Nicaragua: An Overview

Profile | Weather | Economy | Land of Opportunity | Development | Selling Points | Business

Profile

Nicaragua, a land of lakes and volcanoes, is the largest yet most sparsely populated of the Central American nations, with a population just over 5.5 million. Nicaragua borders Honduras to the north and Costa Rica to the south and is slightly larger than New York. Its topography includes a mountainous region to the west, two vast lakes, Nicaragua, the largest freshwater lake in Central America, and Lake Managua, which are connected by the Tipitapa River. The Pacific coast is volcanic and very fertile, which lends itself to an abundant supply of agricultural exports, while the marshy Caribbean coast is known as the "Mosquito Coast."

Nicaragua has some of the most spectacular beaches in Central America. It is also home to the colonial city of Granada, purportedly the oldest in the Americas, and the remarkable crater lake Apoyo, recommended for accreditation as a World Heritage site.

According to ProNicaragua.org, FDI inflows in 2008 reached a record high of $626.1 million, an increase of 64% over the previous year. Nicaragua's FDI in 2008 was equivalent to 10% of the GDP for that year. According to a ranking published by Latin Business Chronicle, Nicaragua is ranks third in Latin America when comparing the FDI-to-GDP ratio of each country.

This significant increase in foreign investment and exports growth bears witness to the great advantages offered by Nicaragua to foreign investors, i.e. its strategic geographic location, a favorable investment climate, highly competitive costs, and a productive labor force. Furthermore, on-going reforms of the judicial system and administrative procedures are expected to continue to improve the business climate and help attract increasing amounts of foreign investment into Nicaragua.

Weather

Nicaragua has a tropical climate with two seasons: a wet season from May to January and a dry season from January to mid-May. Average annual rainfall in the capital of Managua is 35 inches and average temperature ranges are from 68 F (20 C) to 93 F (44 C) throughout the year. Nicaragua Weather >>

Economy

As a result of years of economic liberalization, and the implementation of policies intended to stimulate national and foreign investment, Nicaragua is now one of the most dynamic economies in Central America, due in large part to a substantial increase in private investment and exports.

Nicaragua has always been primarily an agricultural country, but construction, mining, fisheries, and general commerce also have been expanding during the last few years, as well as the tourism industry. International visitors to Nicaragua reached nearly 900,000 in 2008, with tourist spending reaching $277.8 million, a 9% increase from 2007. Preliminary figures for the first semester of 2009 reported an increase of 9.8% in tourist arrivals compared to the same period of 2008, as well as an increase of 30.1% in tourism revenues.

Nicaraguan exports reached $2.7 billion in 2008, a 13% increase from 2007. Although preliminary figures from Cetrex register a year-on-year decrease of 7% in 2009 mainly due to the global economic dip, it still highlights one of the strongest results in the region.

According to the World Bank Group, Nicaragua was ranked as the fastest country in which to start a business in Central America. The indicators analyzed in this report measure business regulation and the protection of property rights, and their effect on businesses. The study placed Nicaragua in the number one position within the Central American region, followed by El Salvador and Costa Rica. The study also positioned Nicaragua as the country that best protects investors. Nicaragua ranked 117 (among 183 countries) in the Doing Business 2010 report. Additional factors exclusive to Nicaragua include a reduced property transfer tax from 4% to 1% of the value of the property and improved conditions for obtaining credit and trading across borders.

Land of Opportunity

For investors, an emerging market offers a brief window of opportunity to realize exceptionally high returns. Many investors took advantage of the opportunity in Costa Rica 15 years ago but that time has passed. Now Nicaragua's time has come.

Using Costa Rica as a measuring stick, one can get a glimpse of the enormous potential offered in modern day Nicaragua. Costa Rican apartments that sold for $20,000 just 10 or 15 years ago now sell for in excess of $200,000. Large beachfront lots that could be had for under $100,000 now often sell for millions. Increases of a thousand percent and more are not the exception in Costa Rica; they are the norm.

Now Nicaragua is playing catch up. Nicaragua could not only catch up, but could actually surpass Costa Rica on the popularity scale. Nicaragua is home to 7% of the world's biodiversity, which is more than Costa Rica. It is also home to 76 protected areas covering 20% of its landmass. Nicaragua has a robust economy and has been a stable democracy for almost two decades. People are waking up to the fact that Nicaragua offers immense natural beauty, year-round warmth, world-class surf, and an abundance of real estate opportunities.

What does this mean to visitors and potential investors?

Lower comparative costs with most of the rest of the world for starters. So long as this country is embraced and accepted by the few and retains an air of skepticism by the many will there be this extraordinary buying opportunity, whether its for retirement, seasonal relocation or business you simply cannot compare it to the already developed markets nor discount its ability to become one. Savvy investors can really reap the rewards.

The bulk of foreign investment into the country's real estate and tourism sectors is focused on the southwestern corner of the country, which boasts a dramatic geography and comfortable climatenot to mention an appealing surf break. Often referred to as the "next Costa Rica," Nicaragua shares the same unspoiled and magnificent coastlines as its neighbor and is expected to meet or exceed the expectations. Prices in Nicaragua are still very inexpensive, yet as tourism climbs, the economy continues to strengthen, and mainstream press catches on, substantial rises in value will be seen for many prime coastal locations.

“No one is going to allow seizure of property, big or small. We need to eradicate poverty, but you don’t do that by getting rid of investment and those who have resources.” -Daniel Ortega

Right now, those prepared to invest the time researching opportunities, will be able to lock in great prices. Yes, Daniel Ortega is back in power, but with a new vision. He continues to receive promises of financial aid from all sides of the political spectrum and trade with the US continues to grow on the back of CAFTA.

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Development on the Pacific Coast

Nicaraguan coastal developing is moving at an accelerated pace. A number of projects are underway touting tantalizing dream homes in exclusive communities only minutes from the beach. This growing movement has drawn favorable comparisons to the Costa Rica that existed more than a decade ago when it too was awakening from a stifling slumber of its own troubled past and beach properties could be had at a fraction of what they command today. Its not surprising then that many believe that Nicaragua, offering the more affordable alternative next door, will ultimately overtake Costa Rica as the settlement of choice along the Pacific with the thriving expatriate communities and million dollar homesteads.

While speculation was a factor in the earlier days, where a take the money and run objective lie at the core, today investing in Nicaragua's oceanfront property is much more about community building where beautiful living areas emerge along the coast providing plenty of R&R for visitors and potential residents. Development will continue and as it does, a beneficial side-effect will occur by way of new highway construction, newly paved roadways, tourist infrastructure and small business to help sustain the local environment while catering to the needs of the newest arrivals.

Selling Points

Nicaragua is very inexpensive compared with the rest of the world and features beautiful coastal settings, exemplary topography, temperate year-round climate, and relaxed lifestyle...to say nothing of the generous tax breaks provided by the government for new businesses. Strategically located between both coasts, Nicaragua is small by American standards, but offers plenty of natural resources and governmental incentives to welcome foreign investment.

The Government passed Law 306 that includes provisions exempting qualified investors from paying income or property taxes for up to 10 years, and providing generous exemptions from import duties for "pensioners" and investors that qualify.

Everywhere you look there are signs of progress: newly constructed highways, re-paved roads, world-class hotels, state-of-the-art shopping plazas, new international franchises. And Nicaragua's not just an attractive place for business; the number of foreign visitors to Nicaragua approached the 1,000,000 mark for 2007, and it is estimated that more than 5,000 U.S. citizens currently reside there. What many probably dont know yet is that Nicaragua is also the safest country in Central America.

For anyone interested in investing or starting a business in Nicaragua, a good place to begin is by reading our article on Entering the Nicaraguan Market, then visiting our section for Nicaragua Business to learn how we can help.

Business Opportunities

The opportunities in Nicaragua are limitless. Whether you'd like to run your own B&B, offer local tourist services, start a fishing charter, your own cafe or cantina, import/export, Nicaragua is a great choice. Besides the lucrative tax saving advantages, there is great demand for foreign business entry to serve the local and flourishing international markets. We know Nicaragua and are very well connected with reliable sources in numerous industries. We can assist you to establish or extend your business operations and guide you through the entry process.. Learn more... Nicaragua Business >>

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