Real Estate Market Report, October 2018
October marks six months of the 2018 political crisis in Nicaragua. During that time the economy has suffered significant losses as the protests and related transportation issues affected numerous sectors of the economy.
Tourism has been particularly hard hit as large numbers of vacationers watch from the outside. Many are either delaying trips to Nica or choosing alternative destinations for the upcoming North American winter. Airlines have reduced the number of flights coming into Nicaragua to account for decreased tourism.
Since August, however, we have seen a stabilization of the situation on the ground. A semblance of normalcy has returned to day to day life. While the political situation remains ongoing, the violence appears to have passed. The United States still has travel warnings on for Nicaragua, along with long standing ones for Honduras, Guatemala and El Salvador, but it has allowed for the return of embassy staff and their families.
Those economic losses, combined with the decrease in tourism, have had a spillover effect on the real estate market in Nicaragua.
Property values are down nation wide, as many potential buyers delay or reconsider their purchase. At the same time additional sellers have listed their properties. This combination of factors has created a buyers market in which most properties are selling for about 30% less than original list price.
There is some variability by regional market, related to the amount of unrest that was experienced during the worst of the protests a few months ago. Granada has seen sales slow to a trickle as the mainly older expat community there decreased their purchasing. In contrast the beach destinations on the coast are seeing more sales for social, demographic and geographic reasons.
There were few issues between authorities and protestors in the areas of San Juan Del Sur, Rivas, Tola and Popoyo. That stability seem to have decreased uncertainty in those areas. In addition the younger demographics of the expat community on the coast means they are less risk averse. Those factors, combined with the attractions of the beaches world class surfing, is maintaining demand at a somewhat moderate level.
Asking prices in the coastal markets have not decreased a much as might be expected. While a rare few have dropped list price by 50%, like this home in Pacific Marlin, the average decrease in list price from pre-crisis levels is 10-20%. The difference we are seeing transactions is that sellers are accepting lower offers. For example this home in Colinas De Miramar recently sold for 35% below asking price. And this one in Palermo sold for 32% below list.
The segment of the market that seems to be holding the strongest is ocean front property in Nicaragua. Most ocean front listings have not seen their asking prices decrease at all. However we believe this property category is potentially open to discount. In our opinion many oceanfront properties may be available for 30-35% off original list price.
Who are the buyers at the moment? There are three main groups:
Property investors are looking at Nicaragua the moment. Most are wealthy Canadians and Americans looking to take advantage of the current buyers market. Some are American residents with Nicaraguan roots looking to get a piece of their homeland at a discount. And a final, smaller, group are remote digital workers. These are individuals who work online for companies in Canada, the United States, and Europe. They are drawing first world salaries and enjoy the decreased cost of living, and inexpensive property, available right now.
Looking for some of these deals? Here are a few of our favourites in October: