Located approximately 400 kilometres west of the African coast and 1,500 kilometres south of the Canary Islands are the palm-fringed Cape Verde Islands. 

The closest tropical archipelago to Europe is made up of ten Islands – San Antão, San Luzia, São Vicente, São Nicolau, Sal, Boa Vista, Santiago, Maio, Fogo and Brava. It will soon be possible to reach this former Portuguese colony in less than six hours from the UK – once Praia airport on Santiago starts receiving direct flights from Britain in November 2006, which is sure to extend British interest in this North African country even further. With tourism on the increase, buying a holiday home in Cape Verde or a buy-to-let could be a wise move.

Is this a good place to buy?
Over the past two years the islands have started to become popular with British tourists seeking winter sun. Their proximity to the UK (compared to the Caribbean), lack of jet lag – the time difference is just one hour behind GMT throughout the year – and the fact that it is a fairly safe country, have all contributed to making the Cape Verde Islands a new holiday hotspot with Brits.

A promising sign is that the government is now actively seeking overseas property buyers to further improve its economy. Economic reforms are aimed at developing the private sector and attracting foreign investment to diversify the economic base of the islands. The government is also working to improve infrastructure and tourist amenities.

Underpinned by this sound policy environment, GDP growth has been robust – per capita GDP was $6,200 in 2005, a 5.5 per cent increase over 2004 – and inflation has remained low – 1.8 per cent (2005). Even more importantly, Cape Verde continues to exhibit one of Africa's most stable democratic governments. There is also the incentive that tax breaks are offered to foreign investors – the first five years of home-ownership are tax free.

Where to buy
The main area for overseas purchasers has so far been the island of Sal. Santa Maria,  a small village on Sal, has been particularly popular as it is close to what was the country's first international airport, which can be reached from the UK, and has one of the country's best beaches.

Just 30 kilometres long and 12 kilometres wide, Sal is the most north-easterly of the islands and is without doubt the country's most developed. Until the beginning of 2005 the island accounted for around 90 per cent of all Cape Verde-bound tourists, so has plenty of bars and restaurants, and boasts much of the country's best infrastructure and amenities. As an example of what you can get for your money in Sal, a one-bedroom apartment would cost you in the region of £58,000, while £160,000 would allow you a good choice of three-bedroom houses. 

However, while Sal may be leading the property boom, other islands are now starting to follow suit. Development on the island of Santiago, the country's largest island, is well underway and when airlines begin flying to the international airport in Praia from Britain in November 2006 the island is likely to undergo a popularity boom with Brits and ultimately an increased interest in property on the island.

Investment potential
Given the island's tourist potential, buy-to-let purchasers are likely to find Sal a particularly enticing investment opportunity. With year-round temperatures averaging between 22 and 26°C, rental potential is not limited to a few months a year. Many of these tourists may well hope to buy in Cape Verde a few years down the line, so buying into an off-plan development completing in the next two years could place an investor in a position to sell on as tourists look for finished second homes.

Cape Verde is certainly the most significant of the tropical emerging markets. House hunters who want turquoise sea, golden sandy beaches, and sunny climes would be hard pressed to find another tropical paradise so close to the UK.

At present, the market is so new that it's a country full of  potential, but with so many of the developments yet to be completed it is an emerging market that is yet to realise its potential. Development of the property market is reliant upon government schemes proving successful, and the lack of facilities such as schools and tarmac roads mean that it is not really a viable country to relocate to permanently. The country's transformation into an established property market may take years but there seems no reason why it shouldn't one day be on a similar level to the Canary Islands.

How to buy
1. The  property search in Cape Verde is in many ways similar to that of Portugal. After finding a property and agreeing a price the first step is to obtain a Personal Fiscal Number from the tax office. The contracts will be agreed in two stages: first the Promissory Contract (Contrato de Promessa de Compra e Venda) and then the final contract (Escritura).

2. After the purchase price has been agreed the Promissory Contract is signed and the deposit  paid. The deposit is non-refundable but secures the property. Before signing the contract your solicitor should conduct checks at the land registry to ensure that the vendor has the right to sell the property.

3. A number of documents will be needed to complete the transaction. From the land registry you will be required to obtain a registration certificate which states the legal history of the property, and from the local tax office a document listing the yearly taxes which must be paid on the property. If the development is new a temporary certificate will be issued. Your solicitor will then help you to obtain a licence of use.

4. After the promissory contract the next step is to sign the final contract. Foreign buyers should be aware that this is when the balance of the purchase price has to be paid along with transfer taxes (stamp duty) and notary fees.

5. The final contract has to be signed in the presence of the local notary and is then registered with the Land Registry and the Tax Office. This is the document that gives the purchaser official ownership of the Property.

Cape Verde factfile:
Timezone: GMT-1
Exchange rate: GBP1= EUR1.4407 (HiFX July06)
UK mortgage availability: limited
Deposit required: 10–30%
Agent's fees: 2.5–3% legal fees: 2%
Capital gains tax: Yes, variable
Peak letting season: Year-round
Average daily temps celcius (Jan-Dec):
22, 22, 23, 23, 24, 25, 26, 26, 27, 27, 26, 24 (praia)
Average property prices: 1-bed apart: £ 56,659; 2-bed apart: £ 79,274; 3-bed villa: £ 158,729

Search for properties in Cape Verde

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Article published in August 2006