Investing in Teak plantations in Nicaragua and Panama

Interview with , Rachel Jensen Vice President of Business Development Hardwoods Unlimited, Ltd.

Why is teak valuable?

The fine hardwood, teak (tectona grandis), has been deemed the “gold of timber” for good reason. It has been used for centuries due to its remarkable qualities including resistance to fire, rot, and termites.

Many luxury boats, including Chris Craft, are finished in teak. Luxurious outdoor furniture is priced at a premium because of its longevity and durability. High-end buildings and structures in tropical climates are often constructed with teak due to its strength and incredible ability to withstand all elements. Over 100 years ago, even the Titanic was furnished with teak flooring and outdoor furniture. Because of its consistent proven worth throughout the centuries, there is a high price tag on teak and the demand just keeps growing.

Where does demand of teak come from?

Rachel Jensen

The demand for teak is worldwide and continues to grow with the increase in global population. Specifically, there is a large consumption in the Chinese & Indian market. As these two, populous countries continue to grow at an incredible rate, the demand for teak parallels that growth.

Do the investment packages, include ownership of the land? Yes. As an owner at the Hardwoods Unlimited farms, whether in Panama or Nicaragua, you receive full title to your parcel.

In which part of Panama is the land located?

Panama: The plantation is located in the western part of the Darien, the province east of Panama City. This area is very well-known in the farming and agriculture industry for its fertile and rich soil, and ideal climate.

Nicaragua: The farm in Nicaragua is located about 1 hour west of Managua in an area known as Gran Pacifica. Here the agronomists found perfect, well-drained alluvial soil which is ideal for growing teak.

What are the main risks for the trees and in which period of their development?

After age 3 the trees become resistant to the typical timber risks including, but not limited to, termites, rot, fire. It’s remarkable. Prior to this age, extra precautions are taken including firewalls and bug repellant.

Around harvest, a risk would be there is no teak market. However, the beauty in ownership of teak is that you can continue to let the teak grow until the teak market picks up again. As the teak grows in age, it literally grows in value and never expires. A second risk would be theft as the trees mature. Precautions are put in place to prevent this and we’d be happy to talk to you about those methods.

Does the plantation have water and licenses for its extraction on site?

The teak is growing in its natural habitat and irrigation systems are not needed. In Panama, the farm does back to a river but the beauty of teak is that it’s fairly low maintenance after the first few years

What are the ongoing fees for the plantations?

Panama: There are no ongoing annual fees as thinning proceeds are reinvested into the annual maintenance and upkeep. At harvest, there is a 20% fee which means the managers and you have the same goal. Their incentive is to take the best care of your farm. If the logs are processed to lumber, there is an additional 15% processing fee.

Nicaragua: There is an annual fee of $250 which includes property tax and annual maintenance. At the end of harvest, there is a 20% management fee and 15% fee is the logs are processed to lumber. NOTE: Owners of the Nicaragua farm receive thinning profits throughout the harvest cycle.



How many planting, thinning and harvesting cycles have the company gone through?

For this specific group of investors, this is their first. However, the plantation managers, GeoForestal, are one of the largest forestry management companies in the country and have managed and successfully harvested thousands upon thousands of hectares of farmland, specializing in teak.

How many parcels does the company manage?

At the Panama farm, the owners own half of the parcels. In Nicaragua, the company owns about 2500 acres.

Owners of land in Panama can apply for residency, can this land be spread out in Panama or does it need to be in one specific parcel?

It depends. Contact us to go through your specific scenario and we’ll see if you qualify.

What is the time lapse between a thinning or a harvest and the investor having the funds in his account?

About 12-18 months. During this time the trees are harvested, dried, processed to lumber, and sold. Then the next round of planting occurs after the land has breathed and rejuvenated.

What should investors be most diligent about when buying a teak plantation? 

Be aware of the annual fees and who the management team is. Anyone can plant a seed, but the real value in the timber is over the 25-year harvest cycle, as the wood develops.

What should investors be most diligent when an investment in Panama or Nicaragua?

Always double, triple check that you will receive clear title to your land. Because title is a fairly new concept in Latin America, it is not uncommon that instead long-time landowners have “Right of Possession.” However, as a foreigner, you are best protected through the full-titled property that is registered with the Lands Department.

If you don’t speak Spanish, be sure you receive the paperwork translated in English so that you understand what the paperwork is saying.

Would you like to add any information not covered by the above info?

Have an IRA you’d like to put to work? Diversify your portfolio with this unique opportunity that is probably different geographically and timeline wise from your other assets. Contact us via the information below to further chat about this opportunity.

Contact us to learn about the perks of the Reforestation Laws in Panama and how you’ll benefit from ownership in this farm. Info@teakhardwoods.com, or call during business hours (M-F 8-5pm MDT) 1-800-290-3028.

If you understand the importance of having a second residency, please ask how you can pair up your teak land with residency programs in both Panama and Nicaragua. This program has successfully processed residency for over 150 people. Residency in Panama is one of the most desirable in the world right now because of the simplicity of receiving it and the ease of maintaining it.

How can users find out more on investing in Panama and/or Nicaragua teak? Please contact us directly at info@teakhardwoods.com and mention “InvestInIt” to receive the latest promotions!

We thank Rachel Jensen for the interview.