What Does Nicaragua’s HIPC Status Mean For Real Estate Investors?

HIPC is a program started by the IMF and World Bank in the 90’s. It is short for Highly Indebted Poor Countries and Nicaragua joins 39 other poor countries with ongoing debt obligations that are eligible for financial assistance and debt relief under the initiatives.

Although the initiative has been criticized by sister organizations such as Jubilee USA as being overly restrictive and inflexible, most economic commentators agree that the program overall has had a positive effect on Nicaragua since in joined in 2000.

Nicaragua’s economy is doing well, despite being buffeted by the financial crisis of 2009. In fact in 2011 it is reported as having the fastest growing economy in Central America. (Yes even beating Panama with its much heralded growth friendly policies). Foreign direct investment is growing rapidly and exports are on the rise. A strong, stable economy is always a positive for Nicaragua real estate investors.

But we must be careful not to overstate things. Nicaragua real estate investors need to understand that by its very inclusion in HIPC, Nicaragua is one of the poorest countries in the Western Hemisphere. They are investing in an emerging market. Yes there is plenty of room for upside, but there is also a great deal of distance to travel before the market can be considered a mature ones. Many areas of the country still lack good infrastructure such as paved roads, and good quality water and electricity supply.

On the other hand Nicaragua also one of the lowest living costs in the region. For US retirees who are finding it hard to pay for a comfortable retired life in the US, making a move is increasingly tempting. Expatriates living in Granada and San Juan del Sur, two of the most popular tourism and real state destinations in the country, report being able to fund a luxury lifestyle complete with full time maid for under US$1000 each month.