Transnational gentrification: Globalisation and neighbourhood change in Panama’s Casco Antiguo

Abstract

Drawing upon the case of Panama’s Casco Antiguo, this paper establishes the theoretical concept of ‘transnational gentrification’: a process of neighbourhood change both enabled by and formative of a spatially embedded transnational ‘gentry’ whose locational mobility creates new possibilities for profitable housing reinvestment in geographically disparate markets where such possibilities would not have otherwise existed. Globalisation does not just create a common political-economic structure driving urban change or a common ideology for a gentrifying cohort. In this case, it creates historically and geographically specific connections between places, which themselves can become pathways along which gentrification processes propagate, connecting local capital to international consumer demand. The case of the Casco Antiguo offers a provocative inversion of a standard critical narrative of globalisation, whereby capital is freed from national constraints and able to roam globally while people largely remain place-bound. In the Casco Antiguo, residents are transnational and property developers are local.

Keywords

gentrification globalisation Latin America Panama urban redevelopment

It has now been more than a decade since Neil Smith (2002) first described gentrification as a ‘global strategy’, and the transformation in scholarly understandings of what had previously been understood as a local process has been remarkable. At the most basic level, of course, gentrification is a local process rooted in neighbourhood-scale social class dynamics and transformations of metropolitan-scale property markets, but it is now widely also seen as a global phenomenon in that it is geographically ubiquitous (Atkinson and Bridge, 2005); found at nearly every level of the world urban hierarchy (Bridge et al., 2012); implicated in processes of global economic restructuring (Butler and Lees, 2006); and associated with a trans-cultural identity that is simultaneously place-bound and global (Danyluk and Ley, 2007; Rofe, 2003).

However, despite the widespread recognition that gentrification has globalised, current understandings remain mostly predicated upon insights derived from the North Atlantic experiences of the 1970s, 1980s and 1990s (Hackworth and Smith, 2001; Lees et al., 2008; Wyly and Hammel, 2001), and potentially ill-fitted to other contexts where the temporal dimensions and spatial implications of investment cycles have been divergent (Lees, 2012). Despite the title, most of the chapters in Atkinson and Bridge’s Gentrification in a Global Context (2005), for example, focus explicitly on Europe or North America, and much of the recent work on gentrification in Latin America and elsewhere (Borsdorf and Hidalgo, 2013; Duarte, 2005; López-Morales, 2011) is informed by Northern precedents. One of the key challenges, as Butler (2007) points out, is a need to disassociate the process from deindustrialisation and working-class displacement – a near-ubiquitous attribute of late-20th century North Atlantic cases – in favour of a focus on macro-scale class-based change framed by global flows and local urban restructuring.

In this paper, we explore how the study of gentrification can be embedded within a more robust global framework by identifying a novel pathway for globalising gentrification: ‘transnational gentrification’. By this, we refer to a gentrification phenomenon that connects redevelopment capital to housing demand not within a single city-region but transnationally, and thus creates new possibilities for profitable housing reinvestment – and new threats of displacement – in markets where such possibilities would not have existed on the basis of local demand alone. Drawing upon the example of the ongoing gentrification of Panama City’s Casco Antiguo district, we demonstrate a pathway for the globalisation of urban space that steps outside the literature’s usual focus on global cities and the international capital flows within them, and thus addresses the call for research on the gentrification process in the Global South (Lees, 2012) that reaches beyond postcolonial or developmentalist understandings of urban change (Robinson, 2002). Panama City has undergone a series of large-scale transformations in the past decade (Sigler, 2014a), and the gentrification of its colonial-era Casco Antiguo has been a key locus of change. To this end, we apply a longitudinal research methodology to a case study site not typically included in the international gentrification literature (cf. Suman, 2008) in order to emphasise the role of financial, migratory, discursive and informational flows in shaping the process.

Globalisation and gentrification

A growing new literature places gentrification in a global context by extending the range of empirical sites under study and incorporating new transnational perspectives, particularly comparative ones (Lees, 2012). Building on what until recently comprised just a few scattered case studies (e.g. Thomas, 1991), scholars have investigated gentrification in East Asia (He, 2007), Latin America (Inzulza-Contardo, 2012; Janoschka et al., 2014; López-Morales, 2011; Varley, 1999), Africa (Garside, 1993; Visser and Kotze, 2008) and elsewhere, providing insights that expand the boundaries – both theoretically and spatially – of gentrification research.

In addition to broadening the empirical scope of research, gentrification scholars have also begun to explicitly consider the theoretical relationship between gentrification and globalisation, generally via one of two pathways. First is the argument proposed by Smith (2002) and later substantiated by a range of case studies, that gentrification has become a ‘global strategy’ by which urban entrepreneurial governance seeks to secure investment in cities across the world (Bridge et al., 2012). Here globalisation refers to economic restructuring that has destabilised nation-states as the preeminent form of territorial organisation while strengthening functional connections between the urban and global scales (Brenner, 1999). The result of this urban rescaling, Smith claimed, was that gentrification has ‘rapidly descended the urban hierarchy’ (Smith, 2002: 439), and become an increasingly ubiquitous phenomenon in ‘ordinary cities’ (Robinson, 2006) as well as in so-called global ones. Particularly as gentrification has become a state-led strategy, actively facilitated by municipal, regional and national governments in cooperation with large capital (Hackworth and Smith, 2001), a gentrification ‘template’ has been replicated in cities around the world (Davidson and Lees, 2005).

The second proposed relationship between gentrification and globalisation has been via the subjective identity of the gentrifying class. Rofe (2003) argues that globalisation has rendered local experiences of neighbourhood change less uniquely distinctive and more readily comparable with neighbourhood change elsewhere in the world, at least for local gentrifiers. These actors thus come to understand themselves as part of a global, cosmopolitan class (Calhoun, 2002), consuming a globally homogenous ‘gentrification commodity’ (Mills, 1993), and the same global economic restructuring processes that make gentrification practically available as a strategy of entrepreneurial urban governance make it imaginatively available as the basis for a cosmopolitan identity among local gentrifiers.

Despite the different theoretical (and sometimes normative) thrusts of these perspectives, what they share is an orientation towards gentrification as a local outcome of globalised socio-spatial processes. In this orientation, global capital is injected into disparate local property markets, which are moulded to conform to the preferences of a local (and often embryonic) urban middle class, along with a new subjectivity wherein this cohort imagines itself to be part of an international cosmopolitan class.

Here, however, we wish to focus on a third dimension of globalisation’s relationship with gentrification, one much less remarked upon in the existing literature. This is globalising rather than globalised gentrification: that is to say, gentrification not as a result of globalisation processes that are distinct from it, as in both the ‘global strategy’ and ‘cosmopolitan class’ arguments, but as an active pathway along which globalisation processes unfold. In particular, what we identify as ‘transnational gentrification’ is a process that connects leisure-driven migration to spatially distant neighbourhood reinvestment schemes that existing local demand may not have allowed for.

The concept of transnational gentrification draws theoretical attention to the relationship between gentrification and migration. Researchers have explored such linkages, but overwhelmingly in the South–North direction (Hackworth and Rekers, 2005; Lees, 2000; Murdie and Teixeira, 2011; see Janoschka et al., 2014 for more discussion), insofar as particular migrant groups have been wrapped up in the gentrification process. By contrast, while the role of Anglo-American migrants in encouraging or facilitating housing-market and neighbourhood change outside the Anglo-American world has been noted in a few contexts in Latin America (Bailey, 2008; Scarpaci, 2005; Steel and Klaufus, 2010), there has not yet been a theoretically systematic exploration of this theme. We propose to undertake such an exploration in large part because it raises the prospect of integrating our understanding of gentrification substantively within the broader context of globalisation processes, rather than treating it merely as an epiphenomenal outcome of such processes.

What we call ‘transnational gentrification’ can be summarised as follows. The increased worldwide flows of capital, people, information and culture associated with globalisation have destabilised existing land-use arrangements in metropolitan areas around the globe, both by introducing new supply-side possibilities for capital investment or state-led redevelopment schemes and by changing demand-side preferences.¹ This destabilisation leads to a disjuncture between place-specific neighbourhood decline and citywide growth – a rent gap (Smith, 1996). The rent gap concept in its most basic form states that if (a) economic returns on a specific property decline as the structure ages, while (b) potential economic returns to that property increase because of larger-scale economic transformations or technological change that render the existing use no longer ‘highest and best’, then (c) a gap can form between rents actually achieved and potential rents following redevelopment. This produces strong incentives for local or global redevelopment capital to create new housing opportunities in areas formerly characterised by disinvestment, with the demand for this housing coming from relatively affluent residents drawn from elsewhere in the city-region.

But effectively all explorations of rent gaps understand them to be a local dynamic – a product of the divergent tendencies of neighbourhood-scale disinvestment and metropolitan-scale growth. By contrast, the concept of transnational gentrification explores a rent gap that itself is globally scaled. In other words, in some cases the pathways along which rent gaps are formed and new residents are attracted are themselves transnational. Localised disinvestment presents an opportunity for reinvestment capital not because of the neighbourhood’s changing relationship with metropolitan growth dynamics, but because of the neighbourhood’s changing relationship with a transnational middle class, for whom globalisation has rendered a physically distant locale increasingly accessible both logistically and imaginatively as a lifestyle destination. The rent gap here is a transnational one, since potential rents are only higher than actual rents thanks to the presence of an internationally mobile gentrifying class. Thus, in contrast to the conventional narrative of globalisation driving a process of urban restructuring which plays out at the metropolitan scale, transnational gentrification is constitutively globalising: the ‘urban system’ within which it occurs is not the city-region, but a transnational network. Of course, the theoretical existence of this transnational rent gap does not necessarily mean that real estate interests will recognise it and attempt to act on it, or that they will be successful if they attempt to do so; these are empirical questions which depend in part on the specific local political economy of land use and development financing as well as the specific migratory circuits that connect transnational housing demand with local supply. In the sections that follow, we use the case of Panama City’s Casco Antiguo neighbourhood to demonstrate precisely such an empirical instance of transnational gentrification at work, before concluding with a discussion of the implications of this research for other geographical contexts and for urban theory more generally.

Methodology

Given the fact that many of the processes underlying gentrification take decades to manifest, we seek to augment a small but significant body of research applying longitudinal approaches to understanding neighbourhood change (Atkinson, 2000; Badcock, 2001; Butler and Lees, 2006). To this end, we investigate the case of Panama’s Casco Antiguo spanning the period between 1990 and 2010. Although the case of the Casco Antiguo is emblematic of a wider phenomenon that we argue is global in the broadest sense, it is contextualised within a local urban system that has been cosmopolitan for several centuries, owing to its advantageous geographic position and dollarised economy (Sigler, 2013, 2014b).

Our primary empirical data are derived from a 20-year sample of property records detailing the nature of land tenure through speculation and investment patterns (see Figure 2 below), which serve to reveal the supply-side dimensions of the far-more-visible consumptive processes occurring within the urban landscape. A total of 86 parcels in two non-adjacent block groups were selected using cluster sampling from both paper cadastral maps and electronic shapefiles sourced from local planning officials. These ranged from 43 m² to 1427 m² in size, and represented the western and eastern halves of the Casco Antiguo (which are radically different in character) approximately equally. Parcel identification numbers were then used to obtain property transaction records from Panama’s public registry (http://www.registro-publico.gob.pa), which is particularly robust owing to the country’s longstanding history in ship registry. In order to identify the financial processes underlying neighbourhood change, two specific transaction types were systematically recorded – title transfers and mortgages. Transfers were used as a proxy indicator of the intensity of property speculation, whereas mortgages were used a proxy indicator of property investment, and as Figure 2 shows, the former precedes the latter. These data were applied as a measure of supply-side factors responsible for influencing the neighbourhood’s reformulation, with a specific focus on the temporal dimensions thereof.

Cadastral data were complemented with a variety of data points to better understand the parallel demand-side processes, including household and individual-scale data on population dynamics and land tenure from the 1990, 2000 and 2010 decennial censuses. Both formal and informal interviews with key stakeholders in the redevelopment process were carried out over repeat visits, telephone and email² between 2006 and 2013, and – as is common in gentrification research – further supplemented by personal interactions with many people involved in the process, both the displacers and the displaced. Finally, a combination of popular news sources, websites and blogs were consulted in order to assess the cultural and aesthetic impact of the Casco Antiguo’s new residents (and visitors), and to understand the mechanisms by which information was being deployed. As such, we incorporate both the supply-side and demand-side to properly capture the totality of the transnational gentrification process that we wish to illustrate.

The Casco Antiguo in historical context

Located on a rocky peninsula just 3 km to the east of Panama’s eponymous canal (Figure 1), the Casco Antiguo³ is the oldest continuously inhabited settlement with European origins on the west coast of the Americas. Surrounded on three sides by the Gulf of Panama (Pacific Ocean), the Casco Antiguo’s picturesque geographical setting is both an advantage and a disadvantage. Its isolation from the city’s contemporary central business district led in part to disinvestment and neglect, and the housing estates in the adjacent neighbourhoods of El Chorrillo and Santa Ana – just a few minutes’ walk from the Casco Antiguo – are widely regarded as some of the capital city’s most dangerous and considered no-go zones for outsiders, particularly tourists (Schreck, 2007: 116). But after nearly a century of deterioration, the Casco Antiguo has undergone relatively rapid gentrification, and the colonial-era district now features myriad cafés, boutiques and wine bars, as well as a plethora of elaborately restored buildings that were once home to the Panamanian élite.

Figure 1.

Aerial view of Panama City’s Casco Antiguo (foreground).

The extensive media attention on the redevelopment of the Casco Antiguo in recent years has been a product of (and arguably a source of) much of the intense speculation that has transformed it from an urban slum into an urban spectacle. As a 2012 Travel and Leisure magazine article describes it:

It’s erotic like Havana, moldering like New Orleans, world-weary like Cuernavaca, Mexico, and just dangerous enough, like Miami’s South Beach in its early years—all of this seasoned with a dash of The Night of the Iguana. (Drucker, 2012)

The area that is today known as the Casco Antiguo was in fact the second city of Panama, founded in 1673 after the original city was ransacked and burned by marauding buccaneers. The district was laid out on an orthogonal grid based on the Laws of the Indies – the Spanish colonial doctrine which influenced town planning in New World cities such as San Juan, Havana and Cartagena. The new city of Panama flourished in the late 17th and early 18th centuries on the basis of trans-Atlantic trade, but fell into its ‘dark ages’ between the late 18th and mid-19th centuries with the waning of Spanish naval hegemony. Aside from urban expansion associated with the construction of the first trans-isthmian rail link in the 1850s, the next significant wave of interest in the Casco Antiguo began to simmer in the late 1870s in anticipation of a French canal effort.

Many of the district’s key buildings were erected during this era, and the continuing presence of a handful of mansard roofs and beaux-arts columns and pilasters serves as a reminder of how influential the French presence was in shaping the district. Not only was it home to European officers involved in the canal effort, but many, if not most, of Panama’s wealthiest families inhabited the district in terrace homes or small mansions. These edifices represented the styles of the times – initially Spanish revival, beaux-arts and neoclassical, and later art nouveau and art deco. The French canal effort flagged in the 1890s and in 1903, Panama gained independence from Colombia, as the US government moved into Panama to build the Panama Canal. With the US canal construction effort underway, the city’s population swelled from 1904 onward, and what is today the Casco Antiguo continued to be the city’s social and economic locus as new suburbs extended in a linear fashion along the waterfront (Uribe, 1989).

The Belle Époque that 21st century gentrifiers have sought to recreate occurred largely between the 1870s and 1930s, not the ‘colonial’ era, as many tourist brochures tout. (Independence from Spain was achieved in 1821.) By the 1940s, the city’s élite had largely abandoned the Casco Antiguo for newer neighbourhoods such as La Exposición and Bella Vista. Thus began more than half a century of decline in the Casco Antiguo, as the neighbourhood filtered down the socio-economic scale, first as a mixed barrio popular (until the 1970s) and then as an urban slum. Owing to its proximity to the main bus terminal, its central location and the low rents afforded by its deteriorating housing stock, it served as a ‘stepping stone’ for migrants from the country’s rural hinterlands. The population of the Casco Antiguo rose continuously, and peaked at 14,145 during the 1970 census. During the late 20th century, the district was characterised by a high number of squatters and low-rent tenants, as rent freezes from 1945 to 1959 and again from 1974 to 1990 not only made landlording an unprofitable venture, but also deterred property owners from investing in property maintenance (Suman, 2008; Tejeira-Davis, n.d.). In addition to the effect of high population density, disinvestment exacerbated deterioration to the point that roofs collapsed, walls crumbled and many of the properties were inhabited by dozens of families, sometimes with five or more family members per room, illuminated and ventilated by jury-rigged wiring systems. Table 1 details the district’s transition over time, with an emphasis on the periodic cycles on investment and disinvestment, of which the current round of gentrification is only the latest episode.

Table 1.

Cycles of investment and disinvestment in Panama City’s Casco Antiguo (periodisation by authors).

Time frame	Investment or disinvestment?	Status of the Casco Antiguo	Architectural style(s)
Late 17th and Early 18th centuries	Investment	Entrepôt for precious metals; command centre within Spanish Empire	Spanish Colonial
Mid-18th century to mid-19th century	Disinvestment (partial abandonment)	Partially destroyed by fires; many vacant lots
Mid-19th century to 1930s	Investment (gentrification)	Headquarters for French canal company; many buildings re-built/restored and new dwellings erected to house élite Panamanians	Spanish revival; neoclassical; beaux-arts; Art Deco
1930s to early 2000s	Disinvestment	Dense mixed-class ‘barrio popular’ and later concentrated slum
2004 to present	Investment (transnational gentrification)	Colonial revival neighbourhood; influx of cosmopolitan transnational residents	Restoration of older-style façades with modern amenities inside

Transnational gentrification in the Casco Antiguo

In the wake of the reversion of the canal and the surrounding US-occupied lands in 1999, Panama City has undergone an extraordinary transformation as a series of new megaprojects has reoriented Panama as a prime hemispheric intermediary (Sigler, 2013, 2014c). Just a few kilometres to the northeast of the Casco Antiguo, the sky is dotted with cranes hoisted above a sea of glassy high-rise towers in the Costa del Este and Punta Pacifica, and in the former Canal Zone development is underway to reformulate several retired US military bases as centres of international commerce. Of all these developments, however, the redevelopment of the Casco Antiguo has garnered the most international attention in the past decade. The Guardian (UK) has repeatedly lauded the ‘renaissance’ of the Casco Antiguo, and The New York Times ranked Panama the number 1 place to visit in 2012, writing that:

Even Panama City’s famously dilapidated historic quarter, Casco Viejo, has been transformed. The neighbourhood, a tangle of narrow streets, centuries-old houses and neo-colonial government buildings, was designated a Unesco World Heritage site in 1997 and is now a trendy arts district with galleries, coffeehouses, street musicians and some of the city’s most stylish restaurants and boutique hotels. (Mott, 2012)

A few months later, a Travel and Leisure article (Drucker, 2012) chronicled the implications of the Casco Antiguo’s seemingly incipient gentrification process:

The historic quarter of Panama City, known as Casco Viejo, is having that moment I always seem to just miss. The Casco is happening but it hasn’t quite happened. Mention Panama at any cocktail party in my fashion-barometer hometown, East Hampton, New York, and people all say the right things; they make sure you know they know it’s a hot destination. But very few of them have made the five-hour trip from New York, and while Sports Illustrated came to shoot its 2012 Swimsuit Issue, models aren’t exactly herding there yet. How long can this innocence last? (Drucker, 2012)

Other international outlets have heralded the Casco Antiguo’s transformation, including The Wall Street Journal and US News and World Report, which have painted it as an ‘unfinished’ neighbourhood awaiting a new heyday. To be sure, as one US News and World Report blog chronicles, ‘While [Colonia, Uruguay’s] Barrio Histórico is virtually 100 percent restored, Casco Viejo is still a work-in-progress’ (Peddicord, 2013) or, as another confirms:

Twelve years ago, Casco Viejo was a barrio. Speculators had just begun buying up the old colonial buildings, and only a few had been renovated. But the picture overall was of a ghetto. Those early-in investors had their work cut out for them. Before they could renovate or rehab, they had to evacuate. Many of the big old houses were occupied by sometimes a dozen or more people representing multiple families, often all squatters. Casco Viejo has since been spruced up and cleaned up. (Peddicord, 2012)

Accounts of the Casco Antiguo’s recent transformations are often informed by selective views based on ephemeral visits, oblivious of the historical processes that have transpired, and indicative of the ‘gentrification of gentrification literature’ to which Slater (2006) has referred. In contrast to the ‘work-in-progress’ that these outlets portray, gentrification has actually been ‘in progress’ for more than three decades, and has been marked by a series of legislative changes leading to rampant speculation, followed by a period of construction that precipitated the displacement of large numbers of long-time residents.

Gentrification in the Casco Antiguo began with a series of preservationist legislation in the 1970s, and intensified with the 1997 designation of the neighbourhood as a United Nations Educational, Scientific and Cultural Organization (UNESCO) ‘World Heritage’ architectural site. 1997 also saw the passage of Panama’s Decree-Law No. 9, which classified the Casco Antiguo’s buildings in terms of their historical value, and extended investors preferential interest rates as well as tax exonerations that prioritised rapid redevelopment. As Suman notes (2008: 425–426), this marked a sea change in Panama’s preservationist legislation, as fiscal incentives were introduced to spur redevelopment. And although the UNESCO designation brought with it stringent architectural regulations limiting the potential for large-scale redevelopment, crucially it also catalysed both international and domestic interest in the neighbourhood, which may have otherwise taken much longer to materialise. A parastatal entity called the Oficina del Casco Antiguo was created in 2000 to ensure that the restoration process was done in an orderly and compliant manner. The office provides technical assistance to developers, helping to expedite a gentrification process that would be made considerably more difficult by local bureaucratic structures. In addition, the Panamanian Tourism Authority created a special ‘tourist police’ office for the Casco Antiguo, mainly as a responsive channel and safeguard against pickpocketing and other common petty crimes.

The immediate impact of these developments was a marked appreciation in land values and speculation, as Figure 2 shows, indicated by the intensity of property transfers and mortgages in the Casco Antiguo between 1990 and 2010.

Figure 2.

The intensity of property transfers and investment in the Casco Antiguo.

As Figure 2 illustrates, property speculation intensified after 1997, and ramped up further after the handover of the Panama Canal in 1999, continuing until approximately 2004, when property values reached more than US$2700/m (more than US$1 million for an average parcel). As the majority of prime properties were bought and sold by those with longstanding local connections, property speculation subsided, only to be replaced by a wave of construction beginning in approximately 2006, as indicated by the mortgage value curve in Figure 2. This confirms that UNESCO’s heritage designation was highly influential in the gentrification process, as the year that World Heritage status was conferred upon the Casco Antiguo coincides precisely with the year that property speculation began to intensify. Property speculation preceded gentrification by several years, indicating that the local real estate industry anticipated the Casco Antiguo’s redevelopment well before demand was actually assured. With UNESCO’s validation of the Casco Antiguo as a place worthy of ‘global’ recognition, property investors and speculators were quick to take advantage of the economic opportunities created by years of neglect, and Panama’s robust banking sector provided the financial capital for redevelopment where private capital was unavailable (Sigler, 2014a).

The fact that speculation preceded gentrification also confirms the localised nature of the redevelopment process, as a handful of families leveraged their knowledge of (and connections within) the local bureaucracy, planning system and legal regime to navigate the daunting, multi-year journey from purchase to renovation and sale. Property records indicate that the majority of transactions in the Casco Antiguo were conducted by ‘natural’ people, as opposed to the corporate or institutional transactions taking place elsewhere in the city (Sigler, 2011: 207–208). Decrepit properties were often owned by multiple descendants of previous owners (indicated by a high frequency of ‘partial’ property transfers in the data set), so purchase and renovation processes not only navigated local and national political structures, but familial politics as well. One informant recounted having to take a distant relative overseas to court (in absentia) in order to re-possess part of a family property that had been subdivided. Furthermore, the temporal dimension of speculation shows that property sales began well before Panama appeared on the ‘radar’ of international financial capital, as the first significant wave of cosmopolitan transnational migrants to the Casco Antiguo arrived in approximately 2004.

Beginning in the 1990s and accelerating from 2004 onward, buildings that were home to working-class Panamanians were vacated and subsequently renovated for high-end use. The eastern end of the district was renovated first, as the proximity to already-restored government buildings and churches, and distance from the barrios of El Chorrillo and Santa Ana, made it a logical candidate for ‘pioneer’ gentrifiers. As the gentrification process proceeded, large numbers of area residents were displaced. These displacements were widely felt, as the population of the district fell 77% between 1970 and 2010 even as the metropolitan population trebled over the same interval. As the Casco Antiguo’s new residents demanded larger apartments with more amenities (e.g. en suite toilets), population density continued to drop even as renovations continued unabated. Many of the most prominent buildings were also transformed for upmarket commercial purposes, and others sat vacant for long periods of time as land owners either held out for the highest sale price or did not proceed with sale and/or renovations for a variety of other reasons.

Despite widespread protest from long-time residents, evictions were common and often forceful. In extreme cases, property owners would have the roofs or staircases removed, as enforcement through formal channels (e.g. police) was often met with strong resistance (Espino, 2009). Table 2 details the household tenure changes in the Casco Antiguo between 1990 and 2010. The number of households fell by 64% over this 20 year period, attributable primarily to a sharp drop in the number of (low) rent-paying tenants. The number of owner-occupiers increased modestly over this time, and after a small increase, the number of squatters had dropped sharply by 2010.

Table 2.

Household tenure in the Casco Antiguo 1990 to 2010.

	1990	2000	2010
Mortgage	3	42	28
Rental	1903	1021	501
Own	58	61	65
Condemned (squatter)	819	944	419
Other	129	105	40
Total	2912	2173	1053

Source: Instituto Nacional de Censo y Estadística, Contraloría General de la República de Panamá, (National Census and Statistical Bureau), 2014.

The fate of those that were evicted was far from uniform. At first, many were relocated to other housing estates in the neighbouring districts of El Chorrillo and Marañon, or to exurban areas such as Arraiján and Las Garzas de Pacora, according to key informants. Others moved in with family members elsewhere in the city, or relocated to the urban periphery, where rents were substantially cheaper than in the city centre. While many long-time residents, particularly squatters, were not compensated, others were given indemnities, notably those that had lived in buildings leased by the Ministry of Housing from private landlords (La Prensa, 2005). Much of the displacement was justified on the grounds that many residents were allegedly gang members whose primary livelihood was selling drugs (Espino, 2009). This social ill was universally justifiable to the public and meant the evictions could proceed under the double-rationalisation of removing squatters engaged in illegal activities. Many residents fought the evictions in court, enlisting lawyers and soliciting assistance from the government or from UNESCO. Legislation was passed in 2002 to slow evictions and to stipulate adequate compensation, and the Oficina del Casco Antiguo made commendable efforts to build affordable housing to avoid complete displacement (Espino, 2009). However, by the early 2000s, the damage was mostly done.

One of the most visible elements of change in the Casco Antiguo has been the slow yet steady renovation and refurbishment of historic buildings. Figure 3 shows the ‘Montefiore’ building, located at the heart of the district, before and after renovations. It was purchased in 2006 for US$225,000. At the time, it was home to 18 families and two businesses. The owner paid US$40,000 in indemnities and other relocation-related expenses to the past tenants. The building was converted into five apartments and two commercial spaces, which sold for US$1700 to US$2000 per m².

Figure 3.

Before (2000) and after (2010) photos of Edificio Montefiore in the Casco Antiguo.

As of writing, one-bedroom units in the building rent for US$1400 per month (Arco Properties, 2013), and the current commercial tenant is a high-end steakhouse. Across the Casco Antiguo, rents in refurbished units range from approximately US$1000 to US$4000 per month, in a city where 57% of residents pay less than US$200 per month in mortgage or rent. Renovated apartments within the Casco Antiguo sell for between approximately US$150,000 and US$2 million – clearly beyond the capacity of most locals. And while it is evident that there is some local demand for the ‘new’ Casco Antiguo, particularly from younger cohorts, it is not being realised. According to one local property developer:

As opposed to older Panamanians, who are obsessed with parking, security and strip malls, younger Panamanians (twenty-somethings) want to move there. […] The big dilemma is that Casco is becoming too expensive for them. (Personal communication, 4 May 2013)

Although there does exist a significant Panamanian middle (and élite) class with adequate resources to move into newly refurbished properties in the Casco Antiguo, local housing demand has been channelled toward newer suburban areas with a different set of amenities and cultural associations. In the words of another property developer:

Casco lacks the convenient shopping of newer neighborhoods, has parking and garbage collection issues, and suffers from a historical association with crime, poverty and neglect. It is, in essence, the Panama that was, and that is not necessarily a good thing to many Panamanians who grew up in a time when Panama was at its lowest: backwards, poor, controlled by populist dictators and all but irrelevant on the world stage since the one thing that could make it relevant—the Canal—wasn’t even in their hands. (Personal communication, 4 May 2013)

Although some of the district’s new residents are in fact Panamanian, the international market has been the primary target for redevelopment. As the same informant notes:

Probably 70% of the renters and buyers [of refurbished apartments] are foreign. A large part of Panama’s growth [over] the last few years has been driven by multinational companies moving in and we’ve had a sudden influx of foreigners, many of them fairly young and with decent housing budgets. Casco isn’t cheap; they could get more space in modern buildings, but the Casco suits people who choose satisfying experiences over maximizing their consumption. (Personal communication, 4 May 2013)

As such, the majority of demand is from abroad, and according to a local planning expert:

Definitively, Casco’s resurgence depends heavily, although not exclusively, on the international market. I also think the government has helped a lot, although the main thrust has been the internationalization of Panama’s real estate market. No policy could have had a comparable effect. (Personal communication, 21 February 2013)

Meanwhile, this transnational circuit of migration itself is predicated upon the increasing imaginative ubiquity of gentrification across the globe. As a prominent local developer and hotelier states:

Casco is a niche neighborhood and you see more foreigners ‘getting it’ because they have seen it elsewhere so many times over. (Soho, Alphabet City, Le Marais, Malasaña, East End, etc.) […] Most foreigners don’t need too much imagination to see Casco’s potential. (Personal communication, 4 May 2013)

The process of residential conversion has been accompanied by a series of developments catering to international tourists and expatriate residents, including numerous bed and breakfasts, hotels, hostels and restaurants (Fiffer, 2010; Rathbone, 2012). Several websites dedicated to the promotion of both cultural events and real estate in the Casco Antiguo exist in English, and Spanish-language outlets often express Panamanians’ unfamiliarity with what has transpired (Humbert, 2014). As an article from US News and World Report confirms:

Another big advantage to Panama is that this country, small as it is, serves up a surprising diversity of lifestyle options. Casco Viejo, for example, offers the most cosmopolitan, European city retirement lifestyle to be found anywhere in the region. (Peddicord, 2012)

Although the Casco Antiguo has not been ‘European’ for nearly 200 years (if it ever was), it becomes clear from the sentiment conveyed by the above statement that – in the perception of many – it is no longer fully ‘Panamanian’ either, despite the fact that the discourse of national ‘patrimony’ is strongly embedded in nearly all legislative and commercial aspects of the neighbourhood’s transformation.

Hundreds of new transnationals have come to form the residential (and commercial) base of the neighbourhood, changing the neighbourhood’s demographic composition radically. The international population now represents approximately one-sixth (and growing) of the Casco Antiguo’s residents, and North American, European and Colombian in-movers have replaced Dominican, Chinese and Nicaraguan residents as the main foreign-born groups. In the 2010 census, 45 countries were represented in the Casco Antiguo, including 16 in Europe. Table 3 summarises the demographic realities of the Casco Antiguo’s transition.

Table 3.

Population characteristics in the Casco Antiguo: 1990 to 2010.

	1990	2000	2010
Total population	10,282	6928	3263
Foreign born (%)	5%	7%	16%
Born in US or Canada (no.)	n/a	9	71
Born in Europe (no.)	n/a	21	102
Monthly household income >US$2500 (%)^a	0.3%	5%	12%

Source: Instituto Nacional de Censo y Estadística, Contraloría General de la República de Panamá (National Census and Statistical Bureau, 2013).

Note: ^a1990 and 2000 figures consumer price index (CPI) adjusted.

Despite these very rapid social changes, the redevelopment of the Casco Antiguo has been slow. According to a former director of the Oficina del Casco Antiguo:

The main challenges to investment are the difficulties of developing there: small properties, difficulties to build, small profit margins (compared to the towers a few kilometers away), more strict regulations, the difficulties of evictions. Given the high costs of renovating, any project is necessarily going to be targeted to high-income groups, so gentrification is practically guaranteed. (Personal communication, 21 February 2013)

As of writing, significant portions of the Casco Antiguo are under construction while many lots contain derelict structures from which residents have been vacated. However, in the absence of the transnational circuit of migration that brings wealthy, leisure-seeking migrants to Panama City, the Casco Antiguo might not have been a viable redevelopment target at all. There would be disinvestment, but no potentially higher economic returns to encourage reinvestment – no rent gap to be exploited, as it is clear that developers can only profitably recuperate the high cost of redeveloping Casco Antiguo real estate through higher prices than the local market could support.

Discussion

The introduction of a transnational element of gentrification – not simply as a mechanism for imagining or financing gentrification but as a formative social element within a novel urban landscape – complicates an already complex concept. The boundaries of gentrification as a theoretical and empirical phenomenon are of course often debated (Davidson and Lees, 2005), as is the universality of a concept that originated in a specific social, economic and political context (Maloutas, 2012). We argue that empirical analyses of radically different contexts are a necessary step in generating new geographies of theory (Roy, 2009), and new geographies of gentrification theory in particular (see Lees, 2012).

Accordingly, the case of the Casco Antiguo offers a research agenda into transnational gentrification that embeds globalisation within narratives of neighbourhood-scale transformation, connecting local change with global flows. We demonstrate that, even with local élite distaste of the central city, a combination of localised disinvestment with a globalising property market and cosmopolitan lifestyle circuit was sufficient both to generate a rent gap and to supply the (transnational migrant) consumer demand to plug that gap. In the Casco Antiguo, in other words, globalisation has played a far more active role in the gentrification process than most scholarly accounts would credit, and indeed has facilitated gentrification where it seems unlikely to have otherwise occurred. Although our empirical analysis has addressed a single site framed by a specific set of socio-temporal circumstances, theoretical implications can be applied in diverse global contexts.

The case of Panama is unlikely to be unique and several other sites feature all the same trappings: a long history of cosmopolitan settlement with noteworthy architecture and proximity to natural amenities, aligned with the existence of a transnational rent gap, resulting from a prolonged period of urban decline. It is likely that other locales (in Latin America and elsewhere) are already or will soon be exposed to transnational gentrification, particularly as, on the demand side, retiring baby boomers seek to maximise their retirement budgets and, on the supply side, local development interests decide to target these and other internationally mobile incomers.

We thus second Butler and Lees’ (2006) position that gentrification and globalisation are now inextricably intertwined phenomena. But, at the same time, transnational gentrification stands in contrast to prior accounts of how globalisation has acted to foster neighbourhood-scale transformations, and demonstrates how both highly globalised and localised sets of actors can be fundamental to gentrification, and that the gentrification process itself can simultaneously be globalised and globalising.

Moreover, transnational gentrification offers a provocative inversion of a standard critical narrative of globalisation, whereby capital is freed from national constraints and able to roam globally while people largely remain place-bound. In the Casco Antiguo, even though most of the new residents are transnationally mobile, the redevelopment actors have been largely domestic, thanks to the highly place-specific legal, institutional and political channels which must be successfully navigated. Global capital would find such a journey nearly impossible – as a result of precisely the same disembeddedness in the local political economy that has encouraged a transnational middle class to take up residence. Our analysis, in other words, confirms the familiar general result that globalisation strengthens some international connections while weakening others (Castells, 2000), but with details that turn the standard narrative of the ‘globalisation of gentrification’ on its head. In the Casco Antiguo, as our longitudinal evidence indicates, new residents are global whereas development capital is local.

Conclusion

While most scholarly work connecting gentrification and globalisation has done so at a highly abstract level, appealing either to structural logics (Harris, 2008; Inzulza-Contardo, 2012; Smith, 2002) or subjective imaginaries (Rofe, 2003), our analysis of the Casco Antiguo demonstrates a more concrete, actively globalising dimension of gentrification, in which gentrification is not merely a local outcome of globalisation but rather a vector along which it develops. Globalisation does not just create a common political-economic structure driving urban change or a common ideology for a gentrifying class. It creates historically and geographically specific connections between places, which themselves can become pathways along which gentrification processes propagate, connecting local capital to international consumer demand and thereby thickening the global circuits of capital and migration that constitute globalisation. Importantly, from a political-economic perspective, the Casco Antiguo could only be said to have had a rent gap when placed in transnational context: absent the circuit of transnational migration, the differential between existing and potential rents in the district would not have been sufficient to drive reinvestment on the scale that has occurred.

Gentrification in the Casco Antiguo has been facilitated by both a transnational class of migrants and a local cadre of developers. We demonstrate that, even with local élite distaste for its older housing stock, a combination of localised disinvestment with a globalising property market and cosmopolitan lifestyle circuit was sufficient both to generate a transnational rent gap and to supply the (transnational migrant) consumer demand to plug that gap. In other words, here globalisation has played a far more active role in the gentrification process than most scholarly accounts would credit, and indeed has facilitated gentrification where there would otherwise have been insufficient demand for refurbished properties.

Our case therefore helps address the question posed by Rofe (2003: 2524), as to whether ‘the gentrifying class constitutes an emergent, élite global community’. Our answer is: not via the subjective imaginaries of gentrification agents, but via their material impacts on the landscapes they transform. What we have identified is something like a feedback loop. The increasing global mobility of transnational middle classes creates new opportunities for gentrification projects where such projects would be infeasible on the basis of local demand, and the proliferation of these projects creates increasing consciousness among members of these middle classes of the possibilities of gentrification-producing migration.

The concept of transnational gentrification mobilises both supply-side and demand-side factors to theorise a new global pathway for gentrification processes. As our data have indicated, local actors (both government and private) were grooming the Casco Antiguo for redevelopment long before a cosmopolitan transnational cohort found their way to Panama. However, once established, the latter’s presence was widely heralded, and the built environment was moulded to conform not only to a classed aesthetic, but to a range of new lifestyle and commercial possibilities. Our empirical treatment of the Casco Antiguo here has not been able to address all of the potential complexities that the concept of transnational gentrification introduces, but it serves as a starting point for a broader conversation about the universality of the gentrification process in other contexts, touching upon recent calls for scholarly understandings of gentrification to be more globally informed. Specifically, transnational gentrification demonstrates the simultaneous importance of both highly globalised and localised sets of actors, and demonstrates that the gentrification process itself can be simultaneously globalised and globalising.

Footnotes

Funding

This research received no specific grant from any funding agency in the public, commercial, or not-for-profit sectors.

Notes

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