I held a very interesting conversation the other day with two young fund managers who have bought properties in Panama, and spend some considerable time here. Both from very different parts of the world, very international guys. One of them even decided to move completly to Panama out of convenience for his lifestyle and business, which he does all around the globe.

The conversation was, of course, the US recession. It was interesting because one of them is a complete pesimist and the other is an optimist, myself being basically in the middle but slightly bent towards optimism, it was a lot of fun to argue on both sides. However, one of the common grounds on investing in Panama was that it has one of the best blessings you can have: it is it´s own niche and economic microclimate.

Why? it just happens that the country is benefiting from many things at the same time: democracy & stability (of course), geographic position which makes it a regional hub for businesses to move their headquarters here, great projects (long term) like the Canal Expansion, and the migrations of neighbor countries looking to inject the economy with their own energy (and funds). Remember, Panama only has 3 million people, all this is huge for this small country. 

We seem not to be the only ones thinking this way.

Early february, Bear Stearns (BS) recommended investing in Panama in its last regional report about Central America and the Caribbean. They estimate that inflation would keep the same level than 2007: 6.4%.  According to the news presented by La Prensa (www.prensa.com  February 8th), they forsee a growth for 2008 of 9.5% although other regional reports (like the one I presented recently on CEPAL) are more conservative showing 8%. Bear Again, according to the note, Stearns doesn´t seem to worry too much about the US impact on the Panamanian economy. Most of the construction demand is not only fueled by American retirees but also by Venezuelans and Colombians looking to move their families due to political reasons. They consider the banking system to be strong and trust that the Canal revenues will increase for 2008.

And within Panama, Casco Viejo, which is a niche within niche. Sometimes the best thing you could own in a globalized world facing recession is something so unique (trully valuable and scarce, like gold) that it will hold it´s true value on the face of the storm. Many love real estate as the best and surest way to keep your money safe. Within real estate, historic properties are the long term winners all around the world. They are the real estate gold.  Even better if the "gold" is in the right region, with the right economic fundamentals that would keep the boat afloat with style during the storm.