Your Fast track to the tropics

Until now few investors could place Cape Verde on a map. A new airport and links to the EU will change that, says Matt Baker of The Times 

WHEN THE Prime Minister of Cape Verde, José Maria Neves, mooted the idea that his country be given a “special status” relationship with the European Union earlier this year, it was the clearest sign yet that this West African archipelago is economically and culturally shifting towards Europe.

With Spain and Portugal already having pledged their support in Brussels, there is every chance that this cluster of islands situated some 280 miles off the coast of Senegal could soon be enjoying the same ties to the EU as the Canary Islands, Azores and Madeira. At the heart of this shift in focus is a property boom that is looking more bullish by the day.

Few people in Britain could probably have placed Cape Verde until it appeared in Channel 4’s list of the top 20 locations to buy abroad in 2005. It was ahead of the likes of the French Riviera, Costa del Sol and Tuscany, and experts are now predicting that this former Portuguese colony, which achieved independence only in 1975, will be the next hot tourist destination. Cape Verde is widely regarded as having the highest standard of living in West Africa. And as the closest tropical islands to Europe, with year-round sunshine, will soon be little more than a five-hour flight from London once a new international airport opens later this year in the capital city of Praia, on São Tiago island. At present the quickest route to Cape Verde is from Heathrow or Gatwick via Lisbon: the flight takes roughly seven hours, costs about £530 for a return, and lands on Sal island.

“People in Britain have only started buying property there in the past few months but the secret’s out and interest in Cape Verde is hotting up,” says John Howell, an international lawyer who advises investors on overseas property.

One man who has witnessed the growing British interest in Cape Verde property is Kevin Fleury, director of Smart Investment Property. He recently sold 90 off-plan properties in the first month of sale for the Sambala tourist village planned in Praia, a short distance from the new airport. “Cape Verde is at the stage where the Canaries were 15 years ago,” he says. “It’s a beautiful archipelago with stunning white beaches, exotic and beautiful landscapes and great people. It really is a winner because tour operators like Thomson and Airtours need to find places like this to keep people excited.”

Properties are selling for about €820 (£555) per square metre, which equates to about €35,000-€41,000 (£24,300-£27,800) for a studio apartment situated some 300 yards from the sea. Moreover, there are ten islands to choose from – Santo Antão, Santa Luzia, São Vicente, São Nicolau, Sal, Boa Vista, São Tiago, Maio, Fogo and Brava. On quieter, less crowded islands such as Maio two or three-bedroom villas on the leeward side, five minutes from the beach, are on offer for €133,000-€159,000 (£90,300-£108,000). They come with a communal swimming pool and gardens with palm, lemon and papaya trees.

Many of the properties bought by Europeans in Cape Verde are off-plan. “The first thing you need to realise is that there’s no mortgage finance by Cape Verdean banks for foreigners buying Cape Verde properties,” says John Howell. “In general people are borrowing in the UK. It’s no more complicated than buying in Bulgaria or Turkey but if you’re buying off-plan you should check that the seller has got a good title and check if they’ve planning consent. Ideally, check out the status of the seller. Are they a reputable seller? What history do they have? Then check that the contract is fair and reasonable. On the whole though, it’s a fair system. The Cape Verde legal system is the same as the Portuguese system, so it’s well established.”

Kevin Fleury advises investors to look at São Tiago, Sal and Boa Vista, the islands where the bulk of the property development is under way. He says: “One option is a tourist development set-up, where buyers/owners lease their property to travel companies, who will then rent them to holidaymakers on package tours.” Alternatively, Fleury suggests investing in the financial districts of the main cities: “Buyers would use local management companies to lease their property to the various companies that are setting up in Cape Verde and transferring their personnel to the islands to work long-term there.” Either option seems a good bet for buy-to-let investors, with potential rental returns of up to 11 per cent a year and the value of property likely to increase by 25 per cent a year, according to Fleury. Yet with a steady stream of German, Italian, Spanish and British buyers investing here, do the locals — Cape Verde has a population of 400,000 — worry that they may be excluded? “Not at all,” says Fleury. “The arrival of tourists means jobs for the locals and their children. Many of them are seeing it as a chance to learn a trade. A lot of Cape Verdeans are now being employed as engineers, cooks and builders.”

Raquel Medina, a Cape Verdean solicitor who has assisted the sales of many properties, says that the influx of foreigners has made most Cape Verdeans proud of their popularity.

“Everyone here is excited at the changes that are taking place on our islands and Cape Verdean people are very kind, with open minds,” she says. “We establish relationships easily with foreign people and we know that living alongside Europeans is our way of life because Cape Verde has a part to play in the world now.”

But with interest in property in Cape Verde starting to reach a fever pitch it is worth considering a cautionary word of advice from a tour operator who has been travelling to Cape Verde ever since it became independent.

“People need to get some perspective,” says Ron Hughes, of Cape Verde Travel, who is married to a Cape Verdean. “Someone phoned me the other day and asked where the best place in Cape Verde was to put their daughter in school to resume her GCSEs. I don’t think people realise that Cape Verde has nothing like the infrastructure they expect. I’m advising people to learn more about the islands before they invest and to try and put something back there – even if it’s just bringing over books for children in the local schools.”

Source: TimesOnline (www.timesonline.co.uk) (August 26, 2005)
Link: http://property.timesonline.co.uk/article/0,,14052-1748975,00.html