These clear turquoise waters with patches of sapphire seem to belong in the Caribbean.

I’m standing on a steep hill overlooking a white-sand beach. I’ve just walked past the “airport”—little more than a landing strip—to the mini-mart on the “main road.” I’ve passed no cars, just a few golf carts whose drivers smiled or nodded or said hola. Aside from that and the rolling sound of the waves, it’s quiet.

I don a hat and sunscreen, and set out to walk the entire island; a feat that takes two hours…at a leisurely pace. I come across workers at construction sites; they do not catcall or bother me in any way. The island population is notoriously polite.

Sweet, flower-framed cottages sit next to mansions—the weekend homes of Panama’s most influential families. Here on the island they are accessible…not cloistered behind the inky windows of an air-conditioned Mercedes. The local elite aren’t the only high-profile people to be drawn here. Famous visitors range from the exiled Shah of Iran to John Wayne.

One of many islands in the luminescent string that is the Pearl Archipelago, Contadora is just off Panama’s Pacific Coast, a mere 40 miles from Panama City. The tidy island town boasts three “mini-supers,” a miniscule social security clinic, an equally teeny police station, and one gas pump. There are a few hotels and B&Bs, and a handful of restaurants boast fresh seafood and even European cuisine.

Residents travel to Panama City regularly to visit large grocery stores, theaters, malls, hospitals, and more. There are no banks or ATMs on the island, so bring cash (though many of the hotels do accept credit cards). Despite the lack of city trappings (or perhaps because of it) there is a small but thriving expat population here. These few have discovered that Contadora’s waters rival those of the Caribbean.

Expat Ken Grabenhofer bought property in Contadora five years ago. He built a three-bedroom, three-bathroom home that he rents out to visitors. Next door, he built a smaller apartment, where he lives for much of the year, returning to Illinois when he can. The home is close to the water and features a small but pleasant pool.

“I came here and was pretty much hooked,” he says. Though building a home on a small island can be challenging—especially when it comes to sourcing and transporting materials—Ken says it was all worth it. “The hard work can really pay off,” he says. “I have rented the house for $500 a night during the high season. For New Years I had an upper crust group of Panamanian youths who liked the house so much, they were happy to pay $600 a night.”

Ken recently purchased a lot in front of his home, where he has begun building three small cottages. Though the year has been a bit slow in terms of tourism and rentals, he is confident it will pick up. And with so many foreigners discovering and visiting Contadora, there are plenty of niches to fill for anyone thinking of starting a business here. The island could use an Internet café, an ice-cream shop, a small wine bar…and the list goes on.

But don’t get me wrong; there is plenty to do here. You can rent a golf cart or walk to one of Contadora’s 11 beaches (including Panama’s only nude beach). Take in the birds and the Technicolor flowers, play golf on the rustic nine-hole course, or hire a local panga or fishing boat for a tour. The surrounding islands offer plenty of opportunities for adventure. Spend the day fishing, go snorkeling or diving, rent jet skies, charter a catamaran, go whale or dolphin watching, or pretend-play Robinson Crusoe on a truly private island.

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