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Is this the next South American hotspot?

Brazil, Argentina and Panama could have a rival when it comes to South American property investment...

And that rival could be Nicaragua, which is shaping up to be the next property investment hotspot.

It's Pacific and Caribbean coastlines set in a tropical climate have already made it incredibly successful for property investors, yet prices are still a fraction of the cost of property in neighbouring Costa Rica.

Foreign investment is now pouring into the country. In 2005, a total of about $241 million was invested by non-Nicaraguans. In 2006, that number grew to $268 million and then rose again in 2007 to $335 million.

Meanwhile, tourist dollars are fast becoming a large part of the economy that was once focused on agriculture exports.

Tourism has increased by 300% in the last decade and even rental yields on Nicaraguan houses are reaching 7.7 percent. Yields on new luxury resorts could make double that, and will coast to around the 10-12 percent mark.

Commenting on Nicaragua's potential for success, a spokesperson for David Stanley Redfern Ltd said: "As with any emerging market the biggest gains are made on off-plan property, and the tropical coastal regions are likely to prove the most lucrative.

"If Nicaragua is anything like the South American coastal countries before it - Brazil, Argentina, Panama and Costa Rica - then capital growth on off-plan coastal property could increase from 20 to 30 percent a year, and is unlikely to be anything less than 30 percent per year for up to the next five years".