CANARIES AND CAPE VERDE: AN ISLAND HIDEAWAY

A BUYERS GUIDE

Cape Verde Based on Portuguese law the costs of buying a property in Cape Verde add up to approximately 7 to 8% of the purchase price. Conveyance fees are about 3%, stamp duty is 1/1000th of the cost price and registration of deeds and contract cost approximately €2,000. Mortgages up to 80% of the value of the property are available for periods of up to 20 years. One issue of comfort is the fact that as part of Cape Verdian law if a developer does not complete construction by the agreed time they have to pay the buyer interest for the duration of the time that the property remains overdue. In relation to tax all profits from the property are exempt for the first five years on condition that foreign capital is reinvested. After the sixth year 10% of the income is subject to tax. Canaries As it is part of Spain, buying in the Canaries is as easy as buying anywhere on the Costas. As a general rule you should budget for purchase costs of approximately 10 to 12% on top of the selling price. This will cover legal fees, plus expenses such as notary public fees, land registry, stamp duty, rates and VAT. There is also a Wealth tax, based on the value of the property and the income it generates. When getting mortgages fee are usually 1% of the amount required.

If Ireland was sunny it would be perfect, well in Cape Verde and the Canaries they have an abundance of sun and an equally buoyant property market, reports Shane McGinley.

While Cape Verde is currently the media darling of the overseas investment world last year many people would never have heard of the country and would have had to ask for a globe to locate it.

Cape Verde

So for the uninitiated, Cape Verde is an independent group of 10 islands off the coast of Senegal in North Western Africa. It is a former Portuguese colony and has been a democratic republic for 30 years. It is on the same latitude as Barbados, has a mix of European and African architecture, enjoys average temperatures of 21 to 29 degrees, low rainfall and is surrounded by warm water that never drops below 21 degrees.

The most developed island is Sal, discovered in 1640 it is a modest 216 km sq and is the gateway to Cape Verde. With its dry tropical climate it is now the epicentre for much of the development on the island. In terms of accessibility it is roughly a six hour flight from the UK or five and half on a charter from Ireland.

Official government figures, presented to the Cape Verde Parliament earlier in August, have shown that the country's tourism sector has grown 25% between 2000 and 2005, helping to invigorate the archipelago's economy.

Sal Is The Hot Spot

Paradise Beach on the island of Sal, Cape Verde

The report said that the most popular island for tourism in Cape Verde is Sal, which received over 70% of total tourist entries, while the islands of Santiago and Sao Vicente received 14% and 8.4% entries respectively.

Sal is flat and relatively small with two major settlements, the capital of the island Espargos and the tourist resort of Santa Maria. An International Airport was built here in 1939, making Sal the gateway to the Cape Verde archipelago.

Sao Vicente is the third smallest of the islands that make up the Cape Verde archipelago but it is home to the countries second largest city, Mindelo, as well as an airport and an 18-hole golf course.

While Sal is sandy and arid Sao Vicente is volcanic in origin and has some stunning scenery. Although now dormant its highest point is at Monte Verde at an altitude of 774 meters.

Africa is often perceived as undeveloped however the UN Development Programme's Human Development Index (2003) places Cape Verde as fourth highest of all African nations behind the traditional tourist hotspots of the Seychelles, Mauritius and Tunisia; declaring it a middleincome country.

Cape Verde is being described as the Caribbean of Europe but the difference is that in Cape Verde you can buy properties that will cost you up to three times less than in the Caribbean.

Horizon

The Horizon Property Group is one of the latest companies to see the potential of Cape Verde. The value of properties is estimated to increase by at least 50% over the next 4 years based on the current developments that are being released, however as more developers start building this will increase the value much faster. The Horizon Property Group also reports that potential rental returns of up to 11% a year are likely on the island.

"This is likely to be the hottest holiday home destination over the decade ahead with a superb climate and green field tourist industry. On the cusp of major tourist infrastructural development by the Cape Verdian Government not only can you have an apartment or villa right on beautiful tropical beaches, but also scope for strong capital appreciation over the years ahead," Eddie Hobbs says on his own website about Cape Verde.

Canary Islands

Luxury accommodation on the popular island of Lanzarote

Closer to home and a lot more familiar to Irish holidaymakers are the Canary Islands, a group of Spanish owned islands off the African coast. The archipelago is made up of seven islands; Gran Canaria, Tenerife, Lanzarote, La Palma, La Gomera, El Hierro and Fuerteventura; and along with the Azores, Cape Verde, Madeira, and the Savage Isles form the Macaronesia ecoregion.

The economy of the Canaries is heavily dependent on tourism, which accounts for approximately 32% of the GDP, with up to 10 million tourists visiting per annum. To maintain tourism construction is needed, therefore it is hardly surprising that this sector makes up a further 20% of GDP.

The Canaries experienced continuous growth during the lather half of the last millennium, with annual growth rates of averaging 5%. This growth was fuelled mainly thanks to considerable increases in Foreign Direct Investment from the development of the real estate sector and funding from the EU, which for the first seven years of this decade will amount to nearly 11 billion Euro.

The Best Climate In Europe

"Buying property in the Canary Islands is undoubtedly one of the soundest financial investments you can make," believe the Horizon Property Group, who since forming 1984 have become the largest independent estate agency in the Canary Islands. "The best climate in Europe, with almost 365 days of sunshine a year, the best and easiest accessibility for Winter sun, at only four hours flying time and the best opportunities for maximising returns on buy-to-let properties, with a yearround sub-tropical season," report the company of the benefits of investing in the Canaries.

With high levels of tourism demand for rental accommodation and hotel space is high. On Las Palmas the RIU hotel chain has announced that their hotels in Gran Canaria are almost at capacity and in some areas are registering up to 90% occupation while in Tenerife local media report that the number of guests staying in 5-star hotels has risen by 61% during April.

Tenerife – the third most popular rental destination last Summer

Also in Tenerife the Holiday-Rentals.co.uk Trend Tracker 2006, compiled in June, found that it was the third most popular destination for rental demand, with a 20% rise in the average number of enquiries per property per month compared to 2005, despite a 66% growth in the number of properties available to rent.