord to contact those families living on the premises and arrange for them to move.

This is not a simple process. A large percentage of previous landowners have relegated their Casco Antiguo assets to write-off status. As a result, they have ceased to administrate the buildings, including rent collection. This has created a large number of what are literally squatter families who have been in the same residence for a number of years. Although there is no actual legal basis for such persons to remain, Panama civil statute recognizes squatters’ rights to a point, so eviction can be a long and convoluted process.

To avoid messy complications, those developing in Casco Antiguo employ a buyout strategy, which supplies a one-time payment for vacating the premises. In general, experienced developers supply only the money. This can represent a considerable expense. For example, say the agreed figure is $1,000 per family. This sounds like a bargain until one realizes that a single building can easily house up to 50 families or more. They do not arrange for future residences, except in extreme situations. To save time and frustration, it is a good idea to have a real estate agency specializing in the area or an experienced legal firm conduct the entire owner-location, tenant-eviction process.

Stringent guidelines for restoration have been set by the Directorate of Heritage of the National Institute of Culture (INAC), which, in turn, reports to the a new commission appointed by President Mireya Moscoso. Blueprints must be drawn by a licensed architectural entity and submitted to INAC, which judges the architectural merit and period compatibility. Once approved, the plans move on to the municipality, which studies infrastructure, such as electricity and plumbing. The approval process usually takes less than three months. Although when the actual time for drawing up plans is added, the final approval average reaches approximately six months. Final construction prices average around $500,000. When all the incidental costs are tallied, the total for a restoration rises to the $700,000 mark.

Parking can be a problem due to the narrow streets of the San Felipe district. If a building is located near one of the quaint plazas that pepper the area, parking can be obtained there for free. If this option is not viable, there is another strategy that presents an option to the parking conundrum. Edifices built before 1940 must be restored, but those constructed after can be demolished. Some developers have taken advantage of this stipulation by buying a newer edifice near the building targeted for restoration, demolishing it and building a structure that contains parking facilities. (As of yet, no actual parking lots have appeared.)

The move to obtain Casco Viejo investments is escalating. Restored buildings can be seen on nearly every block and specialized Casco Viejo real estate web sites can be found on the Net. (We recommend that you visit Mayhew Cook’s www.cascoviejo.com). A majority of the buildings have been purchased (if not yet renovated), but opportunities still exist. Buyers can expect to pay from $150 to $400 + per square meter. Once the building is restored, the values escalate from $1,000 to $1,600 per square meter so money making opportunities still exist.

As one walks the streets of today’s Casco Antiguo, it becomes obvious that things are changing. Beautifully restored mansions owned by Mayor Juan Carlos Navarro and entertainer Ruben Blades delight the eye. From inside gutted buildings, their facades intact, ring the sounds of hammer and saw. Cobbled red-brick surfaces on the streets are being repaired. The new Panama Canal museum and trendy sidewalk restaurants have opened their doors. This time the long-awaited revamp of Casco Viejo is indeed a reality, and there are no signs that the trend will lose its momentum. Every sign augers well for the preservation of one of Panama’s most interesting and enduring socio-historical legacies.

This article was written from material supplied by Compañía Inmobilaria.