Pensioners seek paradise in Panama mountain idyll

BOQUETE, Panama, June 1 (Reuters) Perched on a volcanic plain in the highlands of western Panama, Casey Koehler's luxury mansion looks like a slice of prime Florida real-estate beamed down to Central America.

Diamonds flaring in his Rolex watch, the Michigan-born retiree sits on his porch in the resort of Los Molinos and lists reasons for retiring to a country most Americans his age remember best as the scene of a 1989 U.S. invasion.

''It's 77 to 82 degrees every day, and it's spectacularly beautiful,'' said Koehler, 65, who moved to Panama last year. ''This house cost me 0,000. In Florida it would be 1.5 million dollar.'' Politically and economically stable, its turbulent history all but forgotten by visitors, Panama is luring U.S. and European retiree baby-boomers dreaming of a millionaire lifestyle on the cheap.

Eager to follow neighbouring Costa Rica as a magnet for wealthy U.S. and European pensioners fleeing high real estate prices at home, Panama, which uses the U.S. dollar as its currency, is offering perks to retirees ranging from tax breaks to discounts on travel, cinema tickets and fast food.

Much of rural Panama is still poor with a very basic infrastructure, and while the gleaming skyscrapers of the cosmopolitan capital Panama City are only a short flight from Miami, the city is too hot for most newcomers.

Retirees are instead flocking to the area around Boquete, a cool mountain town famous for growing coffee and oranges, where small wooden houses are decked with tropical fruit and flowers year-round and old men play dominoes in the shade.

U.S. and European retirees are transforming it into a chic enclave with bistros, a 24-hour supermarket and delicatessens.

CHEAP AND CHEERFUL Boquete is a world away from the image of a typical ''banana republic'' that stuck in the minds of many baby-boomer Americans who watched television images of the 1989 U.S. invasion to remove dictator Manuel Noriega.

Gleaming SUVs jostle for parking space in Boquete's narrow streets. Foreign pensioners scour bistro menus for low-cholesterol dinners while pouring over maps in search of land to buy. With prices rocketing from 10 to 300 dollars per square metre (yard), there's a gold-rush whiff in the air.

Koehler, a former Central Intelligence Agency worker, said cheaper living partly drew him to Panama. He said that while he spent ,000 a month in the United States to live in none-too-opulent style, he now spent only 1,200 dollar a month and wanted for nothing.

Others, like Ramona and Charles Holmes, who moved to Boquete from California last year, dote on its slower, peaceful pace and its unspoiled beauty.

''People thought we were crazy,'' says Ramona, a 50-year-old former legal clerk. ''They thought we'd be kidnapped. That's just silly. OK, sometimes we find snakes and tarantulas on our property, but it's so beautiful here you could cry.'' Developer Sam Taliaferro built Valle Escondido, a 200-home gated community for retirees, on a coffee farm in Boquete. Laughing, sun-tanned pensioners scoot around on golf carts in the landscaped environment. ''When we wake up, we say, 'Wow, we're in paradise,''' he enthuses.

Taliaferro says he wants to haul Boquete, and especially the local Ngobe Bugle indigenous group which once relied on sporadic coffee-picking work for a living, into modernity.

''Now there is something more for the Indians to do than pick coffee,'' he said. ''They are actually waiting on tables, sitting by computers. They're moving from a third-world to a first-world economy.'' More Reuters AD DB0941