Old Town (Casco Viejo) Panama is a small section of the much larger Panama City. Located on a rocky peninsula it was the hub of life a hundred years ago during the construcion of the Panama Canal with elegant buildings, churches and hotels and many common residences. But the area was too small to hold the increasing population who moved across the bay onto the mailand and built modern Panama City. Casco Viejo was neglected for decades and it decayed. Today it is under restoration and is a UNESCO Heritage site.