NEW NICARAGUA
Why Nicaragua
Emerging Market
Nicaragua is clearly one of the most extraordinary, undervalued global markets that is primed to explode onto the world stage. In 2010, Nicaragua saw a staggering 30% increase in exports, 17% increase in Foreign Direct Investment and a 10% increase in tourism--setting historical records for the country--and it is projected that the upward trend will accelerate in 2011. The time for international real estate investors to get into Nicaragua is NOW.
"Nicaragua’s dramatic Southwest Pacific coast has been described as “Southern California at 1950s prices” for good reason. The topography is identical, with hundreds of secluded bays sheltered between massive headlands jutting into the Pacific, creating some of the best surf and swimming beaches on the planet. However, circumstances have combined to make prices along Nicaragua’s Pacific cost some of the lowest available anywhere in the world for comparable property."
~ International Living Magazine
A Safe, Friendly Country Attracting Over 1 Million Visitors a Year
Often misunderstood because of its turbulent past 3 decades ago, the New Nicaragua is a safe, friendly country with warm people that is rapidly attracting international vacationers, eco-tourists, retirees and investors from all over the world. According to the Inter-American Human Rights Institute and Interpol, Nicaragua has been one of the safest countries in all of the Americas for years.
International travelers are drawn to its pristine beaches, inland lakes, volcanoes, and the largest tract of primary growth rain forest north of the Amazon. If you are looking for adventure, you can enjoy some of the best surfing in the world, hike up a volcano and snowboard down the other side!
Or you can explore some of the oldest colonial cities in the Americas, shop at the local artisan markets, eat traditional Nicaraguan food, dance the night away and melt into the history, culture and romance that is ever present in this tropical paradise. If you are looking for leisure, privacy and relaxation, imagine pristine virgin beaches (not mobbed with tourists), wine or cocktails served to you as you watch the sunset over the Pacific Ocean, and enjoy the ultimate in spa treatments, pampering, wellness, and natural healing for mind, body and spirit.
"There are places of extraordinary beauty that are safe and friendly, and where you can live like royalty for $1,200 a month"
~ International Living Magazine
"Nicaragua now lures travelers to its 'eco-amazing' shores, to surf and swim, hike jungle trails, snowboard on volcanic sands....Nicaragua is now one of the safest places in Central America."
~ Departures Magazine, January 2011
Rising Onto the World Stage: Tourism is Skyrocketing
The CBS hit realty TV series Survivor, Nicaragua drew over 14 million weekly viewers from the US and Canada in 2010 and helped raise the profile of Nicaragua for millions of North Americans. That same year Nicaragua attracted over 1 million visitors for the first time in the country’s history according to the Nicaragua Tourism Institute. The 2011 season, Survivor, Redemption Island was also filmed in Nicaragua and began airing in February 2011.
Nicaragua was also ranked the Top 3 International Travel Destinations for 2011 by TravelAge West, and the Top 5 Affordable Travel Destinations for 2011 by Lonely Planet. As such, Nicaragua is expecting a 10% increase in Tourism in 2011 so international visitors are expected to top 1.1 million according to Orlando Castillo, General Manager of EAAI (the International Airports Administration Company of Nicaragua).
"For clients who enjoy tropical weather and exotic surroundings, Nicaragua may be the next best, if not more authentic, alternative to travel to Costa Rica."
~ TravelAge West
"Nicaragua is on the cusp of becoming Latin America's latest 'it' destination....Whether you want your trip amped up or over-easy, this emerging destination delivers."
~ Doctor's Review Magazine, January 2011
Nicaragua Tourism & Growth Projections
- Because of the gigantic spike in tourism, there is also estimated to be a hotel room deficit of 5,000 rooms by 2015.
Ranked #1 Affordable International Retirement Haven for 2011
The baby boomer market is expected to top 78 million, and many of these retirees will be looking for warm climates where their money goes much further. Many of these ‘global-boomers’ are setting their sights on Nicaragua where they can have premium weather, golf, amenities and top notch medical care, yet where they can live like royalty (with a maid, a cook and a quality doctor who makes house calls) on their social security check!
- US News and World Report ranked Nicaragua as the # 1 Affordable International Retirement Haven for 2011
- AARP also ranked Nicaragua in its Top 10 Places to Retire Internationally.
"We wanted somewhere inexpensive and we looked at other Central and South American countries, but we kept coming back to Nicaragua, due to the cost of living, the beautiful country, and the gentle people. You can live the tropical life in your dream house on the ocean, start a business in the mountains, or work with a foundation to help people and their children. Every day is an adventure."
~ Darryl Bushnell, American Retiree Living in Nicaragua, Quoted in AARP Magazine, 2010
"Retirees are drawn by a breathtakingly beautiful country of beaches, lakes, volcanoes, and pine forests, with vivid green parrots swooping through mangrove swamps. It has the same natural rain-forest beauty as do Costa Rica and Panama"
~ AARP
"Nicaragua is more attractive than ever...Here's where you should be looking to realize the adventure-filled retirement of your dreams"
~ US News & World Report
Easily Accessible
Nicaragua is the largest country in Central America, with about 5 million inhabitants and has been a stable democracy for the past 20 years with 4 peaceful transfers of power during that time.
Nicaragua is also investor friendly. It is an active member of CAFTA, and recently passed Law 306, which is one of the most aggressive pro-tourist and pro-investor laws in Latin America. Nicaragua was one of the first two recipients of the US Government’s Millennium Challenge Account Grant—a $175 Million Grant awarded only to countries that “rule justly, invest in their people and encourage economic freedom.” Nicaragua was also ranked favorably in the Wall Street Journal’s Index of Economic Freedom, and the World Bank’s 2011 Doing Business report ranked Nicaragua the easiest country in Central America to start a business and to close a business. The World Bank also ranked Nicaragua as the #1 country in Central America for "Investor Protection" in 2011.
Nicaragua’s democratically elected President Daniel Ortega has been dedicated in words and action to upholding for the rights of foreign investors and has personally endorsed the Seaside Mariana Oceanfront Community. Seaside Mariana is located approximately one hour from Nicaragua’s capitol city of Managua, where 60 international flights per week arrive and depart from Augusto C. Sandino International Airport.Managua is just a 3 hour flight from Miami or Houston
- A Stable Democracy that Encourages and Protects Foreign Investors
"Nicaragua is virtually unknown -- and usually misunderstood -- by most people, which is why forward-thinking investors can find some of the best real estate deals in the world in this country."
~ International Living Magazine
A Dynamic Economy that is Starting to Boom
The New Nicaragua possesses one of the most dynamic economies in Central America due in large part to the increase in foreign investment and exports. In 2010, Nicaragua saw a 30% increase in exports, a 17% increase in Foreign Direct Investment and a 4.5% increase in GDP, according to the Central Bank of Nicaragua, and the Ministry of Development, Industry and Trade. Nicaragua surpassed $1 Billion in Textile and Apparel exports for the first time in the country's history, according to the Nicaragua Association of Textile and Apparrel Industry, a 14% increase over 2009.
According to Francisco Mayorga, Economist and former president of the Nicaraguan Central Bank, “Nicaragua´s economy has gone from a slow growing economy to a moderately growing economy in 2010 and will soon jump to a fast growing economy in the next couple of years… Nicaragua may experience an economic growth above 5 percent in 2011, due to the sound macroeconomic policies promoted by the current government.”
"Nicaragua´s economy has gone from a slow growing economy to a moderately growing economy in 2010 and will soon jump to a fast growing economy in the next couple of years."
~ Francisco Mayorga, Economist and former president of the Nicaraguan Central Bank
Retirees
New Retirees Incentives Law
On June 18, 2009, the new law for retirees was passed in Congress. This new law, Law 694, formally called Ley de Promoción de Ingreso de Residentes Pensionados y Residentes Rentistas creates a retirement program that is one of the best in Latin America. This summary will highlight the provisions of the new law.
Purpose
Law 694 is intended to establish rules and procedures for people residing indefinitely in Nicaragua as Residentes Pensionados (Resident Pensioners or Retirees) or Residentes Rentistas (Resident with Income). Further the Law states that it is intended to help tourism activity by means of promoting these special tourists.
Definitions
• Residente Pensionado- a person retired from a public or private institution who desires to be a permanent resident in Nicaragua and receives a minimum monthly pension equivalent to US $600.
• Residente Rentista- a person who has a stable and permanent income, such as dividends, from abroad, desires to be a permanent resident in Nicaragua and receives a minimum monthly income equivalent to US $750.
• Permanent Resident- a person who wishes to reside in Nicaragua for an indeterminate time and makes Nicaragua his actual domicile.
The Legal Status of Residentes Pensionados or Residentes Rentistas
These types of residents will be classified as Special Tourists. They must meet the financial standards as defined above and once a person qualifies as a resident the same legal status will be conferred on his parents, spouse, minor children and person within 4 degrees of blood that are dependent on the resident for support. For each of these relatives, the resident must demonstrate an additional pension or income of US$150 per month per person.
Benefits
The following benefits are available to persons who have received status of Residente Pensionado or Residente Rentista:
• No requirement for a guaranty bond for residency.
• Importation without payment of the import taxes of household goods with a value up to US$20,000.
• Personal use vehicles may be imported or purchased every four years with no import or sales tax due for up to US$25,000. If the car is transferred within the four-year period, the exempted taxes will be due at the time of the sale. The car cannot be more than seven years old and the title will carry an annotation noting the tax exoneration. If the car is totally destroyed or stolen within the four-year period, the person may acquire a new car under the same tax- free conditions.
• A one-time exemption for sales tax (IVA) on up to US$50,000 worth of construction materials while constructing a house for personal use. The title to the property will have an annotation on it for 10 years. If you sell the house before the ten years, the taxes will be due at the time of sale.
• An IVA (sales) tax exemption for car rentals when used for tourism purposes by the Residentes and their families. The Residentes need to have a valid Nicaraguan driver’s license.
• Tax exemption on importation of up to US$200,000 worth of scientific or professional items, if the Residentes will use them for the benefit of Nicaragua .
Administrative Procedures to Obtain Residency
The following authenticated and translated documents are to be submitted in triplicate to the Nicaraguan Institute of Tourism (INTUR) or the Nicaraguan consulate for approval of residency:
• A letter to the President of INTUR indicating the person’s intention of acquiring permanent residency and domicile under this Law. The letter must state the address where the person will live in Nicaragua and contact information.
• A certificate of monthly pension or income from the appropriate organization and establishing that the pension or income will last at least five years.
• A birth certificate showing a minimum age of 45. The age requirement can be exempted if the person can show an investment in Nicaragua of at least US$75,000, is legally disabled or can show a stable income.
• Two passport photos.
• Photo copy of passport.
• A letter or health certificate from your doctor.
• Birth Certificates for any included family members.
• Marriage Certificate, if applicable.
• Letter from local police department stating applicant and family members have no criminal record.
• List of household items and/or vehicle to be imported.
• If the applicant is a naturalized citizen, the naturalization papers must be presented.
Obligations of Residents
The persons who are granted residency have the following obligations:
• Must reside in Nicaragua for at least six months each year unless the Residente receives permission to be absent because of health conditions or impossibility of travel. The six months do not have to be continuous.
• Each year the Residente must present to INTUR documents showing that the pension or income moneys were transmitted to Nicaragua.
• Pay for a residency card (cedula) every five years.
• Respect the laws of Nicaragua.
• If residency is renounced, the Resident must repay all exonerated taxes that were exempted within the two-year period prior to the renunciation.
Restrictions
Residentes Pensionados or Rentistas may not work in any activity in which they receive public money. The exceptions to this rule are: a) if it is their own business and they have real property registered in the Public Registry worth at least US$75,000, and the work has been approved by the Ministerio de Fomento, Industria y Comercio.; or b) they receive special authorization to work; or c) it is work within a public or private institution and is scientific or intellectual in nature.
The beneficiaries of this Law may not become involved in political organizations, nor promote any acts against the cultural, ethnic, religious or tourism image of Nicaragua.
Beneficiaries of the previous Retiree Law 628
Residentes Pensionados or Residentes Rentistas that acquired residency under Law 628 (passed in 1974), will be able to enjoy the new benefits of Law 694, if they receive authorization from INTUR.
Investing
Investing in Property in Nicaragua
The current advice for potential investors and visitors alike is to forget what you think you know about the country and explore the New Nicaragua. Underlying the opportunities are the elements that have always attracted the curious and daring: pristine natural settings, temperate weather, a strong history and culture, scores of recreational and tourism opportunities, picturesque cities and towns, and, perhaps most important, a warm and welcoming population.
Nicaragua offers some of the best value property in Central America and the potential for capital growth currently rivals any other destination in the world. With tourism up over 300% in the last decade, increased flight connections with the US and a growing reputation as a safe and beautiful country, agents are dubbing Nicaragua as the ‘next Costa Rica’.
Beachfront Real Estate in Nicaragua
The real estate market boom is being driven by both residential and commercial property. On the residential side many baby boomers from the US are discovering Nicaragua as a less expensive alternative to Panama, Mexico or Costa Rica where prices are typically 30-50% higher and the potential for capital appreciation is slowing down.
Commercially, Nicaragua’s growing economy has recently attracted many international banks, insurance companies and manufacturers who have now established operations in the country. Overall there has been double-digit increases in direct foreign investment annually over the last five years, including an 25+% increase in 2010. Nicaragua displays the same opportunities and possibilities that marked the beginnings of economic upswings in Costa Rica, Belize and Panama.
The real estate investment opportunity is similar to Costa Rica 20 years ago and by arriving early in this emerging market investors can expect superior capital returns.
Tourism
Tourism & Investment Opportunities
Tourism is the fastest growing industry in Nicaragua rising 300% in the last 10 years. With the country receiving over 1,000,000 visitors annually, there is a growing demand for holiday property especially at the luxury end of the market.
The highest percentage of visitors are from the United States, which is growing annually by 25% as an an increasing number of flight connections become available. Hotels in the country have high levels of occupancy (typically over 75% per annum) and it is predicted that with the growing number of tourists there will be a 5000 room deficit by 2015.
This bodes well for property owners looking to earn rental income from their second home. In addition an increasing number of Americans and Canadians are retiring to Nicaragua as they discover the tax benefits, lower cost of living and investment opportunities.
Business
Doing Business in Nicaragua
Nicaragua has enjoyed peace and constitutional democracy for the past 25 years. The Sandinistas won the last election in November 2006 and 2011, making their long term leader Daniel Ortega president again. Ortega has vowed to respect private property rights, the free trade agreement with the US (CAFTA), the agreement with the International Monetary Fund, and continue the macro-economic policies of his predecessor, Enrique Bolanos.
Economic growth is strong with a 25% increase per annum of rice, beans, coffee and meat exports, mainly to the US. Unemployment rates are declining as the younger population find opportunities with the growing number of international companies. As evidence of the recent progress in improving its business climate, Nicaragua has been ranked favourably in a variety of independent evaluations, including the Wall Street Journal’s Index of Economic Freedom and the World Bank’s ‘Doing Business Report 2011,’ which ranked Nicaragua as the easiest location in which to start a business in the Central America region. Nicaragua is recognized as having the lowest crime rate in Latin America, according to Interpol and the Inter-American Institute on Human Rights.
Ownership
Ownership of Real Estate in Nicaragua
Real estate laws in Nicaragua allow fee simple (freehold) ownership by foreigners. Real estate property transfers are executed by means of purchase agreements signed before a Nicaraguan Public Notary by means of public deeds. Once the parties have signed, a copy of the contract (called “Testimonio”) is recorded at the Property Public Registry of the department in which the property is located. At Seaside Mariana titles have been insured by First American Title Insurance Company and Stewart Title Latin America.
Closing costs on the purchase of a property are approximately 4%. Of that, 1% corresponds to the government tax, 1% to legal fees, 0.75% to notary fees and 0.25% for registration fees. Real Estate Taxes & Closing Cost The yearly real estate tax is calculated at 0.8% of the value of the property.
Nicaraguan income tax rules apply to the income generated in the sale and lease of the property. The rate will depend on the residence status of the owner. There are no restrictions to repatriate gains or incomes, as long as the tax withholding has been paid. Tax withholding on real estate property transfer in Nicaragua is 1%.
