Market Selection

ETI has chosen to be in the business of investing in real estate in emerging markets. For a number of reasons, we’ve chosen Panama to be our first and primary market of opportunity. In this section we discuss why we made this choice. We’ll also discuss how, in the future, our criteria for selecting particular emerging markets will be applied elsewhere.

General Considerations

Several years ago, ETI decided to choose the emerging growing markets in Latin America. Within these chosen markets, we evaluated the regions within those countries that possessed two primary characteristics,

Growing Local Economy

The region must possess a growing local economy that also shows strong indicators for predicting continued growth. We look for a rapidly emerging middleclass in the local economy. We believe an emerging middle class in an emerging economy is the strongest indicator of growth of real estate values in a region.

We look for an economy that is diversified beyond tourism as a basis of the economy. We also look for an economy that does not rely materially upon infusions of cash from its citizens living in foreign nations. That is, we look for a nation that has a local economy that sustains itself by reason of its own local industry.

International Interest in the Economy

We look for an economy that foreign nations, foreign corporations and foreign individuals are investing in.

We believe a strong indicator that real estate values will rise in a region is the degree to which foreign persons and entities are investing in the region. We believe it is almost a self-evident analysis that when this is the case, real estate values in the region will tend to rise.

Constant Research and Evaluation

We continue to monitor the condition of countries in the region. It is common that someone in our organization, invests considerable time each day reading respected economic journals like The Economist, The Financial Times, and/or the financial sections of local or regional financial publications.

The countries that interest us, will possess political stability, a growing infrastructure, and global trade dynamics.

Taking Advantage of Market Cycles

Real estate markets, like all other markets, are cyclical. Therefore, we stay informed about the cycles relating to the real estate markets in our regions of interest. Often emerging market nations next door to each other may be in different phases in their real estate valuation cycle. On the basis of this awareness, we adjust the investment portfolio to take advantage of these varied cycles.

For example, Costa Rica is in a different stage of real estate development than that of Panama properties. We believe Costa Rica has completed an international investor real estate buying boom. Therefore, when considering Costa Rica, we operate under the assumption that a real estate valuation bubble has just occurred there, and there may be some partially developed land available at post-bubble rates.

The real estate opportunities that interest us most in the emerging markets of the Americas exist in Panama.

We’ve Chosen Panama as Our Strategic Starting Point for Emerging Market Real Estate Investment.

After applying our criteria for selecting an emerging market for real estate investment, Panama is at the top of our list. Therefore, for the last two years, we have been actively investing in this amazing nation of opportunity. We’ve done this because of a strong confluence of realities here.

Small Populace in a Relatively Geographically Large Nation

The economy has about 3 million people. In other words, a population the size of a city enjoys the resources of a nation. Panamanians are educated, and are in the process of taking advantage of their plentiful economic resources.

Local Industry-Based Economy

The economy of Panama is based on local industry. It is considered to have been strong and likely to remain strong.

The Panama Canal

At no expense to the country, Panama recently acquired one of the most valuable nationalized business properties on the planet -the Panama Canal. We believe that the Panama Canal’s impact on the economy of Panama is unparalleled in all of the Americas. It is the equivalent of finding a sustainable oil reserve off the shore of the nation. It is also in place and functioning with no debts relating to investment in the resource.

Panama is currently engaged in a massive expansion project adding shipping lanes to the existing canal to accommodate modern-sized ships. It has acquired financing for this huge endeavor from many international sources. The building of this expansion provides a large financial stimulus to the local economy.

Panama recently recognized itself as a top-tier tourist destination.

For a number of reasons, Panama never capitalized upon its unique beauty and resources as a tourist destination in the way other local nations like Costa Rica have. It appears that this is because they never needed to do so.

This non-tourist inclination created a strange phenomenon in some beautiful beach regions of Panama. Since these regions had little industrial or agricultural value, they were undeveloped and suffered low demand in the real estate market.

For example, in western Panama there is a city named David, which sits next to beautiful sections of the Pacific Ocean and has its own international airport. If you were to visit David, there are no indications that this city is proximate to the ocean, and hardly any good roads that lead there. Yet, the city exists, with a local airport, as a potential hub for getting to some of the most beautiful tropical beach regions in Latin America.

However, the financial planners of the Panamanian economy are in the middle of a very well-funded and strategically smart campaign promoting Panama as a second-to-none tourist destination. Given that approximately 80 to 85% of Panama is undeveloped, tourist-friendly real estate is plentiful.

Conclusion about Panama as a first choice for real estate investment

Therefore, for many reasons, we are on the ground in Panama. We are scouting undervalued raw land that is close to growing economic areas, or that represents probable top-tier tourist destinations.