The 'old' city in Panama City, while not actually being the oldest part of town (that honor belongs to Panama Viejo #742), is an atmospheric collection of new and old buildings, trashy bars, elite restaurants, ramshackle apartments, chic hotels and restored churches. With views looking towards Panama City's 'new' high-rises over a harbor filled with quaint fishing boats, it may no longer be the 'in' place to live, but it holds its charm of an old Spanish colonial city like Lima #744 or Cartagepna #900.
This part of Panama City dates from 1674 after the original city was sacked by pirate Morgan, but suffered from a decline after it's Caribbean twin, Portobelo was ransacked in 1746 until the 1850s California gold rush (traveler's used the Panama isthmus railroad, because the Panama Canal #920 would not open until 1914. Reefs allow for a natural defense line and Cerro Ancon rises up behind it for excellent sea views. A wall was built, which helped to give the area its name -- Casco Viejo means 'old compound'. On the edge of the city on the road towards the promenade lies the President's house, Palacio las Garzas (herons), and of course in the middle of the old city is Plaza de la Independencia (the event is celebrated twice in Panama, for it got its independence first from Spain and then from Colombia). Walking along the Paseo las Bovedas (a promenade along the top of the city walls) gives a peek into court-yarded houses and occasionally into open windows.
Much of the city lies in disrepair or under serious construction, but that only adds to the atmosphere. Poor barrios are very close to the city but the city is pouring money into its reconstruction and revitalization. Art is displayed from many buildings, and the churches offer open doors to visitors escaping the wet tropical heat outside. It's nice to see the area still lived in, and not just occupied by tourist hotels, but this may not last.Source: Lonely Planet Central America 7th Edition, 2010