For a variety of reasons - the greed of the Somoza dictatorship, who intercepted foreign emergency aid and sold it to victims at inflated prices; the refusal of insurance companies (mostly Somoza-owned) to pay out disaster damages; and the Revolution - the old centre of Managua was never rebuilt, while fighting during the 1978-79 Revolution caused further damage to buildings. The Sandinista government wanted to rebuild the centre, using donated foreign funds, but this never happened and for many years "downtown" Managua remained a ruined shell of scruffy fields, skeletal ruins and old parking lots turned into graffiti-sprayed basketball courts, while squatters colonized the derelict spaces and constructed makeshift homes among the ruins.

During the Contra war many people fled violence in rural areas and migrated to Managua, creating new neighbourhoods and expanding the city's perimeter. (The wealthy still tend to live in neighbourhoods called repartos and residenciales; colonias were largely created by the Sandinistas in order to house specific professions, like teachers, and the barrios tend to be the poorer areas, where squatters and rural migrants try to eke out a living.) Following the war, during the 1990s, the city's mayor - and Nicaragua's future president - Arnoldo AlemA?n began the process of restoring the old centre, erecting expensive fountains and, unfortunately, having many of the famous murals of the Sandinista era painted over, thereby losing forever some of Latin America's best examples of political street art. Elected president in 1996, AlemA?n determined to resurrect the long-neglected central district, centred on an opulent new Casa Presidencial (Presidential Palace). Built against seismologists' advice, this salmon-and-mustard-coloured carbuncle is widely detested, and seen by Managuans as a reminder of the greed and mismanagement that has plagued them under AlemA?n's government. Other parts of the area have also been re-landscaped with new plazas and fountains, though the old centre still lacks focus and few local people spend any time here, except on weekend evenings when they come to watch the music-and-light show in front of the old cathedral.

The 1990s also saw the return of some of the "Miami boys" - businessmen and influential families who had fled revolutionary Nicaragua to settle in Miami. The current political climate has enticed some to return, and with them have come their American values, air-conditioned 4WDs and alarm-studded mansions. New bars and restaurants catering to the tastes of these nicas ricas have sprung up, and - even if the cover charges are high, the drinks expensive and the clientele more South Floridan than Nicaraguan - they have at least improved the nightlife scene.