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Essay: Panama Portfolio

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This research is part of the final reports made as a part of the international internship at Panama Portfolio. The international internship is part of the International Business & Languages study at Avans University of Applied Sciences located in ‘s-Hertogenbosch in the Netherlands.
This research was executed for Panama Portfolio, a Dutch-Panamanian real-estate company founded in 2004 by Henri Kerkhof.
Currently the company is mainly targeting America with social media as marketing tool. Researched was, if it is beneficial, since Panama Portfolio is a Dutch-Panamanian company to focus on the Netherlands. The results are described in this report.’Section one starts of with information about Panama Portfolio, followed by the problem analysis that preceded the research. After these two subsections, the research execution follows.
First, the projects Campana Villas, Gatun Beach and Coco Beach are described. The fourth section contains research if there is interest for investment in Central America by potential european customers and if so, how to use social media in Europa. The next section will take this information and make a decision on which social media channels Panama Portfolio should use.
1. Company information
In this first part there will be given information about the company, Panama Portfolio. First a company description, followed by business data that includes overall business figures, the company value and Panama Portfolio’s mission and vision.
1.1 Company description
Panama Portfolio, located in Panama-City, is a Dutch-Panamanian company founded by Henri Kerkhof in 2004. Panama Portfolio consists of a team of 40 full time employees. The main business of Panama Portfolio is land development. There are 12 different projects in total: one within Panama-City and thirteen outside the city.
The project, Panama Center Apartments, in the city can be defined as apart-hotel. The apartment complex of the apart-hotel is also the location of the office of Panama Portfolio. The main business of Panama Center Apartments is short-term rental for leisure and business customers. Panama Center Apartments is used to generate a secure income.
The projects outside the city are for the most part large tracts of land that have been purchased in collaboration with investors. These large surfaces will be developed, and will then be parceled out; these lots will be sold to individuals.
The projects outside the city are being developed for the purpose of residential areas and houses.’While each project may have their own purpose, the main objective is to deliver a return on investment (ROI) for investors and the company. The intended IRR for land projects is on average 25% and 8% per year for the apart-hotel.
Panama Portfolio has three subjects that have a significant importance:
Financing: In order to buy the large tracts of land in Panama, Panama Portfolio works with investors. The investment of a minimum of $500,000 is used to purchase and develop properties.
Selling Lots: A large plot of land is purchased, parceled out and developed. The parcels are then being sold. To sell the lots, there is a sales team and a marketing team.’The projects that have the main focus now are Campana Villas (lots next to the Altos Campana National Park), Gatun Beach (lots at Lake Gatun) end Coco Beach (lots in Chiriqui next to the beach).
Panama Center Apartments: Panama Portfolio owns an apartment building in Panama City as aforementioned. They rent rooms under the name of Panama Center Apartments. The building has been divided into studio apartments, mini-studio’s and single rooms that can be rented per night.
1.2 Mission
Panama Portfolio provides an investment alternative for the traditional western investment possibilities by providing quality services in real estate with a view to social responsibility for the local environment.
1.3 Vision
Panama Portfolio aims for secure and effective investment of investor’s assets, by having know-how of the market, to positively brand the company and to be seen as the number one real estate and project development company in Panama.
2. Problem analysis
In the following paragraphs you will find a description of the research subject, its relevance, and its objective. This section will conclude with a problem definition, subquestions and a research method.
2.1 Relevance
Panama Portfolio’s main current focus is Central- and North-America with social media as biggest marketing tool. Since Panama Portfolio is a Dutch-Panamanian Company with European knowledge and network, it might be interesting for Panama Portfolio to extend their target group to potential customers in Europe. Researched was, if it is beneficial to focus on the Netherlands. Since Social media is a highly used marketing tool for Panama Portfolio the distance should not have to be unfavorable.
In other words, the company could extend their use of social media to Europe, with the goal of promoting the projects to possible Dutch buyers/investors, in a way that is effective and organized.
2.2 Objective
The goal of this research is to obtain information for Panama Portfolio related to Dutch interest in investing in central-America (Panama). The report will be focused on the projects Campana Villas, Gatun Beach and Coco Beach.
2.3 Problem statement
In order to achieve this goal, it is key to first know the target audience for the projects. then it isa important to get insight in the Dutch interest in investments in foreign countries.
2.4 Subquestions
To get more insight in these issues, the following subquestions will be answered:
Who does Panama Portfolio currently reach as target group?
What is the target group for the projects of Panama Portfolio?
What are the current customers of Panama Portfolio?
Should Panama Portfolio target on private investment or real estate companies?
Is there an interest in foreign investment in the Netherlands?
Where do Dutch investors usually invest?
Is there an interest in investments in Central-America?
Who are the competitors of Panama Portfolio regarding to possible dutch investing?
In how far does Panama Portfolio differ from other competitors?
What would be needed to gain trust in Panama Portfolio?
How could Panama Portfolio create awareness in the Netherlands?
How can it be prevented that distance will be an obstacle?
Could Panama Portfolio keep their current marketing strategy?
What is the best way to get into contact with potential dutch customers?
Are there any regulations Panama Portfolio has to take into account regarding to foreign investments in the Netherlands?
Dutch retiree in Panama’?
3. Research method
Desk research and field research are essential to get trustworthy information. The research will be qualitative and descriptive. Since the research will be done only once, it is ad-hoc research.
Desk research will be used to get more information on foreign investing in the Netherlands and the Dutch culture.”The major part will be field research. This will be done through interviews with the marketing and sales team of Panama Portfolio on the current approach of potential new customers. Interviews with dutch private investors and real estate companies and gained knowledge during the internship.
The research is going to be executed by Joesje. Other people that will be involved are Martijn van Dooren and several members of the sales team. Joes Deamen, founder and sole shareholder of Somerset Real Estate. The research will be conducted in the Netherlands. Field research has both been done in the Netherlands and Panama at the office of Panama Portfolio.’
Research execution
4. The projects
Chapter three will describe the projects that this research focuses on. It will describe their features and evaluate their current buyers.
4.1 Campana Villas
Campana Villas is Panama Portfolio’s best selling project. It is located on the border of Panama’s oldest National Park; Altos de Campana, about 65 kilometers from Panama City. The project is divided into 144 single lots, starting from $59,000. Campana Villas is marketed as a Exclusive Mountain Community-Spa-Resort. Lots have a view over the national park or the ocean. Campana Villas will also house a hotel and spa with 32 rooms. Infrastructure has already progressed at an advanced stage and a natural pool has already been structured. ‘Other things that could be found on and near the property are waterfalls, golf courses and beaches.’
4.1.1 Features and USP
Campana Villas feature can mainly be defined as a mountain project. The project is on a higher altitude what makes the temperature a lot more pleasant than Panama City. The temperature lays around 25??C all year round. Also nature is an important feature for Campana Villas: it is located next to a national park and there are wild horses and waterfalls near and in the project.’Beaches, malls, restaurants and golf courses are close by as well.
Unique selling points for Campana Villas are the amenities such as the natural pool, tennis court, outdoor gym facilities and the Hotel-Spa. This all within a 24/7 guarded community.
4.1.2 Current target audience
The target audience for the lots that are for sale from $59,000 to $100,000 at Campana Villas is the Panamanian middle class.’For the lots from $100,000, the company focuses on the more affluent Panamanian population.’Also affluent Colombians and Venezuelans are a target audience for the project Campana Villas, this group often seeks a second home and see Panama as a good opportunity geographically and financially.’The last target group for Campana Villas is the 50+ age middle class from the United States that is looking for a retirement home.
4.2 Gatun Beach
‘Gatun Beach is a smaller project located on Lake Gatun. One hours driving from Panama City. The property is divided into 25 lots that are being sold from $59,000 to $430,000. Gatun Beach will also have a hotel, construction work of this hotel is already at an advanced stage. ‘Gatun Beach is marketed as ‘exclusive lake living’. Specially since Panama Portfolio is the only land investment company on lake Gatun who is permitted to create smaller habitable lots. ‘
4.2.1 Features and USP
Gatun Beach’s feature is defined as a lake project with alluring nature. It is a rather more exclusive project than Campana Villas.
Its unique selling point is that each lot comes with a private boat slip. Some lots have direct water access. Also the fact that the area is perfect for water sports and fishing is much promoted. ‘And as aforementioned the literally unique location.
4.2.2 Current Target audience
Gatun Beach mainly focuses on affluent Colombians and Venezuelans. Also the Panamanian upperclass is a target group for this lake project.
4.3 Coco Beach
Coco Beach is a project in the province of Chiriqui on the beach, near the border of Costa Rica, and consist of 152 lots. The international airport of David is only one hour away. The price of these lots start at $37,000. Since this project is located on the beach, it is marketed as ‘exclusive beachfront properties’. Coco Beach’s selling started March 2015.’
4.3.1 Features and USP
Coco Beach’s feature is defined as beach project. Activities that can be done near Coco Beach are surfing, snorkeling, sailing and sea fishing.
Unique selling points for Coco Beach are the private harbor and tennis courts. Coco Beach also promotes villas that can be build on the lots. The project has a luxury and tropical sense.’
4.3.2 Current Target audience
The target group for Coco Beach are the Panamanian middle to upper class who want a second home. Also American and Canadian retiree are a large target audience.’The third smaller target audience are rich Venezuelans and Colombians. This group is most likely to use the lots as an investment, rather than residential.
4. Foreign investment Netherlands
Chapter 4 will describe the foreign investment behavior of the Dutch, based on research results.
4.1 Interest in Foreign Investment Netherlands
Many Dutch invest money in another country. So invest many Dutch in the United States and Germany is popular because of the bonds. End 2011 the Dutch have a total of EUR 4732 billion spent on investments abroad. (PaVeM, 2015)
The Netherlands comes in first place when it concerns direct investment. This ranking is exalted by the favorable tax treatment in the Netherlands for these investments. But even when adjusted , Netherlands remains in the top 10 of major investors. Also the interest in investing keeps increasing. (DNB, 2011)
A significant part of the top rating of the Netherlands coherences to the relatively large size of the Special purpose entities (SPEs) sector in the Netherlands. These are companies that because of the favorable tax climate establish in the Netherlands to act as a financial center for companies with a parent company .
The Netherlands has a bilateral investment treaty (BIT) what provides protection to foreign investment. Moreover, a BIT strengthens economic ties between two countries. Panama is among other thing one of the countries the Netherlands has this agreement with. Which makes foreign investing even more interesting. (Rijksoverheid, 2010)
4.2 General Investments
In general Dutch Invest a lot in Germany and America, this because of the bonds with these countries and an fairly stable economy. (PaVeM, 2015)
Increasingly there is being invested with the pension. Investment yields more than saving. And specially since the retirement age is increased investing is more attractive.
Though, the lifecycle funds that have existed for more than ten years do not show impressive results. The best have brought in ten years on average less than 4% per year, the majority even much less. Given the risk of investing, it would be better to put the money in a savings account then. (VBDO, 2014)
Many Dutch see land investment as an interesting investment. Land investment abroad has many attractive aspects to them that are more on a personal level. Though they also find it attractive to buy land on the long term and sell after a few years with profit. It often happens with real estate projects where they buy in the early stages of a construction project ands sell the item back if the project is in the final phase. This kind o investment applies to Panama Portfolio. (mondi, 2015)
4.3 Interest Investing Panama
Panama is emerging as a retirement destination, holidayresort, and above all an investment paradise. Panama is doing well in many areas. The growing export market to Panama is also evidence that there is a growing enthusiasm for Panama among the Dutch. There was a growth of 509,21 precent between 2002 and 2011 (CBS, 2013). Dutch investors see Panama as an interesting and safe destination with excellent investment environment and great business opportunities. Fifteen major Dutch companies, including KLM, KPMG, APM Terminals, Philips and Royal Vopak, participated in the trade conference “Panama Invest’ in 2013. Panama offers a number of advantages compared to other Central American countries, such as tax benefits, incentive schemes for foreign investors and discount schemes for retirees. This makes investing in land or the purchase of a property in Panama extremely appealing. More and more people are discovering that Panama is an ideal country to retire. Although Dutch are a little unaware of the extensive opportunities that Panama has to offer, they still show an increasing interest for this fast developing and promising country(Vastgoedtrader, 2014).
4.4 Regulations Foreign investments Netherlands
As an investor in the Netherlands is approached by a provider of a financial product, then laws apply on the provision of information by the provider, including the Securities Act (WTE) and the Act on the Supervision of Investment Institutions (Wtb). The legislation has its objectives to let the investors be able to make an informed decision when investing. (mondi, 2015)
When you invest abroad these investments are protected. A bilateral investment treaty (BIT) provides that protection. BIT is an agreement establishing the terms and conditions for private investment by nationals and companies of one state in another state. Moreover, an BIT strengthen economic ties between two countries.
The main principle in an BIT is that investors should not be discriminated against. Based on the agreement you are entitled to:
national treatment
You may not be treated otherwise than an investor from the country itself.
MFN (most favored nation)
Each country may impose conditions on foreign investors, as long as they are not discriminated against.
You have the right to transfer capital without additional limitations and to a country of your choice.
As an BIT protects investments abroad, there is less risk. The agreement is intended to encourage investment. This applies to Dutch companies wanting to penetrate the foreign market. But also for foreign parties wanting to invest in the Netherlands.
The national government conducts the negotiations for an BIT. Therefore the Netherlands uses a model text as a basis. This method ensures that there are no major differences between agreements with different countries. The council of ministers and parliament must approve the agreement.
The Netherlands has with more than 95 countries an IBT, or an other similar treaty. These are countries in Asia, Latin America, Africa and Eastern Europe. Therefore also with Panama. This is convenient for Panama Portfolio for building more confidence with potential new customers.
4.5 Conclusion
Panama would be a realistic option for Dutch people to invest. In general are the Dutch willing to invest in foreign countries. There is a steady growth in export and investments towards Central-America. Also the fact that retirees more often want to invest their pension or even want to buy a house abroad is advantageous for Panama Portfolio. Regulations and laws are in the favor of investing in Panama. The only thing is that there does not seems to be enough awareness and knowledge about Panama.
5. Target Group
Chapter 5 will describe the current target groups of Panama Portfolio and the potential target groups in the Netherlands based on research results.
5.1 Current Target Group
5.1.1 Campana Villas
The target audience for the lots that are for sale from $59,000 to $100,000 at Campana Villas is the Panamanian middle class.’For the lots from $100,000, the company focuses on the more affluent Panamanian population.’Also affluent Colombians and Venezuelans are a target audience for the project Campana Villas, this group often seeks a second home and see Panama as a good opportunity geographically and financially.’The last target group for Campana Villas is the 50+ age middle class from the United States that is looking for a retirement home.
5.1.2 Gatun Beach
Gatun Beach mainly focuses on affluent Colombians and Venezuelans. Also the Panamanian upperclass is a target group for this lake project. Lots start at $59,000 till $439,000. It is a very exclusive lake project. And the only
5.1.3 Coco Beach
The target group for Coco Beach are the Panamanian middle to upper class who want a second home. Also American and Canadian retiree are a large target audience.’The third smaller target audience are rich Venezuelans and Colombians. This group is most likely to use the lots as an investment, rather than residential.
5.2 Potential Customers Netherlands
5.2.1 Campana Villas
Campana Villas has lots starting at $59,000 and targets focusses on the Panamanian middle class to the more affluent Panamanians and also the more affluent Colombians and Venezuelans who want a second home. As Campana Villas is seen as an second home base for among other things commuters and families who want to get a way from the city in the weekends. This might not be a suitable project for Dutch people to invest or to live.
As well as the fact that this project is already on a higher construction level, and lot prices have gone up.
5.2.2 Gatun Beach
Gatun Beach mainly focuses on affluent Colombians and Venezuelans. Also the Panamanian upperclass is a target group for this lake project. Since Panama Portfolio is the only land investment company on lake Gatun who is permitted to create smaller habitable lots, it might be really interesting as investment. It is only one hours away from Panama City. And along with the exceptional nature it could be a valuable investment for people who want to invest.
5.2.3 Coco Beach
The current target group for Coco Beach are the Panamanian middle to upper class who want a second home. Also American and Canadian retiree are a large target audience. After research it occurred that Dutch people want to invest more and especial with their pension. Also many retirees want to move abroad and Coco Beach might just be the right place. This project is still in preliminary stage of construction. And the value will increase as the construction continues. For Panama Portfolio it would be interesting in targeting coming retirees and investors in general.
5.3 Private Investing, Real Estate Companies and investments funds.
When choosing whether to use private or business capital investment it is wise to look at the expected value development. Panama Portfolio’s expectation are favorable. The expected return on equities and real estate are higher though, so is the risk. Private investing is financially more appealing, though because of the limited knowledge of Panama it is more likely that Dutch investors choose to use Real Estate and investing companies.
Entrepreneurs can benefit financially with a number of investment schemes. Every entrepreneur in the Netherlands who is liable to pay income tax or corporation can use these schemes.
5.5 Retiree
With a retreating government and growing uncertainty about the collective pensions, more Dutch will need to create a part of their pension themselves. Above the state pension and the pension that employees build at an employer, people can arrange additional pension assets. By saving money or invest they can build an additional nest egg (Telegraaf, 2015).
5.6 Conclusion
Research on the potential dutch target group for Panama Portfolio has shown that upcoming retirees are an interesting target audience. Specially the middle to upperclass dutch of the age of 50+. Results show that more and more people form the Netherlands try to invest money to enlarge their pension or to move abroad when retired. The interest in investing money will only increase more since the government will continue to cut back on pensions and the retirement age keeps going up. As regard for the projects, Coco Beach seems to fully meet the needs of the demands of this target group.
6. Marketing plan
Marketing for the 50+ target group is different then the more and more used marketing tool social media for under 50. The audience is different, the behavior is different and thus the marketing strategy will also need to be different. The performed research is to get insight in the best way to reach the 50+ target group. It examines both the traditional media such as newspapers, magazines, radio and television but the Internet and “social” media.
6.1 Traditional
Someone over 50 get over 22 hours per week of media consumption. This applies to both Radio, Television and for magazines and newspapers. The older, the higher the use of media, one uses the media especially for provision of information.
In television has been strong preference for public broadcasters and especially news and current affairs. When radio is also widely listened regional and local.
6.2 Internet and Social Media
Recommendation
Create Awareness
Distinguish
Trust
Distance
In order to reduce the unawareness about Panama, an consultant should connect to the potential new clients. As for the unawareness of investing a financial manager should be available all times. This will also create more trust I might pass of the distance.
Bibliography
Websites
Centraal bureau voor statestiek. (2013) Retrieved December 28 2014, from http://www.cbs.nl/NR/rdonlyres/5FF8BD73-8EA0-4F02-A67E-445FACB17910/0/Evaluatienederlandsehandellatijnsamerika.pdf
De Nederlandsche bank. (2011) Retrieved December 27, 2014, from http://www.dnb.nl/nieuws/nieuwsoverzicht-en-archief/dnbulletin-2011/dnb256487.jsp
De rijksoverheid. (2010) Retrieved December 27, 2014, from http://www.rijksoverheid.nl/onderwerpen/internationaal-ondernemen/investeringsbeschermingsovereenkomsten
Mondi, (2015) Retrieved Januari 29, 2015, from http://www.mondi.nl/beleggen/beleggingsmogelijkheden/page62.php
PaVeM. (2015) Retrieved Januari 28, 2015, from http://www.pavem.nl/investeren-in-het-buitenland/
De financieel telegraaf. (2015) Januari 16, 2015, from http://www.telegraaf.nl/dft/geld/vermogen/20055180/__Beleggen_voor_je_oude_dag__.html
Vastgoedtrader. (2014) Retrieved Decemver 2014, from http://www.vastgoedtrader.nl
VBDO. (2014) Retrieved Januari 28, 2015, from http://www.vbdo.nl/files/media/VBDO_Benchmark_Pensioenfondsen.pdf

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