Panic in Nicaragua!

Ortega won. The mainstream press is running away with the story. People are panicking. Right on cue.

By now you know the facts: Sandinista Danny beat out second-place Montealegre by a margin of 9% to regain the Nicaraguan presidency this week. Most investors are interpreting this as a death knoll for the market.

We don't agree.

All these years we've been spending time and money in Nicaragua, a question has hung over the country: What would happen if the Sandinistas were ever to return to power? This uncertainty has been in the backs of the minds of all investors...keeping some away...making everyone nervous.

What would a Sandinista president mean for the New Nicaragua?

At last, we'll have the chance to find out.

Ortega assures the world he's a new man. He's nothing like the revolutionary leader the world knew in the 1980s...and neither is his Sandinista party. One of the first things he did upon winning the election this week was to call a meeting of investors, whom he invited to the Crowne Plaza Conference Center in Managua for a chat. Our Granada office staff attended. He assured them, and the 200 others assembled, that he values foreign investment, respects property rights, and has no interest in derailing the country from its current growth course. He identified as his top priority the elimination of poverty, and explained that he needs foreign investment and tourism in Nicaragua to achieve this. (He directly made the point that he was not going to take land from anyone to combat poverty.)

We don't have any reason to believe him, of course, given his track record. But the Nicaraguans have chosen to give him a second chance...so we will, too. He'll likely say and do things that will raise our eyebrows...maybe curl our toes. He is, after all, a politician.

But we think the business as usual of the past dozen years will continue in this country...as our in-country sources assure us it has this past first post-election week.

But, until foreign investors are able to see for themselves that Ortega and friends aren't snatching private property, impeding trade, or generally irritating the more developed world, they'll stay away. For six, 12, maybe 18 months...things will slow down...property values will stall...prices will stabilize...probably fall, maybe dramatically in some cases. As one friend put it this week, the real estate market will go to "no-bid." Some reports are that it already has.

But if Ortega doesn't do anything too foolish...the market will rebound...and it will come back stronger. For the Sandinista demons will have been cast out. We'll have seen what it means to have a Sandinista president in Nicaragua again. And, we hope (and we predict), we'll have seen that it won't mean anything much more or less, better or worse in the long run. The market will have been tested...it will have persevered...and the world's investors will return.

What should you do in the meantime?

If you're already invested in this country, as we are, sit tight. Don't panic. Don't sell...unless you want to. But don't sell for the wrong reason. If you were happy to own here two weeks ago...you shouldn't be unhappy to own here today.

If you've been thinking about buying in Nicaragua...don't cross the country off your list. Again, don't dismiss little Nicaragua unless you decide you want to for your own reasons. Don't let President Ortega be your reason.

Finally, if you've got a speculator's stomach, pay attention, as we are. We believe opportunities will present themselves within the coming months. Less savvy owners in Nicaragua won't hold steady. They'll succumb to panic. And they'll be willing to part with their stakes in this country for perhaps less than they would have been a few weeks ago. Their loss...maybe your gain.

Lief Simon
Real Estate Editor, International Living

P.S. As I pointed out last weekend, and as, certainly, you've noticed for yourself by now, the Nicaragua property market has appreciated dramatically in the past half-dozen years. Maybe over-appreciated in some spots. A cooling-off period could be in our best interest long term.

P.P.S. A friend in the country has connections to President Elect Ortega, and has offered to extend to him an invitation to address the group at our next Live and Prosper in Nicaragua Conference, scheduled for Jan. 22-24. Nothing is confirmed yet, but I plan to make a special point of attending this event should Ortega be on the speaking roster. Full details of the conference here.

P.P.P.S. We make the point often: When shopping the world in search of a property investment, look for places where the property buy has intrinsic value for you, in addition to the potential to make you some money. Seek out places where you're happy to own no matter future market twists and turns. When we first bought in Nicaragua more than a decade ago, we made the purchase with this point of view. Even if the land we were buying were never worth more than we paid for it at the time, we'd be happy to hold it...for, for us, it had value beyond its price tag. In the 10 years since, we've bought more and again...and, all the while, we've had use of our "investments." We've enjoyed holidays and visits, fact-finding trips and scouting missions, with family and friends, all from the base we've built here. Nicaragua's coastline is among the most dramatically beautiful in the world. This was true when we first took notice more than a decade ago...true a week ago before the most recent presidential election...and it's true today. We look forward, as always, to seeing it again soon.