Africa - Cape Verde
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Out of Africa
 Enticingly off-the-beaten-track, Cape Verde is fast gaining popularity as an exciting property market. But are uncertainties and difficulties in the buying process jeopardising its chances of attracting investors?
Published in Square Foot Magazine April 1 2007
Hotly tipped as the “New Canary Islands,” Cape Verde is an archipelago consisting of 10 islands, just 500km off the coast of West Africa. The islands are split into two groups: the north islands of Sal, Boa Vista, Santo Antão, São Vicente, São Nicolau and Santa Luzia, collectively known as Barlavento; Sotavento gathers the south islands of Maio, Fogo, Brava and Santiago (or São Tiago, site of the capital, Praia). Combined, The Republic of Cape Verde (as it is officially known) covers a total land mass of just over 4,000 sq-km, with a population of around 420,000.
Growing interest
Cape Verde is currently enjoying a large amount of international investment, and is making the required infrastructure changes to ensure it realises its full potential as a world-class, year-round holiday destination.
It has a very stable democracy and has seen strong and continued economic growth in recent years. It is currently seeking associate status with the EU and has won the support of Portugal, the Azores Islands, Madeira and the Canaries.
Praia now boasts two international airports (in Cape Verde) and two more are due for completion in 2007, on Boa Vista and São Vicente. Direct flights from Europe started in 2006 and the first charter flights are coming in this summer.
With dry tropical weather, low humidity, stunning beaches and unspoiled scenery, Cape Verde could become the next big holiday destination and this in turn will lead to excellent opportunities for investors seeking substantial capital growth.
Cape Verde was recently featured on UK Channel 4’s A Place in the Sun – 20 best places to buy abroad.
High investment potential
 Cape Verde is at the very beginning of its growth and with virgin land being developed for the first time, property investors can look to gain early entry at low prices to a market that is set to boom. You can expect to pay just $430,000 for an apartment less than five-minute’s walk to the beach.
According to the Nôscasa Cape Verde property index, properties went up by 17 percent between January and October 2006 alone. Most homes on the market throughout the archipelago are new-build and, not surprisingly, sold off plan. Properties are purchased on a freehold basis.
Most searches for Cape Verde property centre on the island of Sal which is home to about 50 percent of the archipelago's tourism. On Santa Maria, the main resort with 8km of golden sands, the government has approved the construction of two golf courses, three marinas and a casino.
Several years ago, Italian property speculators started to buy large tracts of cheap land on Sal and numerous developments are springing up along its coastline. Leme Bedje, for example, situated on the southeast tip of Santa Maria, is just 80m from the water’s edge. Most of the 62 one- to three-bedroom apartments feature balconies and some have wrap-around terraces. Prices range from $600,000 to $2.5 million. Completion is slated for early 2008.
However, if you are eager to find the newest investment hotspot on Cape Verde, turn to São Vincente. Property prices are still lower than Sal’s, but there’s greater growth potential. Hosting annual carnivals and music festivals, São Vincente is attracting an increasing number of tourists. Three cruise lines have already added it to their itinerary.
São Vincente’s property market mainly caters to the higher end. The newly released São Pedro Village Promotion offers front line properties at under $900,000 and an Ernie Els 36 hole golf resort development, in the north of the island at Baia das Gatas, is due for completion this year. This should contribute to promote the area and push property prices higher. In southern São Vicente, the company behind the famous Dubai Palm Development and “Dubai World, is launching a massive US$1.5 billion project. The resort will include a 36 hole golf course, 1,700 villas, 2,200 apartments, a sports centre, shopping centres and up to five hotels.
Risky business
The purchase of property in any developing country is not for the faint-hearted and Cape Verde is no exception. This is not an Internet or instant buy: research the area you are interested in and spend a lot of time on site before signing any deal.
You need to ask yourself: How financially stable is the company that is proposing to build the development? Do they have planning permission, and can they prove it? Does the person selling me the property own it? What happens when I hand over the money? What happens to my deposit if the company calls in the receivers?
Always check that the agent is from a company with an official registration number. As yet there are no estate agents or developer trade bodies on Cape Verde. There are some opportunists on the island (many locals turn builders, property developers or real-estate agents over night) so, be diligent, and check and re-check the paperwork at every stage. As a first-time investor in Cape Verde, you should focus on the international property developers. It’s the safer option and you know who you are dealing with. For an off-plan property, make sure that the developer has both title and license and appoint a lawyer to check these documents. After paying the reservation fee of between $100,000 and $500,000, you will need to sign the promissory contract and put down a 20 to 30 percent deposit. You are required to pay a flat rate of 3 percent of the attributed value before signing the deed of purchase and sale, plus another 3 percent annually on 25 percent of the attributed value.
Also, bear in mind that the local currency is fixed to the Euro and for Hong Kongers the conversion may not be as attractive as it once was.
BUYING LAND
Even though the demand for land has skyrocketed over the past two years, it is still priced relatively low due to its immediate availability. Private and foreign investment is encouraged for projects such as golf courses, leisure parks, shopping centres and tourist resorts. Landowners are reluctant to split their land into smaller plots as they target major investors who can buy the entire plot. This means smaller plots of land are increasingly difficult to find in popular areas of Cape Verde.
It is inevitable that land values throughout the Cape Verde islands will continue to rise significantly over the coming years, while the predicted boom in tourism is leading to a high demand for land and construction.
Useful contacts www.capeverdeproperty.co.uk; www.property-cape-verde.co.uk; www.investinpropertycapeverde.com; www.savills.com. |
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