Market Focus on Cape Verde
Wednesday December 6, 2006
Saundra SatterleeIf the Atlantic archipelago of Cape Verde conjures up an image of azure blue waters, crystalline sands, lush vegetation and swaying palm trees, you would be right ? but not entirely. While seven of its 10 islands are mountainous and typically tropical, the remaining are genuinely desert islands ? flat and very dry ? but blessed with beautiful pristine beaches.
The climate is dry-tropical with average air and ocean temperatures hovering around 24ºC all year. Although on the same latitude as the Antilles in the Caribbean, hurricanes are a rarity.
Cape Verde ? a 3½ hour flight from Brazil or Portugal ? sits some 500 kilometres off the coast of Senegal. ?Geographical isolation means that conflicts in West Africa do not filter over,? says Paul Akwei, MD of island-wide Nôscasa estate agency. ?The archipelago is safe and bereft of organised crime.? In a United Nations index of 156 countries, dominantly Christian Cape Verde is the 154th least likely to go to war.
Country and economy
Cape Verde, first discovered and settled by the Portuguese in the 15th century, soon became a major stopover for the slave trade. Early unwelcome visitors ranged from pillaging pirates to Sir Frances Drake, who in 1585 sacked the capital. Over the centuries the Portuguese, Africans and to a lesser extent the English and French ? with smatterings of other Europeans ? inhabited the islands. The influx of different nationalities over time created a melting pot. ?Today there is no colour stratification, either at high government level or on the street,? explains Sophie Marcellesi, director of Hotel Morabeza and whose own family first came to the islands close to half a century ago from Belgium. ?Newcomers notice this integration straight away.?The sovereign and independent state of Cape Verde is new, established in 1975 when Portugal relinquished 500 years of rule. The end of colonialism marked a re-start from which to launch the islands into the 20th century. Despite hiccups along the way, the economy is upward swinging, and the poverty that usually dogs the developing world has received a crippling blow.
According to the World Bank, the islands? economic growth since the late 1980s has raised the country to the ranks of a lower middle income country, with a GNI per capita of US$2,040 in 2005. GDP growth close to 6% last year bodes well for growth in the years ahead, says Agustín Carstens at the IMF. ?Increases in capital spending, rising tourism revenue and inflows of foreign direct investment are all positive,? observes Awkei. The Cape Verde escudo is pegged to the euro at a rate of CVEsc110 to ?1. Adult literacy is over 70% and life expectancy at birth is the third highest in Africa.
When it comes to property development, Patone Lobo, land owner and proprietor of Odjo d?Agua Hotel says: ?We have the good fortune to learn from early mistakes made in places like the Algarve, Costa del Sol and the Canaries.?
Santiago, São Vicente, Santo Antão, Fogo, Brava, Santa Luzia and São Nicolau are the greener and more mountainous western islands. Sal, Boavista and Maio in the east represent the more arid side of the equation. The main property destinations to date are Sal, Santiago and São Vicente and to a lesser degree Boa Vista followed by Santo Antão.
Property market
Cape Verde ? very much an emerging market ? is not readily thought of as a property hotspot. But this is set to change. With double-digit property appreciation over the last three years, it is on the verge of take-off. According to the Nôscasa Cape Verde property index, properties have gone up by 17% between January and October this year alone. While the government is pursuing foreign investment in earnest, infrastructure improvements are underway on a massive scale.?As more people discover the advantages of this remote and lovely place, now is an opportune moment to invest,? says Awkei. Much of what is on the market throughout the archipelago is new build and, not surprisingly, sold off plan. Properties are purchased on a freehold basis.
The island of Sal, Cape Verde?s main resort island, takes its name from salt fields situated in the crater of an extinct volcano. The main resort, Santa Maria, with eight kilometres of golden sand beaches, is where the government has approved construction of two golf courses, three marinas and a casino. The colourful old town ?population 3,000 ? features cobbled streets and attractive restaurants for sipping caipirinhas while waiting for the catch of day to be grilled on an open fire. Sal is a haven for water sports and is considered by specialists to be among the world?s top five windsurfing locations. Several dive sites around the islands feature shipwrecks dating back to the 16th century.
Small and large developments are increasingly dotted around Sal?s coastline. Leme Bedje is situated in Santa Maria at the southeast tip of the island, just 80 metres from the water?s edge. Of 62 one to three bedroom apartments, most feature balconies and some have wraparound terraces. Integral to the development, an old colonial hotel is being converted into apartments. Prices range from ?60,000 to ?250,000. Fully fitted kitchens cost ?1,500; furniture packs are optional. Completion is early 2008.
SGL, the country?s biggest construction company, is building the small Morabeza development of apartments next to the upmarket Hotel Morabeza ? and also at Paradise Beach, the largest development on Sal. The former features 46 one and two bedroom units from ?150,000 to ?187,000, inclusive of fully fitted kitchens. Service charges will range from ?700 to ?1,000 a year. Owners can use the comprehensive leisure amenities at Hotel Morabeza.
In contrast, Paradise Beach covers a virgin stretch of coastline where construction of 950 apartments and villas began in November. The project includes semi-detached villas with shared private pools, apartments and penthouses priced from ?199,000 to ?250,000 and is set for completion in 2009. ?So far, most foreign investors are Irish,? says SGL?s CEO Jose do Luz. All units at Morabeza and Paradise Beach feature air conditioning, satellite TV and fully fitted kitchens, and along with Leme Bedje, are for sale through Nôscasa.
Boavista ? with its landscape of drifting dunes and Saharan date palm oases ? is the archipelago?s closest island to the African mainland. Being Cape Verde?s largest desert island, with no end of exquisite beaches and very little development, Akwei says it presents a good medium term investment opportunity. To date there is little for sale apart from a few small developments such as Delfini Resort where 41 one and two bedroom beachfront apartments start at ?85,000. Its two-year construction schedule begins in February 2007.
Santiago is the largest, most populous of the Cape Verdean islands. The capital city Praia ? population 120,000 ? has bustling markets and a lively nightlife. Rugged coastlines with small beaches are complemented by two mountain ranges sprinkled with picturesque villages and lush valleys.
New resort developments are flourishing and include the ?650m Sambala project being built near São Francisco beach on the southeast corner of the island. Ponta Bicuda is another large-scale coastal development where 1,600 units, from studios to villas, are priced from around ?75,000 up to ?1.6m for a top range villa. Included is a 5-star hotel with amenities from a cookery school to a cricket pitch. Purchase options range from outright ownership to leaseback. Construction starts late 2007. Developed by Vila Oceanicas, for sale through Savills International.
On São Vicente, the second most populated island, there is no shortage of idyllic bays nestled between low volcanic mountains. The island is a haven for artists and musicians, and in the port town of Mindelo there are a number colonial houses on the market ripe for restoration.
One of two small new Mindelo projects available from PCF Construction and Nôscasa is Mira Mar where two to four bedroom apartments, all with terraces and most with sea views, cost from ?80,000 to ?119,000. Phase two will be ready for occupation at the end of 2008. Buyers thus far are from the US, Europe and also local. Construction has not yet begun at the second project, Verde Cara, which will perch on a hillside overlooking the port. One to four bedrooms units cost from ?60,000 to ?120,000.
Adjacent to the international airport that will be finished in February 2007 is the beachfront Belgian development of San Pedro Village. A Dubai company is at the masterplan stage of the huge Cesária Resort on another bay, which will be fully accessible only once a road is built through the mountains. See Cape Verde Property for details. Near Baía das Gatas, where an international music festival takes place each August, situated on a massive bay with a crystalline natural ocean pool (and at the base of the island?s highest mountain, elevation 774 metres), another Paradise Beach SGL/Nôscasa project is in development.
The dramatic mountain island of Santo Antão ? with elevations of nearly 2,000 metres ? sometimes described as the Cape Verdean Alps ? is verdant and dotted with steep terraces growing everything from mangos and papayas to sugar cane and cabbages. It has few beaches and little property development, but in the words of a local entrepreneur, the island in its own right has huge property potential.
Pitfalls and practicalities
The purchase of property in any developing country is not for the faint-hearted. Cape Verde is no exception.All new build properties require a reservation deposit in the region of ?1,500 to ?4,500. Key documents include the certidao do registo predial (land registry certificate), planta de localizacao (official map with the property?s exact location), the certidao matricial (tax information certificate) and the contrato promessa de compar e venda (the promissory contract of purchase and sale).
The promissory contract, for instance, sets out the terms of the transaction ? property details, price, method of payment, completion date, warranties, penalties, etc. Once signed, the buyer will normally be expected to pay a deposit of 10% to 30%. This contract should be signed in front of and registered by a notary as a matter of formality.
Always check that the agent is from a company with an official ?nif? registration number, akin to being registered at Britain?s Companies House. As yet there are no estate agents or developer trade bodies. There are some opportunists on the island and a lot of inexperience, as put by one Cape Verdean lawyer who says: ?From clear title to the final escritura [deed], be diligent with your purchase and check and re-check the paperwork at every stage.?
A main point is to declare the full value of the property at the escritura stage.
As a percentage of the sale price, you can expect to pay 5% to 6% in purchase fees and charges (taxes, legal, notary, etc).
As far as travelling to your property, do not forget that Cape Verde market is in the throes of massive infrastructure change. Whilst there are few ferry or catamaran services as yet linking up the islands, direct flights to either Sal or Santiago international airports are available from Boston (USA), Fortaleza (Brazil), the capital cities of Senegal, the Gambia and Guinea-Bissau, the Canaries, Lisbon, Madrid, Amsterdam, Frankfurt, Munich, Paris and various destinations in Italy including Milan and Rome. Launched in November were the first direct flights from Manchester and Gatwick by Astraeus airlines to Sal?s Amilcar Cabral International Airport, named after the internationally acclaimed African nationalist writer and revolutionary who grew up in Cape Verde. Direct flights are also available from Copenhagen and Dublin.
Contacts
Cape Verde Governmentwww.governo.cv (in Portuguese, English ?under construction?)
Cape Verde Property
www.capeverdeproperty.co.uk
Nôscasa
www.noscasacv.com
San Pedro Village
www.sanpedrovillage.com
Savills International
www.savills.co.uk
Sambala Developments
www.sambaladevelopments.com
World Bank
www.worldbank.com
IMF
www.imf.org
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