The continual goal in overseas property investment is to try to find a destination ready to take off on the tourism, international business and economic fronts - and to find it before the majority of the market has been able to get there. This entails an element of risk as to whether the development will be as rapid or as impressive as the predictions indicate.

In many ways, it is somewhat strange, then, that one of the most touted investment destinations in the overseas property market is a country that has long been visited by rich tourists, already has a business district with a large number of multinational companies, and is one of the most important locations in the world for sea-borne trade.

Panama is seen as the most stable country in Latin America, perhaps not that surprising given the fact that the US has been present there since the inauguration of the Panama Canal 100 years ago. A referendum has recently been passed to allow the expansion of the Canal, permitting the largest of supertankers to begin using the route, therefore generating even more revenue for the country.

The economic growth rates in Panama have also been impressive - GDP grew by six per cent last year and is projected to rise by a further seven per cent by the end of this year. The revenue generated by the canal alone tops $500 million per year (£244 million), in a country of just three million people. The advantage of revenue from the trade route is that every other country in the world that uses it has a vested interest in protecting it to preserve their own trade systems. Therefore, the stability and safety of the State of Panama is virtually guaranteed.

The long-standing association of the United States in Panama has also ensured that the infrastructure of the country has developed significantly beyond that of its neighbours, with good road, rail and air links with many parts of the world.

More importantly from a property investment point of view, there are very few restrictions on foreign investment in the country, and the government has allowed 10 to 12-year tax exemptions on new construction projects to allow developers to explore the market for property investors. This has led to a significant increase in the amount of new projects coming onto the market in recent months.

The competition between these developments has kept property prices within the affordable bounds of an emerging market, though rapid appreciation is also reported. This is no doubt being pushed on by interest from the US market looking for alternatives to Florida and Mexico for holiday homes.

Another important consideration for UK buyers is that Panama is sufficiently Americanised for property to be priced in US Dollars. With the current exchange rates, property in Panama is even better value than it was just a few months ago.

As the real estate market in Panama develops and attracts more and more foreign investment, the developments on offer are growing significantly in standing. Currently under construction is the Los Faros development, a site of three towers containing over 1,700 properties being marketed by agents Feltrim. The central of the three towers is set to become one of the tallest residential developments in the world at 84 stories, and offers two-bedroom condominiums from $292,000 (£142,773).

In addition, there will be the world's largest Trump development right on the water's edge. Ocean Palace will be a condo-hotel resort with its own private beach and yachting marina on the Punta Pacifica in Panama City. The 949 properties will share the 66 floors with a top-quality hotel. Owners will also be able to make use of the Trump casino, seven swimming pools and, the piece de resistance, a yacht to transport them to the private beach club on Contadora Island, one of the 100 islands that make up the Pearl Islands just off the coast. Studio hotel apartments are available from $375,000 (£183,356) through Escapes2.com.

The hotel apartment concept is an attractive one for many overseas property investors, giving as it does, good opportunities for the property to be rented through the hotel itself, and managed on a daily basis. Should you be able to find a hotel with high occupancy rates, the returns from renting out this type of property are potentially impressive.

"Panama has attracted foreign investors both young and old since Noriega was toppled from power and stability came back into the country" says Charlie Pritchard of Churchill Innovative Solutions, who are marketing another condo-hotel project at Megapolis in Panama City.

The attraction for retirees as well as investors is backed up by Ian Cunningham of Escapes2.com: "Panama is a leading destination for retirement; the country offers substantial discounts to retirees on travel, medical and living costs, and as long as you have a monthly pension of $500 per month (£244), you can apply for a pensioned visa, regardless of age."

Living costs are favourable for residents, and far below the levels of the UK, while price inflation of general goods is at around two per cent.

Combining the advantages of the investment proposition and the attraction for residents, the argument for investing in property in Panama is persuasive - you may want to keep it under your hat