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Main Access and Arterial Roads

The “main access road” is typically the “last mile or so” from a municipally well maintained paved road such as the road to El Valle or the Lajitas road. By an “arterial road” we mean any roads within a development typically to a vantage point with an ocean vista.

By far the main value to a property is derived from the “main access” road. The better this access road, in terms of twists and turns, width, and length of well-paved surface, the more value is added. Women, the main decision maker typically for such a property, are particularly conscious of well-paved and well-planned roadways.

The arterial roads within a property are also useful if the property is of a substantial size such as 30-40 hectares or more. The most critical arterial road is of course the one that transports a prospective client or developer to the lookout spot with the best vistas.

With the land acquisition strategy being used currently of purchasing view properties “off the beaten path”, investors must realize that they are in the “road construction” business, at least to a limited degree, if they wish to optimize their returns.

The main access road must generally be constructed to certain municipal standards with crushed stone topping, width and drainage specifications otherwise the municipality may not take over long term maintenance.

The quality of the inside “arterial roads” is more flexible depending on the type of development being considered (e.g. condo association, gated community etc) It is common wisdom that the better the roads, the easier and faster the sale of individual lots.

Another consideration in terms of roads is that Panama has a substantial rainy season than can damage poorly planned and constructed roads. What may appear to be a great road in March may become impassable by July.

For this reason, special contingency planning, strategies and budget, on a property by property basis, are necessary for roadway maintenance as the rainy season approaches and does its thing.

The primary component costs of road making are as follows:

1. The rental of heavy earth moving equipment such as caterpillars, graders and backhoes.
2. The purchase of sub-surface, low quality rock aggregates for the road bed.
3. The purchase of high quality crushed rock aggregates that meet municipal standards.
4. Well designed “road way gutters” for drainage including culverts as needed.
5. Construction to municipal standards of bridges over substantial water flows including rivers and streams.

Within this range of costs, there appears to be at least one possibility to save substantial amounts of money given the number of roads requiring construction for the 12 properties to date.

We include a cost/benefit analysis of purchasing a new “rock crusher” for about $50-60K. A used rock crusher may also be appropriate at half this price and would do the job just a swell if it is available. Of course a new rock crusher could also be sold for half the price on completion for the same result.

Such a purchase would probably have a pay back period of less than 6 months. It would permit efficient utilization of “free rocks” on the various properties that have to be removed and disposed of in any event.

The main savings available is in the area transportation costs of crushed stone by truck from a distant location to the development site. This transport cost can be as much as 85% of the total delivered cost of the crushed stone. A payment of $150 to $175 for a 15 yard load of crushed stone may only have $20-25 attributable to the stone itself.

When you own a rock crusher you simply move it to the next site when you are ready rather than have 1000 trucks arrive at $100+ per trip! It could also generate additional income if a neighboring developer or builder wanted to save transport costs.

The life of such a machine is generally about 20 years so a resale after say 5 years of constant crushing should still net at least 50% of the original cost ($25-30k).
 


Property Occupation, Signage, Fencing and Cleanup

Property “occupation” is an important concept in Panamanian law. Every development property had an “occupation program” which ranged from someone actually living on the property, to workers showing up on a daily basis to clean the land, to grazing cattle.

Each property also has a large sign indicating ownership including with a telephone number for private or public enquiry purposes.

Each property currently has a customized “clean-up” and/or “clearing” program as required. Some properties appear to need minimum work in either of these categories. Others need substantial efforts and as a consequence may not be great candidates for early development.

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