Panama City shows capital improvement to become hot spot

Panama City’s future and past intersect at Casco Viejo, the time-worn colonial district that has become the cultural cornerstone of the city.

Despite being home to the presidential palace (and the former dictator Manuel Noriega), its bullet-scarred buildings and cobblestone streets were once deemed unsafe for residents of this Central American financial hub, let alone visitors.

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Edmund D. Fountain/ New York Times

Panama City’s colonial district, central to the Panamanian past, was shabby and dangerous a few years ago. Now it’s the site of trendy restaurants, nightclubs and cathedrals.

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Then, about a decade ago, things started looking up. The mossy warren of Spanish colonial houses was

designated a UNESCO World Heritage site in 1997,

helping to stanch the spread of the city’s glassy office towers and condominiums. A special tourist police force was established in 2005, putting an end to a rash of muggings.

And now, with the help of some government money, cheap real estate and the area’s haunting architectural beauty, Casco Viejo seems poised to become a kind of South Beach-style hotbed of cafes, hotels and nightclubs.

Even if you’ve never been to Cuba, Casco Viejo conjures up your most romantic notion of Havana: dilapidated stone buildings, massive cathedrals and balconies with bougainvillea pouring over the railings. But for every narrow alley, there is a skeleton of a once-glorious building, with the light of the blue Pacific pouring through the hollow windows and trees growing out of the roofless shell and crumbling chimney.

It may not look like it, but each is in a stage of restoration, becoming a luxury apartment building, nightclub or hotel. But you don’t have to wait to see the area’s future. Between the colonial shells are structures that already are drawing expatriates, artists and tourists.

The most impressive of them is the Canal House (Calle 5A and Avenida A;

507 228-1907; www.canalhousepanama.com, a tiny boutique hotel with an Old-World wraparound veranda, exposed brick walls, sleek hardwood floors, plush

beds, and palm plants gracing every corner. Rooms start at $155.

There are also new art galleries like the tiny Karavan Gallery (Calle Tercera; 507 228-5161), which carries an impressive selection of Panamanian folk art and intricate wood sculptures and jewelry — displayed in a bright space more suited for a modern art exhibit.

But it’s not until dark that Casco really comes alive. With streets now safer, locals and foreigners pour into Plaza Bolivar or nightclubs like Platea (507 228-4011; www.scenaplatea.com ) — a dimly lit space where people drink mojitos and sway to the sound of live jazz.

Just this summer saw the opening of the Indigo Lounge & Bazaar (Avenida Central, San Felipe; 507 228-1822: www.indigopanama.com, a Buddha Bar-inspired nightclub that’s half Moroccan lounge and half open-air patio dining.

But for now, Casco Viejo’s past still pushes up against its future. Trendy outdoor bars like Ego Cafe (Plaza Bolivar and Calle 3; 507 262-2045) stand cheek by jowl with street food vendors selling crunchy mango in peppery vinegar sauce.

“Casco has so much opportunity right now,” said Matt Landau, an American who moved to the district three years ago and runs Los Cuatro Tulipanes (www.loscuatrotulipanes.com, an apartment rental agency. “You can’t help but be impressed with this place.”