November 1999
Tracking long-term opportunity on Nicaragua’s Atlantic coast
I’ve spent the better part of the last six weeks tracking down reliable information about Nicaragua’s Atlantic coast. It hasn’t been easy to come by. The vast majority of the development in this country is under way right now 180 miles west on the Pacific. And though every person I spoke with on the ground in Nicaragua agrees that the Atlantic coast is where the next boom will be, they all agree, too, that real development there—and great potential profit—is anywhere from an optimistic eight years to a conservative 15 years away.
That said, it’s beautiful territory: tropical, blue-green waters that surround a collection of little islands where there are white sand beaches and tall coconut palms. If you’re looking for a fairly long-term investment, this is the place to come. It’s arguably the last set of Caribbean islands still "undiscovered" as it were. They are pristine gems, still isolated from the tourist hordes—a limited commodity. And that makes them valuable.
Let me back up for a moment and put this opportunity in context.
With one exception, my contacts on the ground in Nicaragua are looking for a fairly quick return on their investments and have, thus far, put their money in projects under way along the southern Pacific—most within 100 miles of the Costa Rican border. You should, too, if you’re looking to own land in a place where you can easily build a home tomorrow; where you can comfortably live several months a year, even year-round; where you can dine out at first-rate restaurants and enjoy the company of other expatriates.
All that is possible today on the country’s west coast in places like the colonial city of Granada and right on the ocean near the little resort town of San Juan del Sur. If you’re hoping to watch your property’s value increase significantly in the next five years, invest along the Pacific coast.
Calling Robinson Crusoes
But as I said earlier, if you have some cash to put into a longer-term investment, you
should consider the opportunities that present themselves today on Nicaragua’s other
coast.
Nicaragua’s East coast is where you’ll find the next little Caribbean archipelago south of Honduras’ Bay Islands. And if history is any indication of future development—and I think it’s safe to say it is—this is where the next set of intrepid investors will stake their claim.
They will buy cheap land on which to build hotels, open dive shops, run open-air restaurants that serve locally caught lobster and fresh fish. They will subdivide the large tracts of land they buy at bargain prices today and sell it years from now to individuals who will pay a premium for a half-acre lot on some of the last untouched islands in the Caribbean. You could be one of those to get in early and, some years from now, turn a profit. But be prepared for an adventure. Because right now...there’s virtually nothing there.
"Nicaragua’s Atlantic coast is like Honduras was 20 years ago," says one realtor who has been living in Nicaragua for many years and until now has concentrated his efforts on the Pacific Coast. "There are no roads, and so you must go everywhere by plane or boat. The planes are little. And the boats are the same ones that transport cargo. It’s not unusual to sit on crates of tomatoes en route from one island to another.
"When I go to that coast again in a few weeks, I’ll start in Bluefields, which is still a bit inland. There I’ll haggle with a fisherman for use of his boat, something with an outboard motor big enough to power us at some speed for a couple of days. And then we’ll load several containers of gasoline on board—it’s a bit like riding in a floating Molotov cocktail. We’ll have to navigate through the inland waterways until we reach the ocean, where we’ll be thrown into waters that are often rough. It’s an experience."
The lay of the land
Bluefields, the mainland town where you’ll find the seat of government for this
Atlantic-coast region, is, by all accounts, dirty and stinky. The coastline here is
straight and not very interesting, the beaches of dark sand, and the water dingy. So,
though you’ll be obliged to come here to do your title searches and to register your
property purchases, it’s otherwise a place to avoid.
Nevertheless, one local land owner maintains that Bluefields, because it’s a small town, is a remarkably efficient place to do business. "If you want to find out who owns a piece of property, or if you’re looking for some information, you can simply knock on an official’s door. You don’t find here the bureaucracy you can be faced with in Managua," he says.
You’ll want to head to the Corn Islands to start your search for investment property in this area. You can fly daily from Managua to Bluefields or directly to Big Corn Island. (From Bluefields, it’s a three-hour boat ride or a one-hour flight to Big Corn.) Big Corn has a population of about 10,000—a lot of people on a four-square-mile piece of land. There is electricity only a few hours a day, and at last report were only four phones on the island. However, the beaches here are long, white, and palm-lined.
And there is, reportedly, land for sale. However, I couldn’t locate any officially on the open market. If you want to buy on this island (or any of the neighboring ones), you’ll have to go there and ask around. It’s still a market where you’ll buy from locals whose land has been passed down through families for generations. Because of that, it’s unclear what properties will go for. They’ve never been sold before. All you can do is make an offer that you think is reasonable and then haggle with the owners.
Private Islands for sale
I did, however, find several islands for sale in this little archipelago. The owner
purchased them about five years ago from local families. The islands had been passed down
through several generations, and, when he went to buy them, found that various
grandchildren owned small percentages of each island. These part-owners were spread around
the world—as far-flung as Miami, Guatemala, and South Africa.
It took him several years, with the help of a local attorney, to track them all down and to arrange for the sale of the property and the clear title transfer. He did, however, and now is hoping to resell them. There are no building restrictions here, and he is willing to finance up to 50 percent of the purchase price for qualified buyers.
He lists Grape Key, a 2.5-acre, almost perfectly round island with a beach encircling
the entire coast, at $132,500; Crawl Key, a five-acre, moon-shaped island, he lists at
$211,000; and Babboon Key, which is a full 15 acres where the palms are kept company by
many papayas and cashews, he lists at $494,000.
Website :
www.tropical-islands.com
To put these prices in perspective, there’s a five-acre island on offer now in Honduras’ Bay Islands, only five minutes by boat from Roatan, that was $825,000 before Hurricane Mitch blew through and now lists at $475,000. Off Belize’s southern coast, there’s a five-acre island nine miles east of Placencia, with three residences, two marinas, and a reverse-osmosis water-purification system, listed for $3.5 million. In the Bahamas, you can buy an unimproved, mile-long island 32 miles from Nassau for $880,000.
Charting the potential risk
If you feel you missed the boat 15 years ago in Belize, and if you’ve hemmed and
hawed too long to take advantage of the temporarily undervalued prices in Honduras,
there’s still time for you to make an early investment here. But do keep the time
line in mind. It will be many years before Nicaragua’s government earmarks money for
development here. Its priorities clearly lie on the Pacific Coast.
In addition, these waters are known for high drug traffic. Smugglers take advantage of the government’s negligence to ship drugs north to the United States in waters that aren’t patrolled. That’s a temporary problem. As investors begin to buy properties and development takes hold, there will be too much action here to make it a viable channel for smugglers.
So, it’s early. There are risks. This isn’t a place you can comfortably retire to in a year. But a lot of positives come together here. Nicaragua—its Atlantic coast in particular—is well located. It’s beautiful. It’s in a country that is one of the region’s most stable—there have been two consecutively elected democratic governments.
There is a growing middle class made up of Nicaraguans who spent many years in the United States and are now returning home. They are bringing with them not only capital, but capitalism, and an understanding of how free-market economies function. Consider these factors together, and you have a profile of a country on the upswing. Sure, it’s early for investment on the Atlantic Coast. But it’s those who get in early who profit most.