Guide to Property in Cape Verde
The properties for sale on Cape Verde will initially act as perfect holiday homes and every indication is that they will offer exceptional buy-to-let income as tourism on the islands of Cape Verde matures boosted by the opening of its first major airport on Santiago Island in Summer 2005. Described as 'the new Canary Islands', this country has a bright future of development and prosperity, particularly within the field of tourism.
With experts predicting it to be the next big holiday destination for the UK and Northern European markets, Cape Verde provides excellent opportunities for investors seeking substantial capital growth over the next few years and property for sale in Cape Verde offers some unique opportunities for property buyers prepared to explore the more virgin locations.
Propertyshowrooms.com and Property In Cape Verde
Our team of experts are confident that Cape Verde real estate offers a promising opportunity for international property investors and holiday home buyers alike. Cape Verde has much to offer visitors and boasts beautiful, exotic landscapes and superb paradise beaches, making it a favourite destination among northern European tourists. Added to this, the new international airport on Santiago Island is now bringing greater numbers of tourists in their droves, all seeking accommodation for their stay while boosting the country's tourist economy to unprecedented levels.
Purchasers are investing in new properties as well as some very competitively priced land deals, while prices are firmly on the increase due to the progress of various developments and their supporting infrastructures. Our land options range from smaller plots for villa construction to land on which to develop large resorts.
Can Foreign Nationals Own Property in Cape Verde?
Yes, foreign nationals are free to purchase property in Cape Verde. The Islands positively welcome foreign investment as a means to create a sustainable growing economy through job creation and resulting capital revenues.
Cape Verde welcomes private foreign investment as a way to create a sustainable growing economy through job creation and capital investment and thereafter through the collection of tax revenues.
Why Should I Choose Cape Verde?
Because today Cape Verde is one of the top investment hotspots of the world, it is currently undergoing huge development in its tourist infrastructure.
Property prices are currently very low and are sure to appreciate as Cape Verde begins to establish itself as a top international holiday destination with direct flights from the UK set to start in 2006.
The 'Lei de Investimento Externo' ('External Investment Law'), introduced in 1993 includes a 5-year initial tax holiday to foreigners purchasing property in Cape Verde, and a subsequent tax reduction of 50% on corporate tax (currently 30%) for the following 10 years. These incentives can be extended indefinitely, so long as adequate re-investment is made.
If you invest in tourism, an exemption is also granted on import duties for materials necessary for construction and installation of projects. All net revenues are guaranteed full transference out of Cape Verde and foreign currency bank accounts are widely available.
What is the Economic and Political Situation?
Currently on the brink of an economic boom, Cape Verde is investing heavily in tourism, creating a perfect environment for profitable returns on investment within this emerging market. A healthy tourist industry is regarded as the main driving force for economic development and investment potential.
According to the United Nations Development Programme, in 2003 and 2004, Cape Verde was a middle-income country, with the fourth highest Human Development Index (which takes into account various factors, such as GDP per capita, life expectancy, adult literacy, education etc.) of all African nations behind only the Seychelles, Mauritius and Tunisia.
The National Development Plan (NDP) in areas such as transportation (air, maritime, inter-island and road) as well as communication, banking, health, electricity, water, sanitation provision and professional training are being developed and these further increase investor confidence in Cape Verde and boost economic growth.
Cape Verde continues to be one of Africa's most stable democratic governments. Cape Verde supports macroeconomic and reform policies recommended by the IMF and the World Bank. Policies are in place to control public spending, reduce domestic debt, privatize companies and improve social services. All political parties are determined to attract foreign private investment, particularly to the development of the tourism sector.
How do we Travel to Cape Verde?
Travelling to Cape Verde is easiest via Lisbon airport in Portugal and then directly to Sal Island or Santiago Island. There are many airlines now offering daily flights to Lisbon not only via the major airports but also through many of the smaller “local” airports.
Travel to the other islands can then be via daily flights or ferry.
November 2006 will see direct flights from UK airports initially starting from Birmingham. In addition, there will be an 'Open Skies' policy allowing other airlines to fly to Cape Verde and forcing lower air fares through competition.
With the opening of the new international airport in the Capital Praia, on the main Santiago Island, the dawn of a bright future in tourism and investment property in Cape Verde is here.
What is the Direct Flying Time from UK to Cape Verde?
Cape Verde is approximately 5 ½ hours flight from the UK and investors will be taking full advantage of the new direct flights due to be available from the UK in November 2006.
Is a Visa Required to Enter Cape Verde?
Most visitors to Cape Verde require a visa. The process is very simple and you will require:
- valid passport
- 2 x photographs
- copy of the reservation of a return flight
- copy of the reservation of accommodation
Visas are valid for 180 days after the date of issue and can be granted for a maximum stay of 90 days. Applicants are able to apply for either a single or multiple entry visa. Although fees do fluctuate slightly from time to time, the cost of a single entry visa is approximately 40€, while those requiring a multiple entry visa will be charged approximately 75€.
Application forms can be obtained through Cape Verdean Embassies or Consulates and, once completed and returned, a visa will normally be issued within 24 hours. Travelers from countries in which there is no Cape Verdean Embassy can obtain visas via a reputable Visa Agency or may apply for a visa upon arrival at Sal Airport
You Will Not Require a Visa if you are:
- nationals of ECOWAS countries (Economic Countries of West African States), Angola and South Africa.
- former nationals of Cape Verde, their spouses and children.
- those continuing their journey to a third destination and who, upon arrival in Cape Verde, will not be leaving the airport.
We Always Recommend Using a Local Lawyer who Speaks Your Language Whenever Purchasing Overseas Property
Property Searches
Your lawyer will carry out land searches at the local Municipal Authority and Land Registry Offices. These reveal whether there are charges registered against the property or any restrictions on the title. The existence of a valid habitation permit is a precondition for a valid conveyance of off plan property in Cape Verde.
Documentation
The lawyer will obtain the following documents for you:
the Certidao do Registo Predial (the land registry certificate) Planta de Localizacao (the official map showing the property's exact location) "Certidao Matricial" (the tax information certificate). If the property is not registered, it is necessary to obtain a Certidao pela negativa (a certificate confirming that the property in not registered in anyone's name). A Certidao matricial para o efeito (which is a tax certificate confirming this). With these two documents, it will be possible to register the property.
He or she will also ask the vendor to produce evidence of payment for any bills such as electricity and other services and check that they have been paid.
Power of Attorney
You will probably need to give your lawyer Power of Attorney so he can represent you when the promissory contract and deed are signed and also to request the necessary tax cards on your behalf. This will have to be done in Portuguese but you should request a copy in your own language. This will have to be signed before a Notary and legalised by the Cape Verde Honorary Consul in Liverpool.
Your lawyer will obtain a tax card on the purchaser’s behalf.
The Promissory Contract of Purchase and Sale
Signing the Promissory Contract of Purchase and Sale - Contrato Promessa de Compra e Venda is the next step.
At this stage the purchaser is normally expected to pay the deposit, which is negotiable (10% or lately 30% is common practice).
In Cape Verde, the parties are contractually bound once this Promissory Contract of Purchase and Sale is signed. This sets out the terms of the transaction (property details, price, method of payment, completion date, warranties, penalties, etc.). This contract should be signed before a notary public in Cape Verde. Until this contract is exchanged, the vendor is not committed and can change his mind.
Transfer tax or IUP tax is due at this point.
Deed of Conveyance – “Escritura”
The final Deed of Conveyance called the "Escritura" has to be signed before a notary public in Cape Verde. This is the document that gives the purchaser complete title to the property under Cape Verde law. The signing of the deed must be scheduled with a minimum of 30 days' notice.
Registering the Property
The purchase will have to be registered at the local Land Registry and also the local municipal authority. In Cape Verde, subsequent to the signing of the deed, the notary will prepare and send a report to the local municipal authority regarding the transaction.
The municipal authority will then update their records and register the new ownership of the property. Notary, registration fees and stamp duty are usually around 2.5% of the property’s value. These are payable on signing the Deed of Conveyance.
Services
A contract will need to be signed with the providers of services e.g. water, gas and electric. Your lawyer can arrange this if necessary. It is also advisable to arrange for final meter readings to take place prior to completion.
Mortgages in Cape Verde
The lack of local mortgages could be construed by many as a disadvantage, but it means that the market is indeed in its infancy, allowing international property purchasers to source excellent quality property at remarkable prices. What is more, the Cape Verde market promises some of the best possible capital appreciation rates worldwide and a future rental market that will rival many other major holiday destinations.
There is already talk of many developers of property in Cape Verde starting to make progress by offering mortgages to off-plan buyers but the paradox is that as the financial stability of the area increases and mortgages become more readily available, the best properties will already have gone. Prices will undoubtedly rise substantially when this happens and, as with every emerging market, it is the very early investors who see the potential in the area that make the most substantial returns on investment.
Today it is possible to achieve a mortgage upon project completion but this does not help a property purchaser fund an investment. The payment schedule for buying an off-plan property in Cape Verde is very different from a more established market such as Spain which typically offers a 30% deposit and 70% payment on completion. This can almost always be covered by a standard mortgage, usually offered by the developer itself. However, a typical purchase in Cape Verde will include 5 stage payments across the development period of the property. The investor or home buyer will need to fund these payments but has the possibility of achieving a 70% "mortgage" on the valuation of the property when they finally sign the completion documents.
Mortgage Terms for Foreigners
Currency
EURO
Amount
Up to 70% LTV (subject to status)
Subject
Purchase of a property
Term
Up to 15 years
Type of Mortgage
Repayment mortgage – capital and interest
Interest Rate
Variable rate: 6 months EURIBOR + 3.75 approx. 7%
Fixed interest rate: approx. 8%
Bank Arrangement Fee
1.25% (No commission received by Fidentia from bank)
Fidentia Fee
£595
Early Redemption Penalty
First 5 years: 1-2% of the outstanding balance After 5 years: 0%
Stage Payment Financing
Yes
Collateral
mortgage on a real estate in Cape Verde
Banking in Cape Verde
The Cape Verde banking institutions and procedures are in the process of full modernisation. The banking system is overseen by the central bank, which has gained greater autonomy since constitutional reforms in July 1999 and a banking law passed in May 2002.
Cash point machines are available in some of the larger towns. Some banks are offering customers credit and debit cards and some of the major hotels will accept credit cards. However, Cape Verde is still largely a cash economy.
In the main towns, travelers cheques are accepted. However, to avoid high exchange charges, people travelling to Cape Verde are advised to obtain their travelers cheques in Euros, US dollars or Sterling.
Currency
The currency is the Cape Verde Escudo (CVE) 1CVE = 100 centavos. Notes are in denominations of CVE 5000, 2000, 1000 and 500. Coins are in denominations of CVE 200, 100, 50, 20, 10, 5 and 1.
The Cape Verde escudo has been pegged to the Euro, which has helped to stabilise exchange rates. (1Euro = 110.265 CVE)
When opening a bank account, as in all countries, investors are advised to check interest rates and charges as they can vary substantially.
Banking Hours
Mon-Fri. 08.00 hrs -14.00 hrs
List of Main Cape Verde Banks
- Tota and Acores
- Caixa General de Depositos
- Banco Nacional Ultramarino (BNU)
- Banco Mello
- Banco Interatlantico.
Taxes in Cape Verde
Transfer Tax
This is charged at a flat rate of 3% of the property value and is paid prior to the signing of the deed of purchase and sale.
Holding Property/Annual Rates
This tax is charged at a flat rate of 3% on 25% of the value of the property and is paid annually every April (or in two installments in April and September).
Capital Gains Tax
Capital gains on plots for construction are taxable if their sale value exceeds a 100% increase of the value at which they were initially purchased. Capital gains on any other property sale are taxable if their sale value exceeds a 30% increase on the value at which they were initially purchased. The capital gain is taxed at a flat rate of 3% and is payable within 30 days of the deeds, together with the submission of a "Declaracao de Mais Valias" (Capital Gains Statement)
Inheritance/Gift Tax
Any inherited or gift property is taxed at a flat rate of 3% on the attributed value of the property.