GLOBAL PROPERTY GUIDE
C ape Verde:
Buying Guide
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GLOBAL PROPERTY GUIDE Islands of Paradise
Cape Verde
Beautiful, sun-kissed Cape Verde, surrounded by the waters of the Atlantic Ocean, is just five hours from London and a mere hop from the Canary Islands. Cape Verde has everything to attract holidaymakers and second home buyers and year after year, the number of European tourists flocking to Cape Verde has grown. Welcomed by the friendly locals, and white sandy beaches warmed by year-round sunshine, many of visitors stay on to buy their own piece of paradise.
Contents Introduction Map Climate
History Cape Verde today Economic growth The investment case
Buying property No restrictions on foreigners Buy-sell transaction costs Mortgages
Landlord and tenant Taxes and costs Income taxes Capital gains tax Rental income tax
Living there The islands
GLOBAL PROPERTY GUIDE
Introduction Map Climate
History Cape Verde today Economic growth The investment case
Buying property No restrictions on foreigners Buy-sell transaction costs Mortgages
Landlord and tenant Taxes and costs Income taxes Capital gains tax Rental income tax
Living there
Cape Verde is hot right now - and we don't just mean the weather. This small island nation 450km off the coast of Senegal has taken big strides since it gained its independence from Portugal in 1975. It is the most economically progressive country in Western Africa, with very high school enrollment, one of the highest adult literacy rates and one of the highest life expectancy rates in the continent, and a health care system that has been successful in eradicating most communicable diseases on the islands.
The islands
In December 2007, Cape Verde graduated from the UN's list of Least Developed Countries, being the second of only three nations to leave the category so far, and was upgraded to the status of a middle-income country While all these statistics no doubt play their part in raising Cape Verde's profile, its gorgeous beaches and year-round summer weather have drawn European tourists in need of a winter sun holiday to the country's beaches and resorts. Lonely Planet has named Cape Verde one of its top 10 destinations in 2011, calling it "an archipelago that looks and feels as if it were born from a Caribbean mother and an African father". Nonetheless, following the long term colonisation by Portugal, this is a nation that thinks of itself as European. Cape Verde's festivals - the most famous being the Mardi Gras carnival in the city of Mindelo - are showcases of the nation's mix of African, Portuguese and Caribbean traditions, music, costume, food and dance.
GLOBAL PROPERTY GUIDE
Introduction Map Climate
History Cape Verde today
Cape Verde
Economic growth The investment case
Buying property No restrictions on foreigners Buy-sell transaction costs
Tropics Zone
Mortgages
Landlord and tenant Taxes and costs Income taxes
Santo Antão Santa Luzia
Sal
São Vicente São Nicolau
Capital gains tax
Boa Vista
Barlavento Islands: Santo Antão, São Vicente, Santa Luzia, São Nicolau, Sal, Boa Vista
Rental income tax
Sotavento Islands: Maio, Santiago, Fogo, Brava
Living there The islands
Santiago
Maio
Fogo Brava
The discovery of Cape Verde Cape Verde surprises everyone by the islands' diversity, picturesque terraces and dramatic landscapes, volcanic moonscapes, cute Hispanic towns and traditional churches and - yes - golden beaches. The islands are divided into the northern windward islands (barlavento), and southern leeward (sotavento) The islands in the east - Sal, Boa Vista and Maio - are flat and dry desert islands with beautiful, extensive white sand beaches. The western islands are rocky and mountainous, with black volcanic sand beaches.
GLOBAL PROPERTY GUIDE
Introduction Map Climate
History Cape Verde today Economic growth The investment case
Buying property No restrictions on foreigners Buy-sell transaction costs Mortgages
Landlord and tenant Taxes and costs Income taxes Capital gains tax Rental income tax
Living there The islands
Cape Verde's climate The Cape Verde islands have slightly differing climates according to their terrain and location. Boavista, for instance, has a dry-tropical climate. Humidity is low. The average daily temperature ranges from 22°C to 26°C, with highs of 29°C in July/August. In december/january day temperature is 25/26 but this implies 20. In comparison, Canary Islands temperatures range between 16°C - 22°C in winter and 19°C - 25°C in summer. The 'Canaries Current' creates much colder ocean temperatures around the Canaries than are present around the Cape Verde Islands. In terms of seasons, Cape Verde is mostly dry. It rains for one to three days a year typically in boa vista. Winds brought in by the North East Trade Winds help provide a refreshing breeze on the coast. There are also the "Harmattan" from the Sahara (December to March) which are hot and dry and carry with them the sand that has led to the formation of the spectacular beaches on Boa Vista. Temperatures based on data from Praia, Santiago Island, Cape Verde. Average 25 25 26 26 27 28 28 29 29 29 28 26 maximum temperatire JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
20 19 20 21 21 22
24 24 25 24
23 22
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Source: BBC Weather
Average minimum temperatire
GLOBAL PROPERTY GUIDE
Introduction Map Climate
History Cape Verde today Economic growth The investment case
Buying property No restrictions on foreigners
History - from hard times to growth
Buy-sell transaction costs Mortgages
Landlord and tenant Taxes and costs Income taxes Capital gains tax Rental income tax
Living there The islands
The islands were uninhabited when Portuguese explorers reached them in the mid15th century. In 1462 they founded a settlement on the largest island, Santiago. They called it Ribeira Grande, and it was the first permanent European settlement in the tropics. The Europeans introduced a sizeable slave population. Under the Portuguese Being along the route of the transatlantic slave trade, the archipelago flourished as a centre of commerce, particularly in the 16th century. When the slave trade declined, the archipelago was still used as a supply station for ships crossing the ocean. Yet though the Portuguese controlled the islands for four centuries, they did not bring development. And when goats were imported and ate the fragile vegetation, famine followed. The 1800s became a century of mass emigration, and there are Cape Verdean communities in the USA, Portugal, Germany, Holland, France, Luxembourg, Spain, Senegal, and Brazil. Several more bouts of starvation followed into the 20th century - even today, 2/3rds of educated Cape Verdeans live outside their home country. Then came the Marxists The Portuguese granted the islanders a form of citizenship, and an educated mixedrace elite grew up by the 20th century which, in the person of Amilcar Cabral led the islands to independence in 1975. There followed 16 years of Marxist one-party rule under the Partido Africano de Independencia Cabo Verde (PAICV). In 1991, the country became the first former Portuguese colony in Africa to abandon Marxist political and economic systems.
GLOBAL PROPERTY GUIDE
Introduction Map Climate
History Cape Verde today
History - then Cape Verde got lucky The Movement for Democracy (MPD) won a landslide victory in the first democratic elections in 1991. A free-market economy was rapidly introduced, the country opened up to foreign investment, and a new national anthem and flag were adopted in 1992.
Economic growth The investment case
Buying property No restrictions on foreigners Buy-sell transaction costs Mortgages
Landlord and tenant Taxes and costs Income taxes
In 2001 the PAICV regained control in an overwhelming victory (continued high unemployment, and widespread poverty helped defeat the MpD. Pedro Pires became president, under a PAICV now convinced of the necessity of the free-market. He has presided over a long and continuous era of growth and new prosperity. By many indicators - including GDP growth, achievement of Millennium Development Goals, and number of tourist arrivals - Cape Verde on the right track to sustainable socioeconomic growth.
Capital gains tax Rental income tax
Living there The islands
Today Cape Verde has a population of 516,000, the majority of whom are of mixed African and European descent. Portuguese remains the official language, though the Portuguese-based Cape Verdean Creole is considered the native language. Political stability Cape Verde is a parliamentary republic, with President Pedro Pires as the chief of state and Prime Minister Jose Maria Nieves as the head of government. It has a stable democracy based on free elections, with a freepress. Cape Verde's currency, the escudo, is pegged to the euro, and it is believed that the country may apply for EU membership. Cape Verde is also the only African nation to rate a 1 (a perfect score) on the "Freedom in the World" report released by the American democracy advocacy group Freedom House.
S ANTA M ó NICA BEACH RESORT & SPA
Demand Perfection .t .t .t .t .t .t .t .t .t
Luxury villas, apartments and managed hotel suites 6% net yield fixed for 20 years Up to 90% finance available covered by rental yields over 20 years Up to 4 weeks personal use Up to 45% discount for pension investors Capital growth potential on fast growing destination Current island occupancy levels at 90% Resort managed by Wyndham, the world’s largest hotel group Year-round summer season - consistent rental income
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Resort strategy Santa Mónica Beach Resort & Spa combines a five-star hotel with luxury apartments, villas and all of the facilities and services required by holiday makers and holiday-home owners. The resort is family-friendly with pedestrianised areas and golf buggy access for luggage and other services. Couples looking for serenity or time alone will love some of the more secluded areas, perfect for reading a book, sunbathing or gazing at some of the resort’s tropical plant species. A fusion of old and new The resort merges contemporary residences with elements of local architecture encapsulating the island’s Afro-European heritage. Mosaic-style cobbled streets, hardwood decking and hand-carved stone features: you will find no shortage of intriguing places in which to absorb Santa Mónica moments. Luxury resort spa As the globally recognised, award-winning spa operator, ESPA work with worldrenowned architects and designers to create environments that provide the ultimate in indulgence and relaxation. You will be able to enjoy a unique spa setting with access to the full range of ESPA products.
0 8 4 5 4 3 0 5 2 1 3 www.santa-monica-resort.com
Welcome to Boa Vista, Cape Verde Huge tourism growth potential
Ideal timing for promising capital appreciation
t Europe’s closest tropical island paradise t Rich in colonial history, natural beauty and ecological wonders t Early stages of development in Cape Verde make this an ideal time to invest t Boa Vista’s international airport now takes direct flights from Glasgow, Gatwick and Manchester. Flights from Bristol and Stansted are to be added, giving UK visitors greater flexibility, adding to the island’s overall appeal t Construction of the Boa Vista Structural Highway, a fourlane, 18km highway linking Boa Vista Airport to Santa Mónica, provides a further boost to Boa Vista’s potential t Easy access from both the Americas and Europe t The contribution of travel and tourism to Cape Verdean GDP is expected to rise from 21.9% in 2010 to 30.1% in 2020 (World Travel & Tourism Council) t Annual investment in travel and tourism is expected to grow from US$80m in 2010 to US$144m by 2020 (World Travel & Tourism Council)
t An early stage property investment market with all the boxes ticked for lucrative capital growth t Very high level of investment in infrastructure and property development, both private and public, national and international
Strong and growing economy t Despite the global economic downturn, GDP growth for Cape Verde held up at 4% for 2009 and is expected to increase to 7.1% growth by 2013 (IMF report December 2009) t The IMF praised the “prudent management and strong economic foundations” undertaken by the Cape Verdean government, which have allowed the country to “resist the impact of the global crisis well” (IMF report December 2009) t Growth is expected to pick up and inflation remain low (IMF review July 2010) t Exchange rate of the local currency fixed to the Euro t Cape Verde welcomes foreign direct investment as a way to create a sustainable, growing economy through job creation and capital investment environments.
25
JAN
FEB
26
26
MAR APR
t A 12-month holiday season and glorious climate ensure continually high occupancy rates and, therefore, exceptionally high rental yields t Thanks to Boa Vista’s year-round holiday climate, occupancy rates are exceptionally high, as proven by other resorts recently opened on the island operating at 80-90% occupancy levels, such as the Riu Karamboa hotel t Appeals to broad demographic (young, old, families, singles, couples, etc) t Specialist tourism appeal - wind-based watersports, wildlife tourism, eco-tours, scuba diving and big-game fishing - and beaches rated among the best in the world t Demand for quality tourist accommodation is by far outstripping supply
Safe and affordable destination t Socially very stable with no religious/political conflict or civil unrest t “Cape Verde enjoys a stable democratic system, high transparency and low corruption” (US Ambassador to Cape Verde, Marianne Myles) t A multi-party, stable democracy which actively encourages foreign investment t Property is protected by national laws ensuring the same rights for foreign investors as for locals t Environment of trust and confidence for foreign investors t Low living costs and property prices
Average minimum temperature
Average maximum temperature
25
Very high yields
27
28
28
29
29
29
MAY
JUN
JUL
AUG
SEP
OCT
28
26
NOV DEC
20
19
JAN
FEB
Temperatures based on data from Praia, Santiago Island, Cape Verde. Source: BBC Weather
20
21
MAR APR
21
22
24
24
25
24
23
22
MAY
JUN
JUL
AUG
SEP
OCT NOV DEC
Property types
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Grande Vi sta Vi llas Grande Vista villas are the jewels in the resort’s crown, combining architectural elegance and contemporary design with unbroken views across the beach. There are only ten available, each occupying its own generous beachfront site with views towards the ocean, and each with its own private pool. Each has a rooftop terrace, ideal for a bar or alfresco dining, or even a jacuzzi – the perfect vantage point for viewing Boa Vista’s magnificent sunsets. The five bedrooms comprise of two ground level rooms, a master suite reached via the spiral staircase and two further upper bedrooms, linked via an impressive glazed walkway. Four of the five bathrooms are en suite.
Vi sta Vi llas Vista villas offer superb family living, with a private pool in a perfect setting for all generations to enjoy the gorgeous Cape Verdean climate. Located within the villa village, they are very similar to the Grande Vista, with up to five bedrooms purposefully designed for large or multiple families. Split living areas and free, bright, ventilated spaces provide practical holiday living. Each Vista boasts its own rooftop terrace space for a jacuzzi or bar if required as well as panoramic outdoor dining. The Vista’s master bedroom is reached via an elegant spiral staircase also giving access to the roof terrace. Of the five bathrooms, four are en suite.
Sal Rei Vi llas The Sal Rei villas represent the ultimate in affordable contemporary living. The ideal residence for a quiet family break or as a base for couples to explore the resort and its facilities with friends, Sal Rei villas provide an exclusive setting with private pool and landscaped garden. A private roof terrace allows residents to make the most of Boa Vista’s breathtaking beauty and wonderful, year-round climate. The villa’s stylish design and thoughtful use of full-height glazed walls make the most of the spectacular scenery within the resort, creating a light and airy feel to complement its topquality design and finish.
Luxury A partments Named after each of the Cape Verdean islands, the apartment buildings at Santa Mónica Beach Resort & Spa provide luxury one and two bedroom accommodation. The apartments also have access to private or shared roof terraces and the shared pools within the stunning, landscaped gardens. Ground floor apartments have small gardens and some have private plunge pools. Residents have access to the full resort facilities and, with such a vast stretch of one of the world’s best beaches on your doorstep, the most difficult decision is where to lay your towel!
SIPP/SSAS Scheme
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Hotel Suite Investment (may also be purchased privately)
The Investment The Hotel at the Santa Mónica Beach Resort & Spa has two associated blocks of suites. These are comprised of large suites and one-bedroom suites. The blocks are in a prime location near the front of the resort and are next to the main hotel building. These are part of the core hotel room stock for direct management by the hotel operator. This is a fantastic opportunity to invest in one of these hotel suites either privately or via your SIPP (personal pension) along with generous tax relief (where available).
Why use your SIPP/ Pension to invest in Santa Monica Beach Resort & Spa? The Hotel Suites may be purchased tax efficiently via a Self Invested Personal Pension (SIPP). Many people are unhappy with their pension returns over recent years and are starting to take back control of investment decisions from the large investment companies and banks. This is often achieved by investors by use of a SIPP which has many well documented benefits including : t Currently receive tax relief at up to 40% tax rate on contributions meaning £60 net investment could become £100 of cash in your SIPP after tax refunds t Transfer old ‘frozen’ pensions into your SIPP and under your control t Receive any growth and income, tax free, within the SIPP t Transfer your old SERPS contracted out benefits, currently held in government coffers, over to your SIPP and under your control – often worth £20k-50k per person Please speak with your Independent Financial Adviser for further details as personal situations vary or ask to speak with one of our suggested advisers.
Vista interior
These luxurious hotel rooms have a minimum accommodation space of 38.7m2. A limited number of these luxury hotel suites are available at just €85,000 (€95,000 for the 1 bedroom suites), a discount of around 50% on full valuation of €162,000 (€172,000 for the 1 bedroom suites), immediately doubling your investment! Investors also receive a fixed income of 7% for 10 years. After this period a 50/50 split of the rental income can be taken with the hotel.
The Investment
Private Purchases
This Hotel Suite investment is designed to give investors who don’t require personal usage of their property the best possible returns. It offers investors the chance to own a fully-furnished, fully-managed rental property with high fixed rental income for the first 10 years and at a highly discounted launch price. Hotel rooms are fully approved by HMRC as SIPP qualifying investments and also offer some of the highest income returns available today.
The hotel suites are also available to private investors with a 10 year rental plan of 7% with 1 week’s complimentary personal usage per year for the duration. Accommodation on the resort will be allocated at the management company’s discretion. After the 10 year period, owners can enjoy a 60/40 split in the investor’s favour on rental income over a 5 year renewable contract.
The Leaseback Scheme A Hands-Off, Hassle Free Holiday Home Investment
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Leaseback Explained t t t t t
A 30 year old, proven solution in France – now coming to Cape Verde Holiday home with personal use and a fixed income Hands-off management Repayment mortgages, fully repaid in 20 years from fixed income rental returns Developer deferred payments and discounts for a limited time only
The leaseback scheme, popular with investors in France for nearly 30 years, is now coming to Cape Verde. A proven solution for French investors, the leaseback scheme originated to encourage good quality development in tourist areas, as well as foreign investment to the country, and was a resounding success that is still going strong today. The leaseback scheme offers investors an opportunity to buy a freehold property and sign a commercial lease contract with a management company who will rent out the property on the investor’s behalf and provide the investor with a fixed annual income. Leaseback not only enables holiday home owners to benefit from a property abroad, but also a fixed rental income, personal use and the opportunity to take fulltime occupation of the property at the end of the lease.
The leaseback scheme and Santa Mónica Beach Resort & Spa The leaseback scheme is available on apartments and villas at the Santa Mónica Beach Resort & Spa and diff i ers from the French model by providing a fixed income that covers the repayment mortgage. The scheme provides a safe investment for holiday home owners which is fully managed on the investor’s behalf by Island Resorts’ experienced management team, in association with world-renowned Wyndham Resorts. Investors will receive a 6% fixed income on the net price of the property with 2 weeks of personal usage, or 5% with 4 weeks of personal use per year. Diversify your holidays! Upgrade to a larger property for a small charge or take advantage of Wyndham’s RCI/ Registry Collection rental exchange programme and take your personal use at various resorts throughout the world.
Sal Rei interior
60% LTV mortgages are covered by your fixed income rental returns As with the French leaseback scheme, all ongoing costs are covered, which include community fees, repairs and maintenance and any syndicate fees. The commercial lease at Santa Mónica Beach Resort & Spa is for a 20 year period. If the investor wishes to sell, he may do so at any point, but the property must be kept within the leaseback scheme, or any balance of the deferred payment must be repaid at the time of resale. After the contract period, investors may retain the property for their own personal use or renegotiate a new commercial lease with Island Resorts.
Pre-launch offer Investors will benefit from deferred developer payments or discounts on their property. As little as a 10% deposit is required upon receipt of contract. Special offers are available for sales before 30th September 2011.
Master Agent Assetz International is one of the UK’s leading international property investment specialists. With property all over the world in countries such as France, the USA, Cape Verde and Turkey, Assetz are truly experts Assetz will deliver the best knowledge and expertise to help investors make the most informed of choices.
Luxury Resort Spa The world’s leading spa designer and operator, ESPA, has signed contracts with Island Resorts to operate the resort’s luxury spa. Some 3,000m2 in size, this will be one of the best spas in the world. www.espaonline.com/spa-design
Developer
holiday-home owners to enjoy one of the most reliable holiday sun destinations in the world and to enable investors to take advantage of the growing tourism property supply-demand imbalance in the islands. Island Resorts are coordinating the world-leading team to develop a series of resorts. www.island-resorts.co.uk
Hotel and Resort Management Wyndham, the largest hotel group in the world, has Hotel Group, part of the Wyndham Worldwide family of companies, encompasses nearly 7,200 hotels and over 600,000 rooms in 65 countries. www.wyndham.com
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GLOBAL PROPERTY GUIDE
Introduction Map Climate
History Cape Verde today
Cape Verde today: economic growth Cape Verde's GDP has been on an upward climb for at least ten years, averaging 7% growth a year from 2000 to 2009. GDP grew 4.14% in 2010, and is projected to grow by 6.04% in 2011, when GDP per capita is expected to reach US$3,086 per head.
Economic growth The investment case
Buying property No restrictions on foreigners Buy-sell transaction costs Mortgages
Landlord and tenant Taxes and costs
The economy is service-oriented, with commerce and now tourism being two of its major sectors. Remittances from Cape Verdeans working abroad also contribute substantially to the economy - some sources estimate by as much as almost 20% of GDP. Real GDP growth is expected to average 8% a year until 2020. Inflation is expected to rise to 2% in 2011, up from 1.81% in 2010, but slow to 1% in 2012.
Income taxes Capital gains tax Rental income tax
Living there The islands
Cape Verde also signed a special economic agreement with the European Union that year and in 2008, it acceded to the World Trade Organization. Cape Verde has succeeded in halving the percentage of its population living below the poverty line - from 49% in 1990 to 24% as of 2009. That's still a quarter of 567,000, but people are enjoying a better standard of living. The country is not rich in natural resources, and less than 10% of the land is arable. As much as 80% of food and supplies are not home-grown; the country imports 20 times as much by value as it exports.As of May 2010, the unemployment rate was 13.1%, using the new National Statistics Institute (INE) methodology, but 20.9% using the previous method, practically the same it has been since 2002. One of Cape Verde's most desirable assets is its accessibility: It is only five hours from London by air, and it is not far from the perennially popular Canary Islands. Big agencies such as Thomas Cook are now offering flights from London to Sal and Boa Vista. Its location along the Atlantic shipping lines makes it a prime cruise destination as well.
GLOBAL PROPERTY GUIDE
Introduction Map Climate
History Cape Verde today Economic growth The investment case
The investment case Emerging property market Cape Verde offers investors the opportunity to get in a promising property market that is still developing. Currently, demand exceeds supply, which means the potential for high yields - as does the country's year-round holiday weather (making it a top winter sun holiday for Europeans) and growing international visitor base. Foreign investors are also offered extensive tax breaks as incentive.
Buying property No restrictions on foreigners Buy-sell transaction costs Mortgages
Landlord and tenant Taxes and costs Income taxes Capital gains tax Rental income tax
Living there The islands
Prices and yields Popular locations such as Sal and Boa Vista offer one-bedroom apartments from around €46,000 for an independent apartment with no facilities to around €150,000 for a high specification apartment in a resort, and promise rental yields for homes of all sizes and types of 7% to 9% ( though there are no house price statistics for Cape Verde, no average house prices or rents). A basic one bedroom apartment rents for €450 on a long let in some towns and shortage of property means that even a single bedroom in an HMO rents for as much as €120 per month. Western standard Hotel rooms and one bedroom holiday property rents for €100 -180 per night. Tourism is growing by 22% a year: The season is year-round Hotels have 90% occupancy There are daily flights from many european locations to Boa vista and Sal Tourism growth Tourism accounted for 21.9% of GDP in 2010, and is expected to account for 30.1% of GDP by 2020. The tourism industry, which already employs nearly 20% of the workforce, will employ more than 27% by 2020.
GLOBAL PROPERTY GUIDE
Introduction Map Climate
History Cape Verde today Economic growth The investment case
Buying property No restrictions on foreigners Buy-sell transaction costs Mortgages
Landlord and tenant Taxes and costs Income taxes Capital gains tax Rental income tax
Living there The islands
Buying property ' No restrictions on buying property There are no restrictions on foreigners buying property in Cape Verde. Laws which apply to local home buyers apply to international home buyers as well. The buying process Cape Verde still closely follows Portuguese law, though it has been independent from Portugal for more than 35 years. Once a property has been chosen and price is agreed upon, a Promissory Buying and Selling Contract (Contrato Promessa de Compra e Venda) is signed, binding both parties to the agreement. The buyer is asked to pay a deposit of 10%-30% upon signing. Though the purchase process is taken care of by a government notary, foreign buyers are advised to retain independent legal advice to help them out as with all countries. Sometimes a translator is also on hand. All contracts and deeds are signed in front of the notary. Because it is a relatively new market, lending is limited in Cape Verde, and the process can take a long time. The lawyer also obtains the Land Registry Certificate, Tax Information Certificate, and the map showing the exact location of the property. In case the property is not registered, the lawyer acquires a Certidao Pela Negativa and a Certidao Matricial Para o Efeito, both certificates confirming that the property is indeed not under anyone's name. These certificates are needed to register the property. Registration of the property is done at the Land Office and Land Tax Office.
GLOBAL PROPERTY GUIDE
Introduction Map Climate
History Cape Verde today Economic growth The investment case
Buying property No restrictions on foreigners Buy-sell transaction costs Mortgages
Landlord and tenant Taxes and costs
Buying property (cont.) The Deed of Conveyance, or the Escritura, is signed in the presence of a Notary Public to transfer the title to the buyer. This should be done 3-4 weeks after the signing of the Promissory Buying and Selling Contract. The buyer needs to pay the remaining balance and the taxes. The lawyer can sign the Deed of Conveyance and pay the taxes for the buyer. Registration of the property is done at the Land Office and Land Tax Office.
Income taxes Capital gains tax Rental income tax
Living there The islands
Taxes have to be paid in local currency. Property buyers are advised to open two accounts, one in Cape Verde escudo and the other in euro. Escudos cannot be transferred out of the country, but the euro can. A tax card has to be obtained from the Local Tax Office. A lawyer can be assigned to do this on behalf of the buyer, with a corresponding Power of Attorney, written in Portuguese
GLOBAL PROPERTY GUIDE
Introduction Map Climate
History Cape Verde today Economic growth The investment case
Buying property No restrictions on foreigners
Buying property (cont.) Purchase costs What the buyer pays: typically 5% of the property purchase price: The Transfer Tax (called Imposto Unico Sobre o Patrimonio or IUP): 3% of the purchase price Notary's fee: €150-200 Stamp Duty: 1% Solicitor's fees: €1,000-1,500, depending on the firm Land Registry Office fee for registering the deeds: €150-200
Buy-sell transaction costs Mortgages
Landlord and tenant Taxes and costs Income taxes Capital gains tax Rental income tax
Living there The islands
Round Trip Transaction Costs (w/out mortgage) IUP (property tax paid at the time of the title transfer) Notary fee and registrar's fees Stamp Duty
3.00%
Costs paid by buyer Costs paid by seller
5.00% 5.00%
ROUNDTRIP TRANSACTION COSTS
10.00%
1.00% 1.00%
Round-trip transaction costs are the total costs, over and above the purchase price itself, associated with buying and then re-selling a residential property in Cape Verde. Source: Global Property Guide
Sale costs What you are likely to pay when selling the property: Agent's commission: usually 5%
who pays? buyer buyer buyer
GLOBAL PROPERTY GUIDE
Introduction Map Climate
History Cape Verde today Economic growth The investment case
Buying property No restrictions on foreigners Buy-sell transaction costs Mortgages
Landlord and tenant Taxes and costs Income taxes Capital gains tax Rental income tax
Living there The islands
Buying property (cont.) Mortgages In Cape Verde, international buyers can borrow up to 70% LTV for up to 35 years (banks want the mortgage to be paid in full by the time the borrower is 75). It is possible to obtain interest-only mortgages for only five years. Both property and land mortgages are available. Loans are granted, and paid, in Euros. Interest rates are still quite high, usually ranging from 3% to 4.5% above the prevailing Annual Euro Interbank Offered Rate (Euribor). Mortgage approval for foreigners may take some time, as non-resident mortgages are new in Cape Verde. Foreign applicants may be asked to supply extra documents before their application is approved such as credit history report, payslips, bank statements, tax returns, passports and proof of address. This is similar to most European countries. Mortgage costs: If the buyer takes out a mortgage, he will in addition have to pay other typical costs of: Registering the charge on the deeds: 0.5% of mortgage amount Registering the mortgage title at Land Registry Office: â‚Ź150-200 Mortgage arrangement fees and other costs - vary from lender to lender.
GLOBAL PROPERTY GUIDE
Introduction Map Climate
History Cape Verde today Economic growth
Landlord and tenant Cape Verde's residential tenancy law is strongly pro-tenant. The landlord and tenant are free to agree on the rent and the payment date. In the absence of other contractual provisions, rent is paid on a monthly basis, and no later than the eighth day of the month. The landlord is not allowed to demand more than one month's rent in advance.
The investment case
Buying property No restrictions on foreigners Buy-sell transaction costs Mortgages
Landlord and tenant Taxes and costs Income taxes Capital gains tax Rental income tax
Living there The islands
Difficult for landlords to increase rent If the lease contract is silent on the method and terms of rent increases, the landlord may increase the rent only after five years of contract. The statutory maximum annual increase is, in any case, a twelfth of the gross income generated by the property. The tenant is entitled to refuse the rent increase, in which case he is allowed to unilaterally terminate the contract with one month's prior notice. Difficult for landlords to evict tenants Landlord and tenant are free to agree on the duration of the contract, but if they fail to do so, a six months' term applies. In either case, the lease period is auto matically renewed for equal periods of time, unless the tenant serves the landlord a termination notice. The landlord may only terminate the lease in very limited cases, i.e. by filing an eviction request with the court on the following grounds: Failure to pay the rent on the due date; Use of the property for purposes other than the ones contractually agreed; Recurrent use of the property for immoral, illegal or dishonest purposes; Unauthorized subletting; Subletting for a rental amount higher than the one authorized by the landlord; Vacancy of the property for one year; or, Tenant having his/her main residence elsewhere Given the above it is clearly of interest to investors to focus on tourist short term let property.
GLOBAL PROPERTY GUIDE
Introduction Map Climate
History Cape Verde today Economic growth The investment case
Buying property No restrictions on foreigners Buy-sell transaction costs Mortgages
Landlord and tenant Taxes and costs Income taxes Capital gains tax Rental income tax
Living there The islands
Taxes and costs Income taxes Cape Verde has a high income tax rate, with a top rate of 35%, and a moderate corporate tax rate, with a top rate of 25%. Non-residents are generally taxed at a flat rate of 20%. Capital gains tax Capital gains tax is only paid on profits above 30%, and the rate is 3% - extremely low. So for instance, an investor who has bought a property for €100,000 and sold it for €130,000 will pay no capital gains tax. If he sells for €140,000 he will pay 3% on the profit over and above the first 30%, so he will only pay tax on €10,000. The investor can therefore make a profit of €40,000 and only pay €300 in tax! Rental income tax Non-resident property owners pay a flat rate of 20% of the income they get from renting out property after deducting 10% of the gross rent and a standard annual amount of €726. Property tax TThe Annual Ownership Property Tax is 0.75% of the value of the property. The value used for this calculation is normally the purchase price as stated in the deeds. Inheritance and gift taxes When property is inherited, transferred or received as a gift, the recipient pays a flat property tax of 3% of the property's tax registered value.
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Introduction Map Climate
History Cape Verde today
Living there - The Islands The Cape Verde archipelago is divided into two island groups. The archipelago has a diverse and dramatic landscape of craggy mountains and active volcanoes, deep valleys and ravines, barren lands and lush vegetation, and dry deserts and pristine sandy beaches.
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In the north are the Ilhas de Barlavento, or the windward islands: Santo Ant達o, S達o Vicente, S達o Nicolau, Santa Luzia, Sal and Boa Vista. The southern islands are the Ilhas de Sotavento, or the leeward islands: Brava, Fogo, Santiago and Maio. The islands in the east - Sal, Boa Vista and Maio - are flat and dry desert islands with beautiful, extensive white sand beaches. The western islands are rocky and mountainous, with black volcanic sand beaches.
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Living there The islands
Cape Verde's urban areas, notably Praia on the island of Santiago and Mindelo on the island of Sa探 Vicente, are crowded and bustling, with some very areas. Visitors and foreign property buyers often bypass them in favour of the more tourist-friendly areas on the islands of Sal and Boa Vista. However, these cities remain the country's centres of commerce, particularly Praia, the capital.
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São Vicente Santo Antão
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Santa Luzia
Sal
São Vicente
Mindelo
São Nicolau Boa Vista
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Santiago
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Living there The islands
Maio
Fogo Brava
São Vicente is Cape Verde's most densely populated island, with most of its 76,000 inhabitants living in its main town, Mindelo. The economy is based mainly on commerce and services, as well as fishing, tourism and a Nato military base. The waters around the island teem with big game fish, and the Atlantic winds make the island's beaches popular with windsurfers and kite surfers. Sao Pedro beach is long and spectacular, known for its safe natural places for children to swim and as one of the finest places in the world for speed windsurfing (the world record was set here) and great surfing. The most famous beach is "Baia das Gatas", with its white sand and clear, deep blue water. Mindelo is second only to Praia in size and importance and is the country's principal port. Though many visitors to Cape Verde tend to head straight to Sal and Boa Vista, Mindelo has begun to attract tourists of its own. It prides itself as Cape Verde's centre of culture. Not only does it have a strong musical tradition, warm and welcoming locals, and the country's biggest Mardi Gras festival, it is also the birthplace of Cape Verde's favourite daughter, the golden-voiced Cesaria Evora. Perhaps the finest representative of the Cape Verdean musical genre morna, Evora has been an international sensation for a quarter of a century.
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Santo Antão Santo Antão
Climate
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Ribeira Grande
Santa Luzia
Sal
São Vicente São Nicolau Boa Vista
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Santiago
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Maio
Fogo Brava
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Living there The islands
The island of Santo Antão has a spectacular landscape of looming mountains, deep ravines, and sweeping plains. Thanks to its dramatic topography, the island has different climate regions, from the humidity in the northeast to the coolness of the centre. Naturally, the vegetation also changes as you go from one region to the next. The higher areas are blanketed in forests of cypress and pine. In the west, the landscape becomes starker and more hostile. In the south it is arid. The diverse terrain provides plenty of hiking opportunities from the cities to the mountains. The island's main town is Ribeira Grande, but Porto Novo is the island's harbour city and administrative capital.
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Sal Santo Ant達o
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Santa Luzia
Sal
S達o Vicente S達o Nicolau Boa Vista
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Santiago
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Living there The islands
Maio
Fogo
Santa Maria
Brava
Sal is a flat expanse of white in the brilliant blue waters of the Atlantic. The island is flat and desert-dry, with expansive white sand beaches and the most developed tourism infrastructure in Cape Verde. Sal currently enjoys the bulk of tourism to Cape Verde, though Boa Vista is currently challenging it as the country's top tourist destination. Sal has a number of hotels, as well as several residential developments that are popular with international buyers, particularly those from the UK and Ireland. build density for tourism schemes is relatively high at 29% of the land area able to be built on leading to dense schemes and expensive land. Sitting on the southern shore if the charming resort town of Santa Maria, sits with its colourful houses, cobblestone streets, and shops and restaurants. Not far is the beach, a surfing and windsurfing favourite. Cape Verde's primary and busiest airport, Amilcar Cabral, is on Sal.
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São Nicolau Santo Antão
Climate
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Santa Luzia
Sal
São Vicente
Ribeira Brava São Nicolau Boa Vista
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Tarrafal
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Santiago
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Living there The islands
Maio
Fogo Brava
The green mountains of São Nicolau loom over the farms and fishing communities of this L-shaped island in the centre of the archipelago. Its capital is Ribeira Brava, a pretty little town of old colonial houses and colourful gardens nestled in a valley between two mountains. Its imposing cathedral marks it as the seat of the Cape Verde diocese. Properties here are much more affordable than in the cities of the more visited islands. The main industries are agriculture and fishing. There is some tourism here, mainly domestic; many Cape Verdeans head to the black sand beaches of São Nicolau for the weekend. The bountiful blue marlin in the waters of Tarrafal Bay also bring the leisure angling enthusiasts to the island.
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Boa Vista Santo Ant達o
Climate
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Santa Luzia
Sal
S達o Vicente
Sal Rei
S達o Nicolau Boa Vista
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Santiago
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Fogo Brava
Boa Vista is Cape Verde's rising star, It is the third largest island in the archipelago and the most visited one after Sal. It has pristine, stunning beaches, large, elegant sand dunes crafted by hot winds from the Sahara and lush vegetation. Not surprisingly Boa Vista is being discovered by more and more sun-loving holiday makers, particularly from Europe. Its 35 miles of pure white sand beaches and the brilliant green waters of its bays have put Boa Vista on the international radar. The Telegraph cited Boa Vista's Santa Monica beach as one of the most beautiful in the world. It is certainly a prime location for sunbathing, swimming, diving, big game fishing, surfing and windsurfing. The island's popularity with tourists - huge, now that direct flights from London are available has translated to a more robust real estate market. Several developments offer mid-price and luxury apartments and condominiums, and there are more hotel rooms here than almost anywhere else in Cape Verde. Build density for tourism schemes is relatively low at 12% of the land area able to be built on leading to well spaced out schemes. The main town is Sal Rei. Once a quiet, laid-back old colonial town, Sal Rei is evolving into a tourist town with hotels and new residential developments, as the island challenges Sal while still presenting itself as a less developed, less crowded alternative. The island is also one of the world's most important protected nesting habitats for loggerhead turtles.
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Santa Luzia Santo Ant達o
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Santa Luzia
Sal
S達o Vicente S達o Nicolau Boa Vista
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Santiago
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Maio
Fogo Brava
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Living there
Santa Luzia is the smallest and the only uninhabited island in the archipelago. It is arid, rocky and volcanic, with two long beaches in the south and a jagged northern coast. Vegetation is sparse, but a number of bird and reptile varieties live on the island.
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Santa Luzia is legally a nature reserve in its entirety. The only way to reach the island is to take a two-hour boat ride from nearby S達o Vicente.
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Santiago Santo Ant達o
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History Cape Verde today
Tarrafal
Santa Luzia
Sal
S達o Vicente S達o Nicolau Boa Vista
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Santiago
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Maio
Fogo Brava
Cidade Velha
PRAIA
Over half of Cape Verde's population lives on the island of Santiago, the largest island in the archipelago. Its complex topography consists of mountain ranges in the interior, with deep valleys in between and a large plateau in the centre. Banana, coconut and sugar cane plantations flourish in the lowlands. And on the southern coast is the city of Praia, the capital of Cape Verde.
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Living there The islands
Praia is a noisy, distinctly African port city with a population of 128,000 living along the southern coast of Santiago. It is one of the country's major seaports, with one of the busiest international airports in Cape Verde. Praia is the country's financial, political and commercial centre and receives many visitors on business. If it has a tourist draw, it's Cidade Velha, the "old city" just 15 kilometres away. Its old streets are well-preserved, its colonial churches still standing. Its old fort, now a tourist attraction, still watches over the city. Cidade Velha has been named a UNESCO World Heritage Site in recognition of its historic importance as the first European colonial outpost in the tropics. Tourists also love the northern coastal city of Tarrafal, which lives in the shadow of Monte Graciosa and has a lovely white sand beach.
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Fogo Santo Antão
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Santa Luzia
Sal
São Vicente São Nicolau Boa Vista
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Santiago
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Living there The islands
Maio
São Filipe
Fogo Brava
"Fogo" is the Portuguese word for "fire" - a very appropriate name for an island that's almost entirely taken up by an active volcano. Fogo's Pico do Cano has been quiet for centuries and is the island's biggest attraction in more ways than one. Pico do Cano is the highest peak in Cape Verde. Adventurers regularly hike up its slopes, explore its caves - and even stay in the crater. This is possible because in the crater is Chã das Caldeiras, a small, isolated and deeply rustic village of about 1,000 people. The village is surrounded by the crater's kilometer-high rim and the ground is carpeted by black lapilli, or volcanic granules, in which farmers grow rich Arabica coffee and several varieties of grape. With its cool climate, rich volcanic soil and dry terrain, Chã is the optimal place for growing grapes, and it is the country's only wine region.
The island is nearly round, with miles of black lava beaches. In the western part of the island is São Filipe, a lovely old town with cobbled streets, colonial-era houses and an abundance of gardens and trees.
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Maio Santo Ant達o
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Santa Luzia
Sal
S達o Vicente S達o Nicolau Boa Vista
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Santiago
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Maio
Fogo Brava
Vila do Maio
Tranquil, sparsely populated and hardly visited, the southern island of Maio is one of Cape Verde's hidden gems. It may be a flat and arid desert island, but it holds a few surprises, such as a large, lovely forest, the biggest patch of green in Cape Verde. Another is the English architecture to be found in the capital, Vila do Maio.
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Living there The islands
The old English-style houses are relics of the British presence on Maio during the 17th century, when they exported salt dredged from the island's marshes and when Vila do Maio was called Porto Ingles. Most of the land is not arable, and fishing is the main industry. Small towns and fishing villages line the coast. Maio's long, white sand beaches are also important turtle nesting grounds.
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Brava Santo Ant達o
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Santa Luzia
Sal
S達o Vicente S達o Nicolau Boa Vista
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Vila Nova Sintra
The investment case
Santiago
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Maio
Fogo Brava
Brava is the smallest and greenest of Cape Verde's islands. Its beauty has gone largely unappreciated - humid and misty, with only one beach, it doesn't attract a lot of tourists. There are a few hotels in the capital, Vila Nova Sintra, but fishing and agriculture are the main livelihoods on the island.
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Living there The islands
The peak of Monte Fontainhas overlooks the island's five towns and their collective population of 7,000. Nova Sintra is the largest of the towns, blanketed in fog as it sits more than 500 metres up the mountain and graced by hibiscus and bougainvillea blooms. The town has a gorgeous view of the island's deep valleys and stunning bays.
GLOBAL PROPERTY GUIDE About Global Property Guide
This is a site for residential property investors who want to buy houses or apartments in other countries. Our focus is financial. You may already know what countries you're interested in, what type of house you want to buy. What you probably don't know is the rent you might earn in another country, what you'll be taxed, and what the landlord and tenant law is, etcetera. Those add up to one word: profit! Why is property investment in another country sometimes a good idea? It can bring a good income. Choosing a 'rising' country can maximize returns. It can bring capital gains. Again, the right choice is crucial. Diversification. Any portfolio should have a range of assets (shares, cash, property). It really helps if some of those assets are in different countries. Are we trying to sell you something? No! (Though we do carry agents' property listings, which they (not us) are trying to sell) Are we 'objective'? Totally. We fervently believe in a philosophy of 'fundamental investing' in property, as in the stock market. We emphasize that to get a good return, it is essential to buy where there are high rental yields, low costs, and low taxes. We're interested in being rational, as property investors. We've developed the world's only global rental yields database, researched by a hard-working in-house team, to support a 'fundamental investor perspective'. We've also developed the world first global transactions costs database. In a lot of countries, you lose 20%-30% of a property's value merely by buying and selling it. That makes no sense. Check here - we've got the facts. We give you nothing but the facts about the financial aspects of residential property investment. Want to know more? Email: publisher@globalpropertyguide.com Like
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