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(Yicai Global) June 29 -- The June 12 establishment of diplomatic ties between China and Panama is like manna from heaven for Miguel Montenegro, chief executive of Panamanian real estate company Omega.
"The number of visitors to my booth has grown at least 10-fold at the exhibition in Beijing last week compared with in April when we attended a Chinese exhibition for the first time," Montenegro, whose company is the only Panama-based property developer at the exhibition, told Yicai Global.
"The establishment of diplomatic ties is like a big, free advertisement for us. Hundreds of people visit our booth every day."
Montenegro, who has detected a change in interest among Chinese investors before and after the establishment of diplomatic ties, expects that Chinese buyers of his company's products as a percentage of total buyers will increase to 15-20 percent by the end of this year and that over 100 apartments for sale at his company will quickly sell out.
Chinese buyers' enthusiasm spurs him to continue to buy land and inaugurate new projects. Home prices in Panama have risen steadily at about 10 percent a year over the past decade, with property investment returns reaching 7 percent to 8 percent, he said.
"Local demand is already enough," Montenegro said. "My company comes to China to find buyers because Panama's tax laws encourage firms to tap into overseas markets. In Panama, domestic businesses are subject to a 37 percent value-added tax, while overseas ones are exempt."
More importantly, providing home management and financial services for international investors is a bigger cake for Montenegro's company. For example, Chinese investors may buy Panama property industry-related funds and other financial products if they feel home purchases demand too much money.