New data: Real estate developers in Nicaragua cut their prices
We’ve just compiled Nicaragua real estate market statistics for 2009 and compared this against our 2008 data. With price falls across the main real estate categories, it’s clear that Nicaragua is not immune to the global contagion of sliding property markets.
The numbers that tell the story
The table below sets out the change in median price for Nicaragua real estate developments since 2008. To ensure that we are comparing like with like, the data aggregates prices for the same property category within each development for both 2008 and 2009. So if a project offered beachfront condos in 2008, but not in 2009, the data was not included in our comparison.
Median asking prices in real estate developments that target the international buyer have fallen 3.53% for serviced lots, 6.40% for condos and 3.41% for single family homes since 2008.
Looking deeper into the numbers, we found that ocean view condos showed the largest fall in median price at 13.62%, followed by long ocean view houses with a drop in median price of 7.55%.
Beachfront property held its own relatively well against the other property types. In call cases (lots, condos and houses) beach front property fell by less than ocean view property.
Not immune
Nicaragua, is clearly feeling the pinch of the slowing global economy. The falling GDP real growth rate from 3.8% in 2007 to 2% in 2008 (according to the CIA Word Factbook) paints the picture for the local economy. But the biggest factor at play in the international real estate space is the fall-off in demand from the US, Canada and, to some extent, European countries. Many of these buyers no longer have access to the necessary capital (be it from investment portfolios or built-up equity in their properties at home) to purchase a property abroad.
But, despite the darkening economic mood, the market in Nicaragua is not experiencing the double digit drops we’ve seen in markets elsewhere. One of the reason for this is the low levels of lender mediated activity in Nicaragua, making the real estate market stickier. There could be some pockets of finance-driven speculation, but the broad foreclosure waves as experienced in the US are not a factor. Another reason could be the low cost of living possible in Nicaragua. This is attracting a particular type of ‘lifestyle purchaser’ looking for a more affordable retirement.
The upshot for investors
All-in-all if you’re a buyer looking at Nicaragua, you’re in the driving seat. The factors you’d expect from a buyer’s market are present: developers are offering incentives, charter programs, package deals, heavy discounts for cash buyers, extended financing and so on. In fact, if you negotiate hard enough, you may get an property deal of a lifetime.
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Carnival of Real Estate
Jul 06, 2009
[...] Claudia Gonella has a great post that gives you a very comprehensive look at the real estate market in Nicaragua. [...]
Real Estate Investing Nicaragua
Jul 27, 2009
[...] Real estate developers in Nicaragua cut their prices [...]
Serenity of Nicaragua
Aug 21, 2009
We’re seeing bigger price drops than what you’ve written here as the reality of the 40% drop in U.S. home values forces more sellers in Nicaragua to become more competitive.