The Hot Spot

PANAMA CITY, Panama — The waves, weather and women were perfect during the surfing trip to Panama six years ago, recalled Keyes Christopher “K.C.” Hardin, and within days the one-time Manhattan attorney was hooked.

“Next thing I knew, I was writing a US$50,000 check and owning a youth hostel,” Hardin says, describing how he left New York and wound up in Panama.

From the moment Hardin saddled himself with the lowrent hostel in the Bocas del Toro resort, the sun never seemed so bright nor the waves so high, but Hardin’s love affair with Panama’s tourism and real estate has endured.

Along with Panamanian partners, the Florida native founded Grupo Archipelago to work on the development of lowcost housing, boutique hotels and the renovation of dilapidated buildings in Panama City’s Casco Viejo, or old quarter, a 100-acre collection of colonial, European and neo-Classical buildings recognized as a world heritage site by UNESCO.

Hardin takes his place alongside other international entrepreneurs who have poured into the country seeking opportunities in its burgeoning tourism sector and its booming real estate market. Big real estate developers have garnered headlines, but the country has been a boon to small enterprises as well.

The boom got under way slowly after the United States turned over control of the canal and other property to Panamanian authorities in 1999, but economic growth hit a record 11.5 percent in 2007 and 9 percent in 2008. Some 30,000 condominiums have been built in the past half decade and building cranes still dot the Panama City skyline.

Hardin says the pace was to be expected in a country that has experienced little private investment until the recent decade.

“This is the natural progress of a country that has been held back so long,” Hardin says.

The condo boom has sparked concerns over a hard landing. But top executives believe the US$5.3 billion canal expansion will soften the downturn in the country where the inter-oceanic waterway is the main engine of the economy.

Still, Panama cannot totally escape the worldwide slowdown. Hotel occupancy rates fell to 64 percent in January, a drop from 78 percent last year.

Patrick Kevin O’Brien, who first began investing in Panama three years ago, remains unfazed. O’Brien, an attorney from Petaluma, Calif., says both his Panama Luxury Limousines and Azueros Villa Rentals, located southwest of Panama City, were running ahead of their business targets.

“For me, it’s like the Wild West of business,” O’Brien says. “Panama needs the tourism infrastructure built up. There are a million opportunities.”

O’Brien’s associate Aimee Arnold, who makes a lifestyle television program offering advice on living in Panama, discovered the country four years ago when she was scouting vacation sites for Sean “P. Diddy” Combs and decided to stay.

Expatriate Nancy Hanna, with The Panama Planner and her website www.panamainfo.com, has worked to promote tourism, from the rainforests to the beach and highlands in Chiriquí province. Panama has also become a shopping destination for Latin Americans. Forests surround even the capital, with its Hong Kong-like skyline. Because the land around the canal must be protected against deforestation, the wooded lands are extensive. “You can see giant sloths, toucans and monkeys near Panama City,” Hanna says.

Hardin, who has focused on preserving the old quarter’s sense of neighborhood and sustainable development, says he expects business will slow but not collapse since Panama is a low-cost destination.

“You can ride out cycles in a place like this,” he says.