Could we be witnessing the beginnings of a green movement in Nicaragua real estate?

On a hillside a few kilometers south of San Juan del Sur on Nicaragua’s Pacfic coast, a green community, completely off-grid, is being born.

A team from Earthship Biotecture (gurus in green building from the US) and a local Nicaraguan crew have joined forces to build the first Nicaraguan Earthship - a house made out of all recycled materials that generates its own energy, recyles its own waste and harvests its own water.

A day-to-day property construction blog is being written and we are currently on Day 24.

If you are interested in the green movement or green real estate of any kind - this is something to watch. In the words of Dave Kniffen:

Developments happen everywhere, so we’ve made a choice on how we are going to develop. If we don’t do it this way, someone else will do it their way. Maybe our way helps the local community, instead of using them to help ourselves. Maybe our way is a little better for the environment than the conventional build. At the end of the day though, it’s a logical decision.

We live in a world, especially in Nicaragua, of limited resources. A sustainable home gives you total freedom and independence. The decision to build or live in an “off grid” home is not moral, it just makes sense. Who you rely on is who controls your life.

Create your own electricity, capture your own water, treat your own sewage, and grow your own food and then you are not talking about ideals of independence or freedom, you’re living them.

Read more about Dave’s vision for this green real estate community and help spread the word.

Central America continues to attract investors and tourists alike.  But not all countries have the same pulling power. 

The graph below shows which countries rack up the highest number of searches for real estate online based on the generic country-followed-by-real-estate search phrase.  As you can see, there are more searches made for “costa rica real estate” than for “el salvador real estate.”  And every day the search term ”belize real estate” is typed into search engines more times than “guatemala real estate.”

The results that underpin the graph above are for July 07.  But the trends have stayed the same for a number of years.  Perhaps we will see the numbers of searches for “Panama real estate” and “Belize real estate” catch up with “Costa Rica real estate.”  At the moment though, Costa Rica is the leader for real estate searching online.

There are over 100 real estate developments dotted along Nicaragua’s Pacific coast.  Most are located in the southern part of the coastline between El Astillero and the border with Costa Rica with the fishing town of San Juan del Sur emerging as the major investment hub for the region. 

The “Tola Riviera” lies within this southern stretch slightly to the North of San Juan del Sur and is home to some of the oldest and most established beachfront projects.  See the links below from Coldwell Banker Nicaragua for location maps showing the major developments.

Map of real estate developments south of San Juan del Sur
Map of real estate developments San Juan del Sur and to the North
Map of real estate developments on the Tola Rivieria

Further north lies Nicaragua’s Central Pacific Coast.  A stretch due west of Nicaragua’s capital city, Managua and closeset to the international airport.  A number of high end real estate developments are taking advantage of this strategic location.

Map of real estate developments on Nicaragua’s central Pacific coast

The real estate opportunities available in Central America span a range of risk / reward profiles.  There is real estate on offer to suit different investment goals.  Properties that are good candidates for short term capital appreciation exist as well as properties in lower risk environments with the promise of an immediate rental income. 

Of course there are markets within markets so the graphic provides only a general representation of relative position of the country as a whole. The Costa Rica real estate market is the most mature, Panama and Belize real estate represent classic middle markets - not quite emerging and not quite developed - with Nicaragua, Honduras, El Salvador and Guatemala at earlier stages of the development curve.  We plan to dig a little deeper and highlight the relative positions and profile of different real estate areas within each country.  More on this to follow…

National real estate associations exist for most counties in Central America.  And, given the sharp growth of real estate investment in the region, these bodies seem to be getting more active. There are some big ticket items on the table not least the question of licencing, code of ethics and ultimately (maybe) development of an MLS.   The associations are as follows:

• The Costa Rica Chamber of Real Estate (CCCBR), Costa Rica Global Association of REALTORS® (CRGAR),
• Camara Salvadoreña de Bienes Raíces (CSBR),
• Asociacion Nacional de Agencias de Bienes Raíces de Honduras (ANABIR),
• Camara Nicaraguense de Corredores de Bienes Raíces (CNCBR),
• Asociacion Panamena de Corredores y Promotores de Bienes Raices (ACOBIR),
• Camara de Corredores de Bienes Raices de Guatemala (CCBRG)
• Association of Real Estate Brokers of Belize
• Federation of Real Estate Associations of Central America and the Caribbean (FeCePAC) - an umbrella organisation that ties the other bodies together with a focus on integration and networking.

The recent activity is a good sign.  The FeCePAC and CNCBR conference held in Managua, Nicaragua last week had a strong turnout with some key action steps to take for more regional integration of real estate approaches and standards.  We were also pleased to see the recent announcement that the Association of Real Estate Brokers of Belize will be working together with the government to establish a code of conduct and general property industry standards.   The US National Association of Realtors (NAR) currently has bilateral agreements with real estate associations in Costa Rica, El Salvador, and Panama and is affiliated with the Federation of Real Estate Associations of Central America.

Savvy investors are always on the look out for emerging destinations - especially those with a twist on a familiar theme. The Inland Mountains region of Matagalpa and Jinotega could be just that. The area shares many of the characteristics of Boquete - probably the hottest spot for real estate in the Panama after Panama City - such as enchanted “hidden” valleys, mists that shroud the mountaintops, a perfect spring like climate, rushing rivers, flowers and high quality coffee. 

This is where you come to commune with nature, hike, fish, cycle, kayak and recharge your senses in a setting of peace and tranquility. Prices in the area are still 1/4 of what you will find in Panama and around 1/3 of property on Nicaragua’s Pacific coast. Read more on the mountainous, coffee growing areas of Nicaragua.

by Chronicle Staff
Despite a new, leftist government led by President Daniel Ortega, executives in Nicaragua’s growing real estate industry remain bullish.

“The real estate market outlook continues to be positive,” says Claudia Gonella, director of the Nicaragua offices of U.S.-based real estate agency Coldwell Banker.”We are selling well out of both of our real estate offices, at approximately the same rate as this time last year.”

Timothy Thomas, owner and broker at ReMAX Monteverde, agrees. “I think [the government] will be OK,” he says. “Our investors met with Daniel Ortega after the election and he wasn’t the Danny Ortega of the 1980s, that’s for sure.”

Nicaragua is one of the key growth markets in Latin America outside Mexico for U.S.-based First American Title Insurance Company.  “The market has not slowed down as people seem to be optimistic about Ortega staying the course when it comes to investments in the country,” says Turalu Brady Murdock, vice president of First American. “From an investment opportunity there are still very good opportunities in Nicaragua in the real estate market.”

The colonial city of Granada, Nicaragua

Promises property rights

Ortega has vowed to respect private property rights, the free trade agreement with the United States (CAFTA), agreements with the International Monetary Fund and continue with the same macro-economic policies of his predecessor, Enrique Bolanos. He has also gained some praise for appointing Arturo Cruz, a well-respected economist, as his ambassador to the United States. His new pledges stand in contrast to his last government (1979-90), when private property was expropriated, inflation skyrocketed and the economy went into freefall.

“The Sandinista party has actually been one of our strongest allies in the resolution of title claims caused by the 1980 confiscations, so I do not foresee any problem with property rights during Ortega’s presidency,” says Murdock.

Ortega assumed Nicaragua’s presidency last week, vowing to forge closer relations with Venezuela while continuing the country’s close relations with the United States. “The release of pro-Chavez rhetoric, which we expect to continue through the term of the new government, is unlikely to undermine a working relationship with the US as long as democratic principles are upheld,” Gonella says. “These next six months are crucial and provide an opportunity to sweep away once and for all the ghost of the Sandinista party that has hovered over the country for the last 15 years.”

Thomas sees the next two months as key to determine whether Ortega means what he has said. Gonella expects price stability for a few months and, assuming the new administration keeps to its verbal and written commitments (in support of DR-CAFTA, private property rights, tourism, free market etc), the market could come back strongly in the second half of 2007.  

A new costa rica?

Nicaragua has seen significant growth the past few years, partly helped by inexpensive prices, a reputation as a safe country, growing tourism and increased flight connections with the United States. Some realtors dub the country “the next Costa Rica.”

“It’s close to America and one-fifth of the price of Costa Rica for the same properties,” Thomas says.

The real estate market is driven by both residential and commercial properties. On the residential side, many baby boomers from the United States are discovering Nicaragua as a less-expensive alternative to Costa Rica and Mexico, while banks and factories are helping the commercial market.

Banpro bank is constructing a new $15 million building across the street from Thomas, while a Korean investors is planning a $100 million factory to manufacture Levis. Meanwhile,  a client of Thomas plan an ethanol plant in Nicaragua, while another one is expanding a chain of coffee shops in the country. Meanwhile, local real estate group is developing a major resort, Gran Pacifica Beach & Golf Resort, with hotels, apartments and gold courses on the Pacific coast.

Laguna de Apoyo, Nicaragua

Prices don’t fall

While the asking prices from developers and owners usually increase during high season (which runs from December to May), that did not happen this time. However, neither have they fallen, according to Gonella. “The major developers are continuing to roll out their master plans with no delay,” she says. “This is a sign of confidence.”

Another reason for optimism is that tourism also is seeing stable demand. Hotels in key tourism towns such as San Juan del Sur and Granada are experiencing high occupancy levels as would be expected at this time of year and tour operators have bookings well into 2007, according to Gonella. “Real estate and tourism sectors are closely linked here,” she says. 

As more tourists visit Nicaragua, more people plan to come back to buy property, says Thomas. “Tourism is huge…and just getting bigger,” he says. This weekend, some 5,000 tourists visited San Juan del Sur thanks to four cruise ships, he points out.

Most of the real estate sales will take place in the residential sector focused primarily in key tourism destinations. “Investors will be looking for capital appreciation, but also for properties that they see as good candidates for rental income,” Gonella says.   “The strong outlook for tourism visitors for 2007 will support this trend.”

Commercial investors wait

Coldwell Banker expects less activity in the commercial sector in the early part of 2007, as many investors  will take a wait-and-see approach.  “Commercial investors tend to invest on a larger scale than the residential buyer, and for the longer term,” she says. 

In terms of geographical areas, the more “established” markets for foreign real estate investment such as Granada and San Juan del Sur are likely to be where most investor activity will continue to be focused, while newer, more speculative, cities and areas for investment such as the colonial town of Leon and Inland Mountains around Matagalpa, are likely to see less activity, at least for the first part of 2007, Gonella predicts.  “Investors are likely to feel more comfortable investing in areas where a positive growth trend is already established,” she says.

Coldwell Banker has also seen good demand for its four-day real estate tours to Nicaragua scheduled for each of the next three months. The tours typically have between six and twelve participants to better tailor the group’s requests. “The tours offer a great way to make sense of real estate opportunities here,” Gonella says.

So far, the participants are mainly from the United States, but Coldwell Banker plans to boost its marketing to Europe to take advantage of the strong Euro and British Stirling, she says.

Source: Latin Business Chronicle

By Greg Brosnan

MANAGUA (Reuters) - Cold War leader Daniel Ortega returns to power in Nicaragua on Wednesday, giving Venezuelan President Hugo Chavez a new ally as he tries to steer Latin America to the left and away from the United States.

Ortega, who first took power in a 1979 revolution and then led a Marxist government for 11 years while fighting a brutal civil war against U.S.-backed Contra rebels, completed a remarkable comeback by winning a November presidential vote.

The balding 61-year-old says he is still a socialist but has dropped many of his radical economic policies from the 1980s, saying he has learned from his mistakes.

Ortega promises to respect private property and the free market this time around even as he fights extreme poverty. He preaches reconciliation and has gained the trust of the Roman Catholic Church and some former battlefield foes.  Click here for the full article.

Daniel Ortega has maintained a busy schedule of meetings with the foreign investment, banking and business communities since winning 38% of the national vote on 5th November 2005 on the back of a campaign focused on the twin themes of “Peace and Reconciliation.” In fact his first key meeting after the election was with representatives of the foreign investment. We attended the meeting and heard Ortega stress his commitment to foreign investment, recognizing it as one of the keys to continued growth and future prosperity for the country. He made clear his intention to support the DR-CAFTA and stated publicly that property rights would be protected.In a way this is not surprising. On a global level, the geopolitical scenery has changed significantly since the Sandinistas were last in power and this is well understood by the Sandinista leadership. Secondly, on a more local level, the current Sandinista party is very different to the Sandinista party of old. The members, by their own admission, have matured and mellowed. Many of them have substantial financial and business interests in the country and so have a very personal stake in the future economic success of Nicaragua.

In addition, the Sandinistas have been very involved in the governance of the country at all levels over the last 16 years. Having Sandinistas in government is not something new. Two of the biggest growth areas for tourism and foreign investment, the towns of Granada and San del Sur (along with the capital Managua), have had Sandinista local governments for a number of years now, presiding over rapidly growing and highly successful foreign tourism and investment markets.

Another factor to note is that although Ortega has won the Presidential seat, he has not secured a controlling number of seats in the National Assembly, the Liberal and Conservative parties (ALN and PLC) have a larger representation. This is an important factor in the new political landscape as the Assembly is equivalent to the US Congress and is the body responsible for passing laws, altering rules and establishing task groups.

If we look toward the long term, a Sandinista victory may well emerge as a positive factor in Nicaragua’s history, sweeping away once and for all the old concerns rooted in memories of the revolution that have hung over the country for over 15 years. In the short to medium term we are likely to experience some price stability as investors watch what Ortega does in his first few months in power. But after this period, as any uncertainty over Ortega falls away, the property market is likely to come back stronger.