Legislation is under consideration by Nicaragua’s National Assembly that would place new regulations on development of the country’s coastal land. Investors and developers are concerned that new restrictions regarding beachfront development could effectively stop coastal development all together if the bill is not properly structured and worded.
In the past 100 years Nicaragua has adopted multiple property laws that are, at times, contradictory and overly complicated. The Sandinista government and President Daniel Ortega, both back in office as of 2007, are taking steps to simplify these laws by drafting new, clearer legislation to replace the old regulations, according to The Miami Herald. In the past, Ortega has said that he is committed to property rights and foreign investment, and most investors and developers agree that the existing property laws need to be reworked and clarified, according to The Miami Herald.
The law is intended to be investor-friendly and aims primarily to provide security for tourism investments and to promote development, protection and ecological balance, according to El Nuevo Diario, a Nicaraguan news website. The Nicaraguan National Assembly has stated that it wishes to preserve public access to its beaches and protect marine life from the hazards associated with property developments. But it’s possible that exclusive beach rights may be granted to some, for a price. Deputy Francisco Valenzuela, president of the Commission on Population and Development, cited Cuba and other countries that offer exclusivity rights to beaches for paying customers. Such contracts would cover periods of 25 or 50 years, according to El Nuevo Diario.
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A consensus of approximately 95 percent had been reached on the bill between officials and the private sector as of the end of May, according to El Nuevo Diario. There are still points, however, on which all parties do not agree.
One of the primary concerns is how close to the shoreline property can be developed. Under current law, building is restricted within 30 meters (approximately 98 feet) of the shoreline, but the bill aims to extend the restricted area. Nicaraguan Attorney General Hernan Estrada recently ordered a suspension of property titles within 2,642 feet of the water (approximately 805 meters), according to The Miami Herald. This measure is temporary until the coastal law has been appropriately structured and passed.
Of the 3,500 coastal properties sold in the past several years, approximately 95 percent of them are within the half-mile of currently restricted space along the water’s edge and most are in preconstruction and belong to U.S. investors, according to The Miami Herald.
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. 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, according to The Miami Herald.
Nicaragua’s National Assembly is expected to pass the coastal law within the next several weeks.