Comparing Nicaragua And Costa Rica

Nicaragua Or Costa Rica?

Daniel Ortega was re-elected president of Nicaragua in 2006. He’s since been elected for a second consecutive term, in 2011, and sits as Nicaragua’s president today.

Those facts have worried some folks. Daniel Ortega was the leader of the Sandinistas, the group that ousted the dictator Somoza back in 1979, and the same guy who, then, once in power, confiscated land and redistributed it to the poor. Investors have had concerns about what 21st-century Ortega might get up to.

I don’t see today’s Ortega as a worry. It’s a different world from 1979, and Ortega is a different guy who, in the intervening decades, has come to appreciate what capitalism brings to the party.

Nicaragua has suffered through a century of troubles, including, most recently, the re-election of the Sandinista icon Ortega, which scared some investors away, and the global downturn that started in 2008, which took many others out of the game. In the wake of these back-to-back events, not only investors but tourists, too, became thin on the ground.

Given the volume of traffic today in Granada, Nicaragua’s crown-jewel colonial city, I think it’s safe to say that the tourists have returned. The pedestrian street lined with restaurants that extends from Granada’s main square toward Lake Nicaragua is crowded with shoppers and diners every afternoon and evening. In fact, I don’t think this little colonial city has seen as much activity as it is seeing right now at any other time during its almost 500-year history.

It’s not only tourists who are feeling comfortable enough to give Nicaragua another chance but investors, too. The property market is returning. Sales are being made at greater rates than at any time since 2008. After nine years in office this time, Ortega hasn’t made a move against anybody’s property. To make the point again, today’s Ortega is not 1970s Ortega. Ortega today is the capitalist version of a Sandinista, with an understanding of the importance of personal property rights.

And Nicaragua today is a country worth your attention.

For tourists, Nicaragua is an absolute bargain. The super low cost of everything attracts backpackers, of course, but it also attracts others looking for a high-quality vacation at a bargain price. The country now boasts legitimately four-star hotels that charge nothing like four-star prices. You can stay at the La Gran Francia in Granada, for example, a hotel I’d rate as four stars, for US$85 a night, including breakfast and Wi-Fi.

For surfers, Nicaragua is a mecca. This country’s Pacific coast serves up some of the best breaks anywhere in the world. Those who make their way to try them out aren’t just 20-somethings with shaggy hair and empty pockets. Today’s surfer is as often a grown-up guy with a grown-up job and real net worth. He’s been surfing since he was in his 20s and sees no reason to stop now just because he’s a few decades older. These older surf dudes, with available capital, were an important part of the property boom Nicaragua enjoyed pre-2008 and are back in the country buying again, helping to fuel the return of this market.

For retirees, the attractions are both the long Pacific coast and the very low cost both of living and of beachfront property. Layer on the warm weather, the incredibly friendly Nicaraguans, and the country’s pensionado residency visa program (the world’s cheapest), and you’ve got the full retiree package.

Nicaragua is an appealing option for a retiree on a small budget. You could live well in Granada, for example, on about US$1,100 a month at the current rate of exchange between the U.S. dollar and the Nicaraguan cordoba. The minimum wage in Nicaragua starts at 2,701 cordobas per month. Right now, that’s US$100 per month. A retiree with income of US$1,100 is wealthy compared with most locals.

I also, though, see Nicaragua as a top choice for a retiree with a bigger budget who wants to stretch it to buy a “luxury” retirement. Increasingly, this is possible in this country. There are not only four- and five-star hotels and restaurants now, but international-standard development communities, too, especially along the Pacific coast. You could retire to one of these communities… furnish your new home with custom-made furniture… have a maid, a driver, and a gardener… eat out at high-end restaurants four or five nights a week… take regular weekend trips to explore the country… on a budget of maybe US$2,500 per month or less.

Of course, you have to keep this idea in perspective. Nicaragua remains a Third World country with limited—though improving—infrastructure.

We have been recommending Nicaragua as a much better value than Costa Rica for a long time. This is truer today than it’s ever been.

Costa Rica has always been more expensive, but it used to have better infrastructure and more destinations developed with the foreign retiree and expat in mind. Today, Nicaragua remains much cheaper than Costa Rica, but its infrastructure has improved. I’d say it’s now on par with that in Costa Rica. Meantime, real estate prices in Nicaragua are essentially what they were nine years ago for most types of property. Same low prices… improved and improving infrastructure.

For me it’s a no-brainer. If I were looking to make a coastal investment in this part of the world today, I’d go with Nicaragua over Costa Rica.

Lief Simon

 

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