MANAGUA – Responding to an increasingly complicated and competitive market in times of global economic downturn, the government of Nicaragua is changing its game plan.
Instead of actively seeking new investment to come to Nicaragua to start new realestate development projects, the government is focusing on helping the 100-plus projects that are already here succeed.
“We are adapting and being flexible to what the environment is like,” said Javier Chamorro, president of ProNicaragua, the government’s official investment-promotion agency. “Today it is more important to make sure current development is successful than to attract new investors.”
Chamorro added, “If we have 100 developments and we bring in 10 more, we may have 110 unsuccessful developers. So we need to make sure that the ones who are already here are successful, because they are facing hard times.”
Chamorro said real-estate developers were the first to feel the world financial crisis, and could be the last ones to recover.
“People who were buying houses here were using second mortgages to do so,” Chamorro told The Nica Times. “So developers were the people who first felt the crisis and are probably the people who will feel it the longest. That’ why we have to make sure they are successful.
In addition to providing judicial security with legislation such as the recently approved Coastal Law (NT, June 12), the government realizes the best way it can help developers is to find buyers for their projects. That’s why the Sandinista government has decided to team up with the private sector to target the U.S. retirement crowd and promote Nicaragua as a new retirement destination.
For the first time ever, Nicaragua will be participating in the annual trade show of the American Association of Retired People (AARP) in Las Vegas next October. Nicaragua will be giving a one-hour presentation at the event and has several exhibit booths set up to attend to the 30,000 people expected at the show.
“The economic downturn, high cost of healthcare, and in some cases, just a sense of adventure, is motivating people to pick up and move out of the United States in their retirement years,” said Gabriela Goddard, editor- in-chief of the AARP’s Segunda Juventud magazine. “In their search for a country in which to retire, these consumers look for political and economic stability, legal residency for foreign retirees, access to public health care, and exemption from taxes on income earned outside. Any Latin American country offering these benefits and with the right infrastructure, could become a potential destination retiree destination.”
Chamorro, who will be heading the ProNicaragua delegation, will try to convince the AARP crowd that Nicaragua is the place for them. He said the idea is to drum up enough interest at the AARP event to recruit a group of 150 U.S. retirees to visit Nicaragua early next year as part of a government-organized five-day tour of the country. The trip will be subsidized by the Nicaraguan government, Chamorro explained.
Once in Nicaragua, ProNicaragua will work in partnership with certain development projects to make a sales pitch.
ProNicaragua is asking participating developers to provide the non-profit organization with a portion of the profits from any sales made during the event.
ProNicaragua hopes to recover its investment and start a fund to conduct similar events next year.
“We are building a partnership by offering subsidies to clients and assuming all the risk for the developers in Nicaragua,” Chamorro said. “This is a way to promote the developers who are already here and help them be successful.”
Chamorro announced the government’s plan earlier this month at a meeting with the Association of Nicaraguan Investors and Developers, which responded enthusiastically to the proposal and offered several recommendations about how to take maximum advantage of the event.
Darrell Bushnell, of Granada, suggested that ProNicaragua consider using the personal testimonials of other U.S. expats already living here.
Bushnell said a testimonial is a simple and effective way of delivering the message, “I am normal, and I love living here.”
Chamorro, too, said the best way Nicaragua can get over its lingering image problem is through personal testimonials. “We can show people that Daniel Ortega is president, but that doesn’t mean we are at war, that doesn’t mean you can’t live in Nicaragua, or that you are not welcome here,” Chamorro said.
He said the fact that ProNicaragua is involved in the AARP event also sends an important message that Nicaragua is open for business.
“We are also a government institution so we will be inviting people to come down on behalf of the government of Nicaragua,” he said.
Chamorro said another clear sign of the government’s commitment to attracting foreign retirees is the fact President Ortega recently sent a new bill to the National Assembly asking for reforms to the old pensioner’s law. The new bill, which seeks to improve incentives to retire here, was sent to the National Assembly in March and is currently in commission.
Not Panama, Not Costa Rica Though Panama and Costa Rica are Nicaragua’s closest competition in the region for attracting U.S. retirees, Chamorro says Nicaragua is a different product and will distinguish itself in several ways.
Costa Rica, he said, has already established itself as a “high-end market,” while Panama is promoting itself as a retirement destination for those who want urban living. Nicaragua, on the other hand, offers a lower cost of living, more affordable real estate and more natural and spacious surroundings, he said.
“We have to position ourselves a bit below Costa Rica; they still have a better brand,” Chamorro said. “We have to look for people who are willing to take a little more risk because they want that savings.”
Developers in Nicaragua are applauding the government’s initiative.
“I think the AARP initiative is an excellent long term strategy for Nicaragua,” said Mike Cobb, CEO of the Gran Pacifica development project. “Many or probably most baby boomers in North America have seen values of their retirement packages fall dramatically in the past 18 months. Many of these folks will be looking for alternatives that offer a similar or enhanced quality of life for a lower cost.”
Cobb, who will be part of the Nicaragua delegation attending the AARP trade show in October, notes that an Ernst and Young report last July found that 60 percent of retirees could expect to outlive their financial assets if they didn’t cut back by 24 percent or more.
“This is serious for those affected,” Cobb said, adding that some will try to make due while others “look for alternatives,” including Nicaragua.
Just as Nicaragua’s tourism industry is benefiting from the world economic crisis, many are hopeful that the housing and financial crisis in the United States could have a silver lining for Nicaragua.
For all its past image problems, Nicaragua now hopes to become a golden option for people in their golden years.