This content is from: Local Insights

Nicaragua: Real estate management fund

Rodrigo Taboada

Over recent years, the Nicaraguan financial system has progressively grown and strengthened. According to recent studies of the Nicaraguan Foundation for Economic and Social Development (FUNIDES) the financial sector growth rate is second only to the construction sector among the economic sectors that are included within the monthly economic activity index.

An important event for the development of the financial market in Nicaragua is the recent approval by the Superintendence of Banks and Other Financial Institutions (SIBOIF) of the first real estate management fund company, to manage real estate investment funds. This makes Nicaragua only the second country in Central America after Costa Rica where such vehicles are authorised.

According to law number 587, the Capital Market Law, a real estate investment fund is an independent patrimony managed by a management fund company, whose main purpose is to obtain income from leasing or selling the real estate in which funds are invested. For example, that would be the sale of houses, apartments, offices, parking lots, warehouses, industrial or commercial facilities, and so on. The profit obtained from these operations is distributed between all the participants, based on their individual contributions.

Individuals may participate with small amounts between $1,000 and $20,000.

During the first five years of operations of this entity, it is expected that it will raise $150 million, approximately equivalent to three percent of the deposits in the national financial system. There are 120 Nicaraguan entrepreneurs who have already invested in Costa Rica's real estate funds who are willing to invest in the new local fund.

Rodrigo Taboada

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