Discovering Nicaragua’s New Value Play

Sunday, July 13, 2008

Read more about Nicaragua in International Living Postcards—your daily escape

Dear International Living Reader,

I’m trying to get some writing done, but I can’t keep my eyes off the ocean.

About 20 young surfers dot the water just to the right of the rocky point where I’m sitting. Watching them work the incoming waves is like watching the waves themselves…hypnotic, endlessly fascinating.

They begin patiently, bobbing on their boards, waiting until they feel the wave they want swell underneath them. Then they paddle along with it toward shore, catch its crest, jump to their feet, and take the ride, shifting their weight back and forth, gliding up and down the face of the wave. Making it look so easy.

My wife Suzan and I are in Nicaragua right now, staying at Rancho Santana, a residential development on the Pacific coast. We lived in Nicaragua for much of 2007, and it feels good to be back, seeing old friends, visiting familiar places.

Daniel Ortega had just been elected president when we moved here in 2007, and we didn’t know what to expect. But the sky didn’t fall, and the earth didn’t shake.

After a year and a half in office, Ortega has made some pretty weird and contradictory speeches and statements. But as far as I can tell, he hasn’t done anything overtly stupid. Things are pretty much the same as before. The surfers still surf, the shopping is still good in Managua’s new malls, the fruit stands still line the highway, the taxis and buses still make crossing a street in the capital a thrilling endeavor.

The foreign real estate market has slowed considerably here. There are not hordes of expats snapping up everything in sight. This has kept a firm lid on prices, but the developers I’ve talked to aren’t having any fire sales. Most are using their “Ortega time” to add value to their projects…get the clubhouse built; put up spec houses; push the roads, water, and electricity into the next sections.

They’re saying a collective “this too shall pass” to the accompaniment of cement mixers and back hoes.

It appeals to me, this adding value strategy. It’s the best of both worlds for a buyer: more infrastructure for your money, and at last year’s prices.

It occurs to me that folks here are treating the Ortega regime like a stretch of bad weather, but without the bad weather itself. Everybody hunkers down, but the sky is still blue and clear, the sun still shines, the breezes still come gently off the ocean. Good chance to pave the road…put the power lines underground…lay the foundations for the new seaside condos.

And sooner or later, the weather alert is going to expire, the crowds will come back, and prices will start going up again.

Don’t get me wrong…you still need some risk tolerance here. Political weather is notoriously hard to predict. But that’s what makes it a contrarian play.

In fact, it’s a classic contrarian International Living-type market in Nicaragua right now. I couldn’t have picked a better time to be here if I were shopping.

Because it’s really nice here, listening to the waves roll onto Santana’s beaches, watching the surfers riding in, watching the ice melt in my drink.

This is the dream we’re all after. I’m happy to learn that it’s being dreamed here in Nicaragua just like always…but with more and better infrastructure, and at last year’s prices.

Best regards,

Dan Prescher
Publisher, International Living

Editor’s note: Would you like to spend a chill weekend in Nicaragua, where you can still find ocean-view lots starting at $47,000? When you are not looking at extremely undervalued properties, you can explore the private beaches, join the poolside parties, or simply swing in a hammock rocked by the cool Pacific breezes. Find out more here.