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Realtors remain optimistic amid real estate woes

Nicaraguan politics and the U.S. economy were the main factors some in the local real estate market attribute to a slow down in 2007, but as the tourist season approaches, optimism remains high for a significant rebound.

In a recent publication, Daniel Ortega: The First 180 Days, by International Living, itself in the business of promoting real estate, the authors reported a 25-50 per cent drop in prices for property in Granada, immediately following the elections. The report goes on to say the values have recuperated 25-30 per cent.

"Due to this being an election year, as is common in Central America, our high season was a bit slower than normal," said the perpetually plucky Sam Stewart, co-owner of the RE/MAX office in San Juan del Sur, via email. "With the increase in investment, we have witnessed over the last several months, this year's high season looks to be a great one. I'm already overwhelmed with the amount of clients setting up appointments months in advance."

Of course, no market likes uncertainty, but Stewart thinks the investment jitters will continue to wane as time goes on.

"As people are starting to see that nothing has changed -- Nicaragua still remains the cheapest and safest country in Central America -- investor confidence is quickly returning [ . . . ] Our office has sold nearly a dozen properties in the past two weeks." said Stewart.

Considering the majority of the Nicaraguan real estate business is cash-only, the recent fallout in the U.S. mortgage market may be having the greater effect than any perceived political factors.

Donn Wilson, of NicaDev, has several development projects in and around San Juan del Sur. He said, via email, he sees the U.S. market as having the largest impact.

"Most people were investing their home equity, which in the U.S. seems to be drying up quickly, therefore slowing down the market in Nicaragua," said Wilson. "Keep in mind, most people have to buy in cash, then
build in cash [. . .] a lot of excess cash to have around and with the current U.S. crunch, it will be tough for most to raise the funds."

Wilson said he thinks that construction will be a key factor to further expansion, price adjustments, and the development of infrastructure. "For me, that is the next big event- when people start putting homes on their lots," he said.

It is estimated that there are approximately 100 projects underway on Nicaragua’s Pacific coast, according to the International Living report. As a result, the amount of choices buyers have is also increasing, and this too is having an effect on the market.

"Yes, it would be a buyer's market but this is mainly due to the number of new developments coming on line recently," Wilson said.

While the fact there was a slowdown maybe uncontested, a recent buyer saw the lull as a great opportunity.

"I had interest in buying in 2006, and I thought it was an easy guess that prices would be impacted after an election, which based on the polls at the time, was fairly predictable," said Brent Cottingham, 33, a Canadian pilot who lives and works in Bahrain.

In the spring of this year Cottingham saw a lot for sale, being advertised at 20 per cent less than six months previously. He snapped it up. "Sure I see it as an investment, but my intention isn't to do the flippity-do-dah. Of course, I hope it appreciates, but like any investment, there is some risk. I could lose my shirt, but I don't surf with my shirt on. Whatever it ends up being worth, I can build a house near a surf beach in one of the most beautiful places in the world."

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