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Archive for Current Affairs

New Nicaraguan coastal law could be on its way

The typical real estate agency in Nicaragua is doing a disservice to its potential beachfront buyers by not informing them of uncertainties recently raised by the country’s renewed consideration of a new coastal law governing development along its oceanfront.

As you might have noticed while navigating our website and blog…we’re not the typical real estate agency.

Below are links to two articles we hope you’ll find helpful, one from the Miami Herald and a follow-up piece by NuWire:

Miami Herald: Pending legislation on coastal land

NuWire: Nicaragua’s Coastal Law

Serenity, as always, is available to consult clients on such policy issues and to refer you to top lawyers and political insiders who can provide more detail and analysis of these developments. In the immediate term, the wrangling over the potential new legislation adds uncertainty. In the long-term, it could offer much-needed clarification and settlement of property rights and terms for property development along the coast.

Any concrete developments from the government on this legislative front will be reported immediately on our website and to all of our clients considering beachfront property. Discover Serenity.

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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.