January 15, 2007 by sacuanjoche.

 Eric Sabo, Chronicle Foreign Service Monday, January 15, 2007

(01-15) 04:00 PST San Juan del Sur, Nicaragua — A barbed-wire fence and several angry men armed with machetes are standing in the way of Philip Christopher’s dream to build a world-class surf resort.

The 46-year-old Missouri native has spent the past two years buying up property around Popoyo Beach, 17 miles from this Pacific beach community that is also known as a surfer’s paradise.

“Popoyo is already its own brand,” said Christopher, one of thousands of U.S. investors buying ocean-view lots and other properties in this once war-torn country. “Everyone knows that this is the best place to surf.”

Yet his $14 million project, which includes beach condos and a clubhouse, has run afoul of the Nahualap, an indigenous group that first settled in the area. Its leaders claim nearly 15 acres of prime beachfront land stemming from an 1877 deed, which Christopher says is part of the 93 acres he bought from previous owners.

“You can’t come into our home and buy whatever you want,” said Bartolome Lopez, the president of the Nahualap community in Las Salinas, a town near Popoyo. “You have to respect those who live here.”

Late last month, dozens of men brandishing machetes stood on the perimeter of Christopher’s fence, claiming a new ally. “They were shouting that (new President Daniel) Ortega will never allow me to get away with this,” said Christopher.

But Ortega, a 61-year-old former guerrilla commander viewed as a dangerous leftist during the Reagan administration, may do just that.

After nearly 17 years out of office and three consecutive election defeats, Ortega was sworn in last week to lead a country that has largely grown out of its revolutionary past. Ortega himself says he has changed from the days when he imposed a state-run economy, nationalized properties to give to landless peasants and fought U.S.-backed Contra fighters. In fact, he has courted nervous foreign investors by promising to respect private property and continue free-trade agreements. As a result, there have been few signs of investor flight.

“There is not even a thought of confiscations,” Ortega told a group of business leaders at an October meeting at his Managua home, which included Christopher. “Foreign investment will help reduce our unemployment problem.”

Indeed, his Sandinista party bears little resemblance to its revolutionary roots. Seven of the nine original junta leaders have abandoned Ortega, including his brother and former head of the army, Humberto Ortega. Jaime Morales, a former Contra whose home was confiscated by Daniel Ortega, is the nation’s new vice president.

“Ortega has given absolute certainty for the respect of property rights,” Morales said last month in a speech in San Juan del Sur designed to assure foreigners that their hotels and homes are safe investments.

Chris Berry, a 52-year-old former ballet dancer and a San Francisco resident who owns the Pelican Eyes resort in San Juan del Sur, says Sandinista officials have been “especially helpful” in his dispute over hillside property with a distant relative of Augusto Sandino, the famed revolutionary hero from the 1920s. “The Sandinistas have been assisting us throughout,” said Berry.

Most political observers say Ortega is well aware that Nicaragua — the hemisphere’s poorest country after Haiti — needs tourist dollars to benefit the impoverished voters who supported him. In 2006, tourism brought in $240 million — surpassing the nation’s coffee exports — up from $189 million in 2005.

Indeed, Nicaragua’s long stretch of white sand beaches and stunning vistas along the Pacific Coast have become hot destinations these days for not only investors but also retirees and U.S. and European tourists. Visitors are also lured by the nation’s volcanoes, lakes, rain forests and colonial towns like Granada.

Calvet & Associates, a Managua consulting firm, says Californians are blazing the trail, accounting for nearly 20 percent of U.S. citizens inquiring about property. An estimated 6,000 U.S. citizens now live at least part time in Nicaragua, according to media reports.

Yet property confiscations during Sandinista rule in the 1980s have left bitter memories and a confusing array of title claims that can make buying property a tricky proposition. Although foreign investors can still find good deals, lawyers and real estate agents say, buyers should beware. A 2002 World Bank study said as many as 60 percent of Nicaraguan properties lack proper documentation.

“Finding property with a clear title is not an easy task,” said John Margolis, who worked in the hospitality industry in San Francisco before purchasing 50 acres near La Bonita Beach, an hour’s drive west of the capital, Managua. “We wanted something that was still off the radar, said the 41-year-old Margolis, who plans to build beachfront homes.

Aside from Christopher’s experience, there have been at least three other beach area property disputes — including one that turned violent. Three members of a group calling itself the Pedro Joaquin Chamorro Cooperative were shot and wounded Dec. 1 by security guards after entering a new development they claimed is being built on their land at Arenas Bay, a few miles south of Popoyo. The Nicaraguan owner, Armel Gonzalez, said that the guards acted in self-defense.

“Some followers of Ortega believe we are going back to the ’80s,” said Gonzalez. “But that’s not going to happen.”

Most owners of confiscated properties either have reclaimed their land or been compensated. According to the U.S. Embassy, more than 4,500 Nicaraguans who fled to the United States during the 1979 Sandinista’s revolution against dictator Anastasio Somoza have received compensation mainly by government bonds.

Vice President Morales has warned poor Nicaraguans who have lost redistributed land in subsequent years not to expect the new government to return those properties. “No invasions will be allowed,” he has said.

These few land disputes, however, have not deterred tourism, which is transforming once sleepy fishing villages such as San Juan del Sur into fashionable retreats dotted by million-dollar homes and $400-a-night hillside spas. Further up the coast are a growing number of gated communities, which offer American-style suburban homes and Nicaragua’s first golf course along the Pacific Coast.

“There used to be nothing but livestock and farms here,” said Steve Snider, who sailed to Nicaragua from his San Diego home 10 years ago.

Snider, now a real estate agent, says cheap land deals are becoming harder to find. Yet, he says property in Nicaragua still sells for about 25 percent less than in Belize and Panama, two other hot spots in Central America for American investors.

Meanwhile, Christopher is gearing up for what he describes as a “battle royal” if he and his business partners are forcibly evicted by the Nahualap. He expects a judicial order soon that will allow him to oust the protesters and fence off the disputed area.

“Clearly, this is not what the Sandinistas want to deal with right now,” said Christopher.

http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/01/15/MNGHJNIR5V1.DTL

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January 15, 2007 by sacuanjoche.

Real estate continues its boom in Nicaragua, spurred by low prices and growing tourism.

BY CHRONICLE STAFF

Despite a new, leftist government led by President Daniel Ortega, executives in Nicaragua’s growing real estate industry remain bullish.

“The real estate market outlook continues to be positive,” says Claudia Gonella, director of the Nicaragua offices of U.S.-based real estate agency Coldwell Banker.”We are selling well out of both of our real estate offices, at approximately the same rate as this time last year.”

Ortega has vowed to respect private property rights, the free trade agreement with the United States (CAFTA), agreements with the International Monetary Fund and continue with the same macro-economic policies of his predecessor, Enrique Bolanos. He has also gained some praise for appointing Arturo Cruz, a well-respected economist, as his ambassador to the United States. His new pledges stand in contrast to his last government (1979-90), when private property was expropriated, inflation skyrocketed and the economy went into freefall.

Thomas sees the next two months as key to determine whether Ortega means what he has said. Gonella expects price stability for a few months and, assuming the new administration keeps to its verbal and written commitments (in support of DR-CAFTA, private property rights, tourism, free market etc), the market could come back strongly in the second half of 2007.  

A NEW COSTA RICA?

Nicaragua has seen significant growth the past few years, partly helped by inexpensive prices, a reputation as a safe country, growing tourism and increased flight connections with the United States. Some realtors dub the country “the next Costa Rica.”

“It’s close to America and one-fifth of the price of Costa Rica for the same properties,” Thomas says.

The real estate market is driven by both residential and commercial properties. On the residential side, many baby boomers from the United States are discovering Nicaragua as a less-expensive alternative to Costa Rica and Mexico, while banks and factories are helping the commercial market.

Banpro, a Panamanian bank, is constructing a new $15 million building across the street from Thomas, while a Korean investors is planning a $100 million factory to manufacture Levis. Meanwhile,  a client of Thomas plan an ethanol plant in Nicaragua, while another one is expanding a chain of coffee shops in the country. Meanwhile, local real estate group is developing a major resort, Gran Pacifica Beach & Golf Resort, with hotels, apartments and gold courses on the Pacific coast.

PRICES DON’T FALL

While the asking prices from developers and owners usually increase during high season (which runs from December to May), that did not happen this time. However, neither have they fallen, according to Gonella.

“The major developers are continuing to roll out their master plans with no delay,” she says. ”This is a sign of confidence.” 

As more tourists visit Nicaragua, more people plan to come back to buy property, says Thomas. “Tourism is huge…and just getting bigger,” he says. This weekend, some 5,000 tourists visited San Juan del Sur thanks to four cruise ships, he points out.

Most of the real estate sales will take place in

 the residential sector focused primarily in key tourism destinations. ”Investors will be looking for capital appreciation, but also for properties that they see as good candidates for rental income,” Gonella says.   ”The strong outlook for tourism visitors for 2007 will support this trend.”

Coldwell Banker expects less activity in the commercial sector in the early part of 2007, as many investors  will take a wait-and-see approach.  “Commercial investors tend to invest on a larger scale than the residential buyer, and for the longer term,” she says. 

In terms of geographical areas, the more “established” markets for foreign real estate investment such as Granada and San Juan del Sur are likely to be where most investor activity will continue to be focused, while newer, more speculative, cities and areas for investment such as the colonial town of Leon and Inland Mountains around Matagalpa, are likely to see less activity, at least for the first part of 2007, Gonella predicts.  ”Investors are likely to feel more comfortable investing in areas where a positive growth trend is already established,” she says.

 
Coldwell Banker has also seen good demand for its four-day real estate tours to Nicaragua scheduled for each of the next three months. The tours typically have between six and 12 participants to better tailor the group’s requests. ”

he tours offer a great way to make sense of real estate opportunities here,” Gonella says.

So far, the participants are mainly from the United States, but Coldwell Banker plans to boost its marketing to Europe to take advantage of the strong Euro and British Stirling, she says. 

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