The new caribbean 

The new Caribbean Cape Verde has been touted as one of the world's
hottest property destinations, but is it all its cracked up to be?
Leaonne Hall finds out just what it costs to buy a little piece of paradise

Sitting just 300 miles off the coast of West Africa, this tiny archipelago of ten islands may seem like an unlikely investment hotspot, but in recent years it has become one of the most talked about destinations on the international property scene.

Breathtakingly beautiful, Cape Verde offers stunning beaches lined with palm trees, friendly people, fantastic weather and wonderful watersport facilities. Heralded as the new Caribbean, prices are just a fraction of those found in the Caribbean today. As Adrian Lillywhite of Cape Verde Property says, “Just think of a mixture of the Caribbean and the Canaries about 20 years ago!”

The market here has grown tremendously over the last few years, especially as direct flights are now available from the UK in around five and a half hours. There are no restrictions on foreigners purchasing a home, and with prices as low as £40,000, with tax incentives for buyers, it's not surprising that Cape Verde's popularity is booming.

Mark and Paula Boustead bought two apartments in the Cotton Bay Marina and Golf Resort. “By buying on an off-plan development, we expect to make a financial gain by the time they are completed. Easily accessible from the UK, compared to other ‘new' markets such as Bulgaria, Cape Verde offers year-round sunshine - important when you're looking to rent. Lastly, this is an emerging market and we felt the time was right to invest.”

Tourist growth
A former Portuguese colony, today Cape Verde is a stable democracy that hopes to join the EU soon - at present, visitors need to secure a visa to enter the country. The potential for tourist growth in Cape Verde is astronomical, though improvements do need to be made.

The government has recognised the need for these upgrades and is investing, recognising that tourism and property are key to turning Cape Verde's economy around and improving the standard of living. Reassuringly, the government is keen to avoid turning the country into a high-rise hell, and has strictly limited the height of buildings, introducing strong developer guidelines.

Once the infrastructure improvements, property developments, marinas and golf courses have been completed, the prognosis is excellent, with appreciation rates of up to 70% forecast over two years. “Capital appreciation has been around 15% a year for the past few years. This year may see prices somewhat steadier. However, everyone expects 2009 to be a bumper year,” explains Adrian Lillywhite.

Darren Mitchell, Director of Cape V estate agents, agrees that the future looks rosy, “The market is still in an early stage of development, with mortgages and finance only just becoming available. We don't expect prices to double year on year, but once the golf courses and marinas are built, prices will rocket.”

Tax incentives, as well as the introduction of 80% mortgages, make this a particularly good time to buy. The Lei de Investimento Externo (External Investment Law), introduced in 1993, includes a five-year tax holiday to foreigners purchasing property here, and a subsequent tax reduction of 50% on corporate tax (currently 30%) for the following 10 years. Key to investor appeal is the massive growth in the tourist market - it has expanded at a rate of 25% per year over the past four years.

Between 1999 and 2006, the number of beds available for tourists increased by 35%, and there's huge potential for further growth, with airlines currently working at just a 75% capacity. Most recent statistics point towards a 22% annual increase in the number of tourists visiting the islands, with the government predicting that the country will attract one million visitors by 2015.

Consequently, demand for rentals is high, with returns at around 8% per annum. Sal is the best island for letting at present, with a choice of short-term tourist lets or long-term lets for those who live and work on the island. Adrian Lillywhite reveals, “A two-bedroom apartment will fetch around €600 a month on a long-term let, while weekly holiday rentals for a two-bedroom apartment can secure between €300 and €600 a week, depending on the time of year and location. I predict these prices will rise.”

Excellent rental yield
Pete Basterfield bought five properties in Cape Verde, citing investment as his main reason for purchasing. “Cape Verde boasts an excellent rental yield, and this, coupled with the climate, beaches, longterm growth potential and beachfront property at affordable prices, convinced me that this was a good place to buy.”

In terms of where to buy, the four main islands are Sal, Boa Vista, Santiago and San Vicente - all of which will have international airports in the coming years - are good places to invest, although in a few years options will be limited as properties are snapped up. “Sal is the most popular, especially in the south where the beach is beautiful and it is still possible to buy on the beach at a reasonable price,” says Adrian Lillywhite.

Tourism is still growing year on year in Sal, and with the new international airport now open in Boa Vista, and direct UK and European flights set to start in October, this island really will start to boom. Santiago and San Vicente are also popular, with several excellent developments, such as Sambala Village and the new Morabeza Resort, to choose from.

Most property options are off-plan, given that developments are still being built. There is a large range of properties available across the islands, and on average you're looking at €150,000 for a two-bedroom, beachfront apartment on Sal. Prices start from €39,000 for a studio apartment, rising to €50,000 for a one-bedroom apartment.

If you choose a five-star resort, such as the Dunas Beach Resort, then a two-bedroom apartment can cost around €126,326 and a three-bedroom villa from around €290,147. A fabulous five-bedroom resale villa on the frontline in Paradise Beach in Sal can be yours for €700,000. On Santiago, a two-bedroom apartment in the Morabeza Beach Resort starts at €163,000, while a home in the Sambala Fogo Villas costs €310,000.

The market has been performing well and is predicted to continue to do so over the coming years, especially as more people become aware of the charms of Cape Verde. But is this a sustainable investment or just a flash in the pan? Adrian Lillywhite says, “We are getting more and more lifestyle clients buying in Cape Verde. Investment is obviously very important and people want to make money on their properties.

As long as they take a medium-term view, I am sure they will do very well indeed. White sandy beaches, clear turquoise water and excellent weather year-round all add up to make these islands a great investment, both for capital appreciation and rental returns.”


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