New law could hinder Nicaraguan development

A new coastal law under discussion in Nicaragua could severely restrict and even halt beachside developments, it is feared.

Investors and developers agree that Nicaragua's outdated property laws need to be reformed as they are contradictory and over complicated. But they are concerned that development could be halted if the bill is not properly structured and worded.

President Daniel Ortega has said that he is committed to property rights and foreign investment and his government wants to preserve public access to beaches and protect marine life.

But local media outlets have reported comments from Francisco Valenzuela, president of the Commission on Population and Development, that the offer of exclusive rights to beaches for paying customers is being considered. Such contracts would cover periods of up to 50 years.

Also there is no agreement yet on how close to the shoreline property can be developed. Under current law, building is restricted within 98 ft (30m) but the bill aims to extend the restricted area. Nicaraguan Attorney General Hernan Estrada recently ordered a suspension of property titles within 805 m (2,642 ft) of the water as a temporary measure until the coastal law has been appropriately structured and passed.

Of the 3,500 coastal properties sold in the past several years, approximately 95% of them are within the half-mile of currently restricted space along the water's edge and most are in preconstruction and belong to US investors.

'Some fear that, if the law is worded poorly or restricts beachfront property available for development, investors could end up being unable to develop property within the coastal limits that they have already purchased,' said Kevin Fleming, a real estate developer originally from Canada.

'If this is the case, it's entirely possible that a large number of investors and developers will either lose out or simply cut their losses and head home, which could have lasting effects for the Nicaraguan market. This legislation represents a crossroads that could either make or break Nicaragua as a Latin American investment hotspot,' he added.

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