Most people have never heard of Cape Verde, the African islands off the coast of Senegal. However, sunshine lovers from all over the world, particularly from Britain and Ireland, have recently begun trickling into the country and enjoying its natural beauty. Charmed by what they found, some have even invested in property.
“In the last three years, the [property] market has changed considerably; the new U.K. and Irish market has completely brought a new vision and cash injection into the country. There are now more new markets opening up such as Scandinavia, and other Northern European countries,” said Mimi Martel, sales manager of Imobrisa, a property developer located in Cape Verde.
About Cape Verde
Cape Verde islands are located in the Atlantic Ocean, 300 miles off the western coast of Africa. In the 15th century, Cidade Velha, the first tropical European city, was founded on an uninhabited Cape Verde by the Portuguese. Shortly thereafter, the islands became a hub for the transatlantic slave trade. In 1975, Cape Verde won its independence from Portugal and is now a middle income country.
Cape Verde’s economy is largely dependent on remittances and tourism. Remittances make up about 20 percent of the islands’ GDP, according to Lonely Planet. Tourism is a rapidly growing industry. As a tourism destination, the islands of Cape Verde boast a variety of attractions. Cape Verde has long beautiful white sand beaches, crystal blue waters and old colonial seaside towns such as Cidade Velha and Mindelo. Its landscape ranges from dry volcanic to lush green. Its people have taken bits of three cultures and blended them into something uniquely their own. “It has this raw beauty, African, Portuguese and Brazilian mix, which makes you feel that you are discovering a completely different world,” said Martel.
Since Cape Verde is relatively unknown, it is not overly commercialized like other popular island destinations, according to Imobrisa. However, it still has everything a beach vacationer wants. “Cape Verde can offer almost guaranteed sunshine and has a genuine all-year round holiday potential. The beaches are glorious and you have fantastic water sport opportunities form world class windsurfing and game fishing to diving, and surfing. The islands of Cape Verde are all unique consisting of beautiful beach destinations such as Sal and Boa Vista to the Volcanic Island of Fogo and the cosmopolitan city of Mindelo in Sao Vicente to the lush vegetation and mountains of Santo Antao,” said Martel.
There is fear that the tourism industry faces a potentially severe crisis because of the world economic slowdown, according to Afrol News. The number of tourists to the country has already begun falling. The leisure and travel sector is one of the first industries to suffer during times of economic uncertainty.
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Cape Verde real estate
Even in this time of a global economic crisis, real estate agents remain optimistic. “The geographical position creates the possibility of an international clientèle; this helps protect the market as certain parts of Europe go into recession, other new markets emerge. We can see [this] from the change in monetary exchange rates. As the U.K. pound declined against the euro, our European sales increased as opposed to decreased sales in the U.K.,” said Martel.
The four islands that are seeing the most real estate investment are Sal, Boa Vista, Santiago and São Vicente, according to Adrian Lillywhite, the managing director of Cape Verde Properties Ltd.
With 70 percent of Cape Verde’s tourist arrivals ending up at Sal island, it is the most popular of the bunch. “The south [part] of Sal is the best area of [the island], and this is where most people are buying in such five-star developments as the Dunas Beach Resort, Cotton Bay and Paradise Beach,” said Lillywhite. In Santa Maria, a small tourist town with a beautiful beach, it is possible to purchase apartments within a five-minute walk to the beach for $65,000.
Boa Vista has a new international airport and direct flights from Europe are scheduled to being in November, according to Cape Verde Properties Ltd. Santiago is greener than both Sal and Boa Vista, making it a good location for golf courses. It is also where Praia, the capital of the nation, is located.
The island of São Vicente is the cultural heartland of Cape Verde, according to Lillywhite. It is more colonial and one of its towns, Mindelo, has a marina and deep water port.
The property sector is thriving, according to Imobrisa. The past few years have posted between 10 percent to 15 percent growth in the real estate market. The current credit crunch has dampened the sector’s expansion a bit. “No market is immune against [the current economic crisis]. As a country in development and as an emerging market, Cape Verde has the advantage of attracting investors who have decided to move their assets in search of higher levels of growth. The GDP predicted for Cape Verde in 2009 is between six to seven percent and the International Monetary Fund has given Cape Verde a positive report,” Martel said.
Buying real estate in Cape Verde
“There are no restrictions placed on foreigners buying property,” said Stephen Eade, a sales director for Horizon Property Group S.L. The laws that govern real estate transactions in Cape Verde are similar to their Portuguese counterparts, according to Cape Verde Properties Ltd. “There is a 3 percent property tax and roughly 3 percent notary charge on completion of a property. We have sold properties to clients who have never visited the islands. It is very simple and straightforward. Everything is freehold,” said Lillywhite.
The islands’ low taxes on property returns are also attractive. There is no capital gains tax for the first 30 percent of profits and it is taxed at just 3 percent after that.
Looking ahead
Some analysts are forecasting price increases between 15 to 20 percent over the next five to 10 years, according to Eade. “Shrewd investors that buy now will see a fantastic capital appreciation along with superb rental returns while they own the property. Currently demand for rental is far greater than the number of properties available,” he said.
The international segment of the property sector is expected to expand and to become more diverse. As the tourism industry expands, new resorts are anticipated. There are plans to upgrade further the island nation’s infrastructure through loans from China, the European Development Fund and the Middle East. “I would expect interest rates to decrease in Europe, especially in the U.K., and this should have a positive effect [on the property market],” said Martel.
Still, the budding Cape Verde property market needs to weather the global economic slowdown intact, something that is far from guaranteed in these gloomy times.
