| The word is out: "Nicaragua is the new Costa | | | | have catalogued over 70 developments on the |
| Rica" but with prices 45-55% lower than its | | | | Pacific marketing to foreign buyers between El |
| southern neighbor. Nicaragua is well and truly | | | | Transito and the Costa Rican border. The |
| bouncing back from its troubled and often | | | | south-west of the country also includes the |
| misunderstood past and beginning to transform | | | | colonial town of Granada, Lake Nicaragua and the |
| into a sought-after investment and tourism | | | | beautiful Laguna de Apoyo crater lake. |
| destination. Misconceptions still persist, but in many | | | | A number of investors are seeking out areas |
| ways that only increases the opportunity that | | | | where there is less activity, for example |
| Nicaragua offers. | | | | beachfront areas further north. The prices may |
| Nicaragua's democratically elected government is | | | | be lower in the northern part of the coastline - |
| showing a great capacity to reform in line with its | | | | but for a reason - and it is important for |
| commitment to a free-market economy. The | | | | investors to take this into account before they |
| country is booming and tourism is now the | | | | make an property purchase. The south western |
| number-one industry, increasing by over 19% in | | | | coastline has more dramatic geography, whiter |
| 2005 even considering a record-breaking year in | | | | sand beaches, richer biodiversity, better surfing, |
| 2004. There is a real buzz in the air for this land | | | | safer swimming areas and cooling lake and ocean |
| of opportunity. Whether you are looking for a | | | | breezes and, yes, also more recently investor |
| retirement or vacation destination, a place to start | | | | momentum. This is not to say that there will be |
| a business or a place to invest for the future, | | | | no price appreciation and development on beach |
| Nicaragua is definitely worth considering. | | | | areas further to the north but that a significant |
| How much is good real estate information worth? | | | | price differential will likely remain into the future. |
| Market knowledge based on fact and base trends, | | | | 4. Build a good network |
| rather than exaggeration and hype (in both | | | | Investors commonly complain of an overload of |
| directions) can make the difference between a | | | | market information and building a good network |
| good investment and a great one. The aim of this | | | | will allow you to triangulate and contextualize |
| article is to capture the essence of the successful | | | | information that you receive. Not surprisingly, |
| real estate investor in Nicaragua. We have | | | | given the excitement about the real estate |
| consolidated the experience of hundreds of | | | | market, there is a great deal of story telling and |
| investors and identified seven success strategies | | | | exaggeration that goes on. Do your due diligence, |
| for successful real estate investing in Nicaragua. | | | | work with realtors who know the market, learn |
| We hope that this encourages more investors | | | | from professionals and be skeptical about claims |
| into taking the first step in exploring real estate | | | | that you can flip your property for 100% more |
| opportunities outside their home countries with | | | | "when the International Living investors come into |
| confidence. Although imbued with a Nicaraguan | | | | town in a few weeks." |
| flavor for the purposes of this article, many of | | | | A solid piece of advice is to buy only what you |
| the principles and steps highlighted in this article will | | | | see. Make up your mind on what you think the |
| also hold true in other investment destinations and | | | | inherent value is of the property that you are |
| contexts. | | | | looking at is. Don't factor in the "new coastal road" |
| Seven success strategies for real estate investing | | | | the "new airport" the "new Marriott" into the price. |
| in Nicaragua | | | | Certainly not if you are investing for the short |
| 1. Understand the link between tourism and real | | | | term. Coldwell Banker Nicaragua has a network of |
| estate | | | | lawyers, project managers, master planners and |
| Tourism brought in almost $200 million in 2005, | | | | investment analysts who have a long track |
| according to the Nicaraguan government, more | | | | record of advising investors on real estate |
| than any other single industry in its $5 billion | | | | acquisition and development in Central America - |
| economy. Current projections indicate that by | | | | these are independent third parties who can |
| 2007 there will be more than one million visitors to | | | | provide un-emotive grounded advice. |
| the country. The profile of visitors has shown a | | | | 5. Due diligence everything |
| marked shift from budget tourists to more | | | | More specifically, retain competent legal |
| affluent and sophisticated travellers and higher-end | | | | representation and take out title insurance. |
| hotels in tourist areas show consistently high | | | | Nicaragua has a particularly complex title history |
| occupancy. | | | | and some buyers who have not looked deeply |
| There is strong relationship between leisure and | | | | enough into the title history of purchased |
| vocational markets and the market for second | | | | property are now mired in difficult legal problems. |
| homes and retirement homes. The areas | | | | A number of real estate developers try and |
| attracting the most tourism are also generating | | | | persuade buyers to use their own legal team for |
| the greatest levels of real estate activity. For | | | | property purchasing. Our advice is to employ |
| certain real estate products, the link between | | | | independent legal advise at least to review (if not |
| tourism and real estate is particularly direct and | | | | draw up) the purchase contract you are signing |
| immediate. Pelican Eyes...Piedras y Olas the highest | | | | and check the title history on the property. |
| quality hotel in San Juan del Sur, boasting | | | | Coldwell Banker Nicaragua recommends investors |
| occupancy levels well above industry standards | | | | to take out a title insurance policy. Other realtors |
| since it opened, offers the possibility for investors | | | | do not recommend title insurance as the due |
| to purchase a villa or duplex unit and participate in | | | | diligence that ensues can slow down the purchase |
| the revenues generated by the hotel. | | | | process and raise difficult questions. Seeking title |
| 2. Know where you are in a property cycle | | | | insurance will force your lawyer to delve many |
| Nicaragua has seen considerable price rises in the | | | | years back into the property history of the |
| past few years. We have calculated percentage | | | | property you are purchasing and follow a set of |
| price changes for serviced lots between 2002 and | | | | criteria in their reporting. If you are buying raw |
| 2005 for seven well known real estate | | | | land parcels outside of a development your due |
| developments on the Pacific that have been | | | | diligence list needs to be longer and will cover |
| active over this period (most developments are | | | | infrastructure issues, environmental issues and |
| more recent) and are still selling property. Over | | | | development permits. |
| this period prices have risen by an average of | | | | 6. Invest with a confidence, develop with a |
| 87%. Unimproved colonial homes in Granada have | | | | conscience |
| been rising by around 25% per year for the past | | | | This is the strap-line of the Nica Dev campaign run |
| three years. These price rises indicate that | | | | by Donn Wilson a developer, entrepreneur and |
| Nicaragua is now on the map as an investment | | | | surfer who has made San Juan del Sur his home. |
| destination, the positive price trend has started, | | | | Nica Dev recognizes that real estate investors are |
| but we are only just seeing the beginnings of a | | | | entering into another country and have an |
| "second wave" of investors: the pre-retirement | | | | obligation to respect the land, the people and the |
| and retirement market. | | | | environment. When you arrive in Nicaragua the |
| Speculators still make up a considerable proportion | | | | impression that you get is of a warmhearted |
| of investors but an increasing number of | | | | nation that is welcoming to international visitors. In |
| pre-retirement / retirement and second home | | | | order for this warm feeling to endure into the |
| buyers are emerging. Much has been made of the | | | | future, local Nicaraguan also need to benefit from |
| 'baby boomer' generation when analyzing future | | | | the real estate and tourism activity that is going |
| buying trends in many markets worldwide. Baby | | | | on in the country. |
| boomers began turning 50 in 1996 and 78 million | | | | Las Fincas, a development aligned with the Nica |
| of them began to enter their period of highest | | | | Dev campaign, is designed with sustainable |
| earnings and greatest discretionary dollars. It is | | | | development principles built in. For example a basic |
| said that over the next 20 years the baby | | | | solar power setup is provided for everyone who |
| boomer generation will likely constitute the largest | | | | buys and the project runs a series of active |
| potential market ever for real estate products, | | | | community outreach projects introducing highly |
| especially second homes and timeshare/fractional | | | | effective, yet low-cost and low-tech, solutions for |
| ownership offerings. | | | | cooking and purifying drinking water. Skills and |
| The real estate product on offer has also evolved | | | | suppliers for low impact construction with |
| from simple lot sales (sold mainly to speculative | | | | elements such as rain water capture, composting |
| buyers) to turnkey products with sophisticated | | | | and recycling, hard to find 18 months ago, are |
| facilities and services for longer term investors | | | | now readily available in-country. Coldwell Banker |
| and the retirement market. A consistent growth | | | | Nicaragua is launching its own campaign to |
| in condominium constructions and sales has been | | | | generate funds for the Nica Dev fund as well as |
| evident for 18 months and is accelerating. | | | | other projects that our clients are involved in here |
| 3. Follow trends not events | | | | in Nicaragua. We will be giving our clients the |
| The bulk of foreign investment into the real | | | | opportunity to contribute to selected projects at |
| estate and tourism sectors in Nicaragua is focused | | | | the time of closing. |
| on the south-western part of the country. To | | | | 7. Become and expert in investing in real estate in |
| take the Pacific coast as an example, in | | | | Nicaragua... |
| conjunction with Calvet & Associates, we | | | | |