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Archive for October, 2007

Is HSBC planning to offer mortgages to foreigners??

 

Special thanks to Geoff Bramwell of Nicaprojects.com for all this:

—————
Nicaragua
is becoming a hotspot for second and vacation homes — and big financial institutions may be soonb to follow. We’re getting rumors of plans by bigshots like HSBC to offer mortgages to foreigners, following years of mounting demand for such financing.

HSBC
recently announced that they’re preparing to offer mortgages on second
homes and vacation homes in 35 countries by March 2008. HSBC completed
a financial merge with Banistmo Bank of Nicaragua about April 2007. The Banistmo Bank signs were lowered and HSBC signs raised. HSBC also has a presence in Panama.

The following newswire explains:

HSBC Plans New Cross-Border Mortgage Product for Early 2008

HSBC
has announced plans to launch a cross-border mortgage product – a
pre-approved loan with an LTV of up to 60%, which is currently only
offered to HSBC Premier clients (who are required to keep at least
$100,000 in deposits and investments with the bank.)

The
new "much, more open," middle market mortgage will be offered in the
same 35 countries that HSBC’s Premier service operates, which includes
the U.S., Mexico, Brazil, and the U.K.

The
UK-based bank hopes to take advantage of a recent trend in people
buying second and third homes abroad as investment properties or
retirement destinations.

A
bank spokesperson noted that " complying with all the regulations has
been difficult," and that it was too early to provide specific details
of how exactly the product would be formulated.

Source: marketwatch, September 3, 2007

Meanwhile, the Leon area of Nicaragua
has been getting good press in North America. An article that came out
on October 13 2007 in the weekend "National Post", the Canadian
national newspaper, alerted us to the growing tourism interest of Leon.
It highlights various activities in the Leon area including lagoon
swimming in a crater and volcano hiking. The
originating article was published in the Seattle Times
on August 17th. The article suggests moving beyond the normal route of
Granada/San Juan del Sur and suggests that Leon, the third tourist
area, is worth a good look.

Naturally
we encourage that view — we have been living it for over two years.
Tamarindo Beach continues to be the best choice in the Leon area for
ocean front living. With a large expanse of beautiful beach and well
designed infrastructure, the future is bright.

———-

This is very interesting news. Many thanks, Geoff.

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Debi and Gerry´s Excellent Adventure: Day 3

Debi and Gerry, a retiring couple from the Southeastern U.S., arrived in Nicaragua for the first time last Friday to join a one-week Serenity Tour. The tour investigates tourist hotspots, lifestyle, housing and retirement options in and around Matagalpa. They want a cooler climate, lower living costs (especially medical bills and drug costs) and a simpler, calmer life. They´re tired of long commutes and traffic congestion…and a nice view wouldn´t hurt. We wanted to run a daily diary of their experiences during the tour, but we´ve been so busy, we haven´t had a chance to report in until now.

Starting today, we´ll provide irregular updates on their escapades. Already, they´ve stayed at the area´s top hotel (Hotel St. Thomas)…


seen more than a dozen impressive properties with great mountain views, cool climates and natural scenery  (three of which were just what they were looking for), have meet with a top doctor from a local clinic, the vice-chief of police for Matagalpa, the head of the region´s top eco-tourism resort (Selva Negra), and the local Dutch business chief of the incredibly scenic Castillo de Cacao (The Chocolate Castle factory) to discuss the area´s medical care, security, business opportunities and the experiences of other foreigners in the area.

We might provide future updates of their trip, time permitting. Until then, check out the photos and click here for more shots of their experiences.

Discover Serenity with Debi and Gerry.

Nicaragua’s window of opportunity

Well, there's no getting around some of the negative news about Nicaragua's political situation lately. Here's a sample:

Bloomberg1
Bloomberg2
GoogleNews

No beating around the bush from us: It doesn't look great. But here's another perspective (and, yes, we're biased but we don't think that takes anything away from our view): this could represent an investment window of opportunity…if you, as an investor, can stomach the elevated political risk.

The fact is, Nicaragua was being heralded widely — globally — as the “next Costa Rica” and the “next Panama” in the world press before Daniel Ortega's presidential victory earlier this year. It's still getting praised in tourism articles across the U.S. and across the world.

Our hope is that as real estate prices continue to escalate in both Costa Rica and Panama, as baby boomers continue to seek warmer, cheaper, "old world" locales outside North America and Western Europe and as Ortega approaches the end of his five-year presidential term, that'll happen again.

Ortega 2.0 is not Ortega 1.0. He was elected as a minority president.  Nicaragua is more dependent financially than it has ever been on the U.S. and the European Union — and most Nicaraguans know this. The proximity and success of Costa Rica, Panama, Chile and Uruguay are — we hope — powerful examples to Nicaraguans in and outside the government of the right way to boost growth, boost job creation and reduce poverty.

It is our view (and yes, hope) that investor apprehension created by the current situation has opened a window of opportunity for smart, forward-looking investors with a five- to ten-year time horizon to get in “before the herd” — before the end of Ortega's term and before what we anticipate will be the resumption of the real estate investment boom that preceded Ortega's presidential election victory. Because at the end of the day, regardless of her politics, Nicaragua remains a beautiful and a nice place to live and life in the "First World" isn't getting any less stressful, costly or abrasive…and, frankly, dangerous.

We've come across estimates from global real estate analyses earlier this year that Nicaragua as a whole may be as much as 68% undervalued, given its level of economic freedom and its business climate (as measured by the Wall Street Journal Index of Economic Freedom). In other words, adjusting statistically for what Nicaragua offers investors compared to other countries – as far as property rights, tax burden, transparency, government spending (as a share of the economy), inflation, trade, labor, financial and business regulation policy –  Nicaragua is only 32% of the average cost of countries offering similar business climate characteristics.

This isn't to take anything away from what skeptics are saying. Don't get us wrong. We're only providing broader long-term perspective.

We only wish to raise the possibility that Nicaragua now may represent an investment opportunity similar to that of Mexico in 1994, Argentina in 2001 and Eastern Europe in the early 1990's represented — that Nicaragua itself represented in the early 1990's — during and after political and financial crises in those regions. Those crises eventually gave way to fantastic real estate booms. The situation now may be similar — not in degree (the situation now isn't as grave, so the rebound would not be as big), but in direction and character. The political risk in Nicaragua now may be far less than it was back in the early 1980's.

Wishful thinking on our part? Maybe. We have no idea what will come next. We're just supplying some food for thought.

It's a beautiful country with a beautiful people — a great place to live with enormous untapped investment potential. For a brief summary of that potential, click the following link for our Why Nicaragua page. It's our expectation — and yes, hope — that this potential will be realized.