Island investments

By on February 25, 2013
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Cape Verde has been a big hit with investors over recent years and there are still plenty of opportunities for savvy second home buyers.

Europe’s shortcut to the sunshine, Cape Verde has long proven popular with holiday makers thanks to its balmy climate, white sandy beaches and transport links to the EU. A former Portuguese colony, the lush archipelago drifts a couple of hundred miles off the west coast of Africa and nestles on the same latitude as some of its Caribbean counterparts. In other words, it’s beach holiday bliss.

So it’s no wonder that Cape Verde has been heralded a golden example in the field of tourism, although, it’s not just its natural assets that have helped make it so successful. The island’s superior infrastructure, willingness to embrace new technology and burgeoning service industry were all praised by economists last year, who claimed Cape Verde should be an “investment blueprint” for emerging nations.

Although not immune to the global financial crisis, Cape Verde’s economy has avoided a recession and growth has not dipped below five per cent since 2010. In that same time tourism has overtaken salt-mining and shipbuilding to become the main driver of the economy, teeing up 2013 to be another great year for the archipelago.

For overseas investors, property remains a lucrative asset thanks in part to the government, who have encouraged sustainable growth by limiting development quotas and enforcing tough planning and construction regulations. Consequently, Cape Verde remains a safe port in a storm.

“The stable and investment-friendly government has a reputation as a ‘hands-on’ business partner with infrastructure projects like Porto Novo for cruise ships, airport improvements and increased ferry services,” says Adam Ellis of UK real estate firm, The Resort Group.

“All of which will make the islands more attractive ports of call while increasing property values with improved access and easy of travel.”

Indeed the ministry of economy expects their own investments to pay off, predicting the number of annual tourists to surpass a million in the next decade. To put that into perspective, in 2011 Cape Verde welcomed approximately 428,000 visitors, so if their estimations prove to be right investors could be seeing some very high returns indeed.

Arguably the trickiest part about investing in Cape Verde is deciding where you want to buy; the islands of Santiago, Sal and Santa Antao are probably the hottest spots, although Boa Vista, Sao Tiago and Sao Vicente are increasingly popular. Wherever you decide to invest in Cape Verde, you will find a range of properties available; from off-plan apartments to luxury villas with the trimmings.

“Turnkey apartments are particularly popular; one bedroom and larger apartments will accommodate the visitor, while houses can provide a longer term residence,” says Ellis.

“With rental returns of 8 to 11 per cent in established resorts, it’s a five-star lifestyle opportunity without the five-star price tag.”

 

Buying in Cape Verde

  • The purchase process comprises two parts; the preliminary contract and the final contract. The preliminary contract is signed once a fiscal number is obtained from the local tax office along with a non-refundable deposit. The preliminary contract secures the purchase but is subject to satisfactory searches being carried out. Assuming that goes through, you will then sign the final contract in the presence of a notary.
  • Transfer tax is payable at a rate of 3 per cent.
  • Notary and registration fees, along with stamp duty amount to approximately 3 per cent of the purchase price.
  • Buying off plan payments are typically staged over the build period, with a final instalment paid upon completion of the building.
  • Property tax is charged at a rate of 3 per cent on 25 per cent of the property’s value and is paid annually every April.

Photo credit: aldask / Foter.com / CC BY-NC-ND