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The Cape Verde Islands, formerly a Portuguese colony, are comprised of ten islands and five islets, all but three of which are mountainous. The Islands are located roughly 400 miles off the West Coast of Africa, or about a one-hour flight from the Canary Islands.
The Islands are poor in natural resources and prone to drought. With little arable land, they are heavily dependent on imports of food, sometimes in the form of international aid.
During the 20th century, severe droughts led to the deaths of 200,000 people and prompted heavy emigration. Today, more people with origins in Cape Verde live outside the country than inside it. The money that they send home provides much-needed foreign currency to the struggling economy.
Since losing their salt-mining and shipbuilding industries, the Cape Verde Islands have turned to tourism to provide income for the 485,000 residents.
The main tourist destination is Sal, which is the island located furthers to the northeast. It's renowned for its glorious, sandy beaches. Sal’s population is concentrated in the southern town of Santa Maria and the island's capital, Espargos.
The Cape Verde Islands are being promoted as the new Canary Islands for travellers. Developers are being welcomed with open arms. The charms of the islands are being paraded in printed advertisements and on hundreds of real estate agents’ websites.
During 2005, the Cape Verde Islands were touted in "A Place in the Sun" as one of the top 20 areas for purchasing foreign properties for investment. This resulted in very high interest among UK investors.
And I was one of those interested property investors.
As with my other property investments, I had to see for myself what all the fuss was about. I flew to the Cape Very Islands to check out what the local property had to offer investors.
I discovered that most of the investment property in Cape Verde Islands is on the following four islands: Santiago, Sal, Boavista, and Maio
Santiago
Santiago is the largest island, roughly twice the size of the Isle of Wight, and home to the capital, Praia. Roughly half of the Cape Verde Islands’ total population lives on this island.
I found the new airport in Praia to be a joke. It has no facilities worth mentioning, no security on departure, and a 1.5-hour queue to clear the immigration processes on arrival.
The beaches are awful and the capital, Praia, is very poor and dirty.
I felt very insecure and unsafe in this place. Two days on this island was more than enough for me. I believe an investor would have to wait at least ten years for an investment to yield any return in Santiago. Overall, I found this island to be many years behind the next island, Sal, in terms of development.
Sal
Sal is the main island that attracts tourists, development, and investment. I found Sal to be much better developed than the other islands.
Sal is a fairly barren island that is brown and cracked in the interior. However, Sal has beautiful white sandy beaches, plenty of bars and restaurants, and reasonable infrastructure.
Boavista
Boavista is the island that lies closest to the West African coast. It's very pretty, but maybe five years behind Sal in terms of development.
Maio
Maio is a very quiet island, and the island that lies closest to Santiago. The interior of the island is flat like that of Sal and Boavista. Most tourists who come here are attracted to the tranquil and relaxing atmosphere.
While I was in Sal, I bumped into around 30 Irish and British investors. They were all part of an inspection trip organized by an overseas estate agent (The agents name I will intentionally avoid mentioning).
Somehow, I managed to sneak into the group’s presentation, which was held in a beautiful scenic hotel garden that had a cocktail bar. I personally couldn't have chosen a better place and setting to fool investors into parting with their hard-earned money.
The weather was beautiful and everyone was taking advantage of the free cocktails.
The agent’s sales talk went like this:
The Cape Verde Islands expect a 70% increase in property prices over the next 24 months.
There is huge growth potential for tourism.
A new international airport has been built on the island of Sal / Espargos.
The Cape Verde Islands are like the Caribbean Islands were ten years ago.
The Cape Verde Islands are the tropical islands that are closest to Europe.
The cost of living is low, and there are no taxes (no VAT).
Property in Cape Verde was voted the second-best location for investment in the world.
Local rental yields are 8% per year
The Cape Verde Islands may possibly join the European Union.
Sounds good, doesn't it?
After the presentation, I wasn’t surprised to see everyone signing up to purchase an apartment. What did surprise me was a number of investors buying two apartments. Obviously, I think these investors had too many cocktails!
Quite frankly, I couldn't care less if the Cape Verde Islands are on the same latitude as the Caribbean Islands, or if they’re only one hour behind GMT, meaning that visitors won't suffer from jet lag.
The issues I had with property in Cape Verde were:
Too many developments are going up. This will affect capital growth and my exit strategy.
Cape Verde is far away, requiring a six-hour direct flight from London. With just one extra hour, I could be in the Caribbean.
Communications are poor.
There is very little infrastructure. The place reminds me of a nuclear site.
Sales are driven by the usual get-rich-quick frenzies, and not by genuine demand.
The Cape Verde Islands will never join the EU. They’re in Africa, for heaven’s sake!
There’s no local resale market, and it’s all driven by speculation.
Mortgage interest rates are high, and mortgages are difficult to obtain.
In my view, the return on one's investment in this country is far too long. I think it’s ten years or more. You can do far better by investing back at home in Scotland or some of the Eastern European countries.
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