Nicaragua Real Estate is poised to boomMANAGUA --
After years of not quite living up to its billing as Latin America's next real estate hotspot, Nicaragua is approaching a crossroads that could determine whether this impoverished country is ready to take off or to remain bogged down in underdevelopment. In the next several weeks, Nicaragua's National Assembly is expected to pass a law that will regulate development along the Pacific, Caribbean and lakeshore coasts. The wording of that law, which has been intensely debated and anxiously awaited for more than three years, will determine whether investors get a green light to start building up Nicaragua's pristine coast or whether they pull out. The return to power of President Daniel Ortega, whose first Sandinista government confiscated thousands of private property holdings in the 1980s, raised political concerns among many business people. Yet a new law that protects such property and establishes clear rules for development would codify Ortega's stated commitment to property rights and foreign investment, said Raul Calvet, a real estate investment consultant. Calvet said the law would provide the clear rules and legal protections that investors need to move forward on plans to build an estimated $1 billion worth of homes and condominiums. However, developers warn, if lawmakers don't amend the bill, investors will bow out. The latest version of the bill extends the state's claim to waterfront property beyond the 30 meters, or about 98 feet, currently established by law. The wording also raises doubts about property rights. ''If this version of the bill isn't changed, it will definitely be a confiscatory law,'' said Lucy Valenti, president of the Nicaraguan National Tourism Chamber (CANATUR). The private sector, represented by residential-tourism development projects, the construction chamber and other related business interests, is lobbying for a version of
the bill that maintains the 98 feet of public beachfront. ''`The bill doesn't talk of expropriation or confiscation, but in practical terms the result would be the same if you can't use the land you own,'' said Calvet, whose investment consulting firm, Calvet and Associates, represents more than half of the 160 residential and tourism development projects underway in Nicaragua.
Developers said almost all of the residential tourism projects that have popped up in Nicaragua over the past five years hug the Pacific coastline or overlook the waters of Lake Nicaragua. So the great majority of development projects across the country fall within the area that would be covered by the proposed coastal law, as it's worded. Some 95 percent of the 3,500 beachfront properties that have been sold in recent years -- most of those to U.S. investors -- are still in the preconstruction stage. A lot of people may see their vacation or retirement-home plans turned upside down in the coming weeks. Sergio Argüello, a legal advisor to CANATUR and an expert on the coastal law project, says not only will tourism and development projects be affected, so too will some 90 percent of all Nicaragua's arable land, which is fed by rivers and lakes in this country known as the ``land of lakes and volcanoes.'' Despite investor anxiousness over how the law will turn out, everyone agrees that some legislation is needed to sort out the existing tangle of overlapping and contradictory property laws that date back 100 years. The Sandinista government came into office in 2007 promising to sort out the mess they helped create with land confiscations in the 1980s. It has taken some drastic measures, such as ordering a blanket ban on the issuances of all new titles on coastal properties, which critics claim has been more hurtful than helpful. In a series of memorandums sent out earlier this year, Attorney General Hernan Estrada ordered a suspension of all property titles within 2,624 feet of any body of water, citing an agrarian law dating from 1917 that is still on the books. Estrada instructed municipal property registrars to refer all such cases to the Attorney General's Office -- a move that has affected property transactions in about 70 percent of Granada and virtually all of San Juan del Sur, Nicaragua's two hottest real estate markets. Instead of focusing on contested titles, the Attorney General's Office has ''thrown all properties into the same bag'' and only confused the situation even more, says veteran Granada lawyer Ernesto Zambrana. ''This is a case of the medicine doing more damage to the patient than the illness,'' Zambrana said. ``This is crazy. It's confiscatory.'' The Attorney General's order, however, is viewed as a stopgap measure until the coastal law is passed. That's why the private sector is so anxious to get the law right and get the country moving forward again.
