The business case for an investment property in Cape Verde
Investment property purchases have skyrocketed to 19 percent, with resort areas gathering significant attention from analysts. The buzz about Cape Verde began in 2010 when reports began to flood in about the region`s sluggish economic growth and booming tourism industry. This may be bad news for locals, but for property investors, the pending stabilization is expected to pull property values up considerably by 2013. It is a property investor`s dream situation to purchase when economic conditions are gloomy so that returns can be maximized after the cusp of a pending rebound. Local governance in the public sector is bringing reform in terms of corruption and business revenues. Infrastructure in the area is still too weak to support a sustainable economy, although this is being remedied, and Cape Verde is expected to cut poverty in half by 2015.
Cape Verde`s population of less than half a million limits its market potential. To overcome this problem, the local government began to encourage public investment in 2010, with promising results. Their efforts pushed the GDP up by 5.4 percent and this growth stimulated infrastructure developments. Foreign investment and tourism received equal attention through an incentives law. Investors are tax exempt for the first five years after purchase and their returns can be reinvested without being bogged down by heavy taxation during this time.
Despite the region`s scarce natural resources, its core tourist industry is expanding. Services, resultant commerce and transportation form the core of its economy. These strengths make buy to rent arrangements highly profitable. The area is quickly falling into the hands of resort developers. Apartments, golf courses and commercial centers are popping up to add stability to the sluggish economy. Certain areas are sustaining their high value, but others can be snagged at reduced costs and resold when their values increase. This is a prime situation for time rich investors who have the funds and patience to sustain rental income until resale values reach their peak.
The Caribbean landscape of less developed islands such as Boa Vista give landlords a high demand region for tourism and inflated rentals become possible. When buy to rent properties are purchased with the goal of seasonal rental, climate plays a key role for income potential. In-season rentals attract high paying, short term tenants and since Cape Verde`s climate is tropical throughout the year, earning potential undergoes fewer fluctuations out of season. Some resorts in Cape Verde have a consistent occupancy level of 80 percent. This is a green flag for buy to rent investors shopping in neighboring areas.
The transportation infrastructure is an important element to assess during investment considerations. An excellent network supports a more vibrant local economy and attracts foreign visitors. Sao Vicente and Boa Vista have their own international airports as well as a ferry service. Improved access increases tourist demand while simultaneously supporting the lifestyles of investors aiming to reside in their properties, long term. Most European capitals offer direct flights to Cape Verde.
Sal is only five hours away from the UK and can be reached via direct flights. This highly developed tourist destination is expecting a boom that will turn it into one of the most desirable vacation destinations globally. The fact that it has not yet reached its ultimate potential means investors can enter the property market at low cost and gain high yields, long term.
Cape Verde was affected by the recession, particularly during 2011. Developments were halted in many cases, but the region has stabilized. Development projects have begun again and inventories of resort property are high, largely due to government prioritizing. The nation is praised for the fact that it has sustained development and stability. Investment experts from simplyfinance.co.uk offer in-depth advice about this tourist destination.