Economic Factors In Cape Verde

There are many reasons that contribute to Cape Verde being one of the best investment opportunities available at this time. Here we look at the economic factors and see how they make an investment in Cape Verde an intelligent decision.


Economic Reasons Why Cape Verde Should be Considered For Property Investment:

The government of Cape Verde is investing heavily in developing tourism throughout the country. The greatest return on investment (ROI) will be achieved through the huge expected tourist interest in the Islands once the planned infrastructure is in place and property prices are set to rise accordingly.

Ideal Time to Invest With 70% Increase in Property Prices Expected

Cape Verde is at the very beginning of its growth and with virgin land being developed for the first time, prices on the islands are low and as soon as the potential for property investors becomes more widely recognized, prices will increase. There will never be a more lucrative time to invest in these islands than now. Predictions state that property prices could appreciate in excess of 70% in just 24 months. Investors, who buy now, before Cape Verde and its development become well known, will be the ones to achieve these high returns on investment. Meanwhile, some developments are already in their third phase of construction with prices higher than in the first phase.

Huge Growth Potential in Tourism

The growth potential for tourism on Cape Verde is immense. All indications show that over time these islands will become as popular, if not more popular, than the Canary Islands. There are a number of natural factors in Cape Verde that help tourism on Cape Verde in addition to the economic factors listed here.

Travelling to Cape Verde is set to become easier with direct flights timed to coincide with the completion of major parts of its tourist infrastructure such as hotels and holiday villages.

With its unique blend of European and African culture, luxury accommodation, short travel times from Europe, beautiful beaches and mountain scenery and other economic features, Cape Verde will be hugely popular. This will add considerable value to property on the Islands. Remember however, the earliest investors will be those who gain the largest return on investment.

New International Airport and Cape Verde Airlines to Start Direct Flights from UK in 2006

One of the principal signs that things are starting to move in terms of the development of Cape Verde was the construction of its second and largest International airport in the capital city of Praia on Santiago island. This is seen as a very positive move towards embracing the inevitable increase in tourism. In addition, the national Cape Verde airline (TACV) has announced that direct flights will commence from the UK in Nov 2006

However many more flights to Cape Verde are due to begin before this date. Furthermore, Cape Verde operates an "Open Skies" policy allowing all airlines to service Cape Verde and create competition and therefore cheaper flights. This is very positive news for the Cape Verde property investor.

Strong Public and Private Investment – Reclassification of Economic Status

A compelling indicator of the expected market growth in Cape Verde is the huge amount of public and private investment the islands are enjoying. This has resulted in the islands being re-classified from a "low-income" to a "middle-income" country, which illustrates that investment into the islands is already creating change. Tourism generated revenues will increase these figures.

The Cape Verde government is actively encouraging investment and development by offering a 5-year initial tax holiday and a subsequent tax reduction of 50% on corporate tax (currently 30%) for the following 10 years to non-resident investors.
Other incentives include an exemption on import duties for building materials. Private investors who invest more than €35,000 or employ in excess of 13 nationals are entitled to residency.

These factors demonstrate the determination of the government to establish a stable tourism based economy and highlight the progress that has already been made to date.

Possible Inclusion in the European Union

Cape Verde has a strong possibility of rapid inclusion into the EU and the subsequent benefits involved. The Cape Verde islands are part of Macaronesia, a grouping of four Atlantic archipelagos, which include Portugal's Azores and Madeira Islands and Spain's Canary islands. These islands automatically joined the EU with Lisbon and Madrid and now Cape Verde awaits its turn. The proposal is unprecedented as no other former colony of a member of the 25-nation bloc has ever applied for, or received membership. E-Business.com states that support is growing for Cape Verde’s inclusion and that negotiation could begin with Brussels as soon as 2006.

Excellent Property Prices

Cape Verde investments currently offer some of the best prices for property available anywhere. Owing to the incentives and the government’s warm welcome to international investment, prices are very competitive.

Much of the present investment is based on the fact that prices are expected to rise dramatically in the near future. With European prices experiencing high growth over the past years, prices are now creeping higher as the investment property cycle matures. In Cape Verde, however, it is still possible to buy before the property market gains momentum. click here to view investment property in Cape Verde from as little as €145,000.

Guaranteed Rental Schemes for up to 3 Years in a Safe and Stable Investment Environment

Many new investment property hotspot locations, for example Russia and the Baltic, create a feeling of insecurity with buyers as they are unsure of the procedures, working ethics and financial security during the purchase of their investment property. In addition, mortgages are rarely available and buyers generally have a feeling of insecurity as though they are investing in a lottery.

In contrast Cape Verde offers a secure environment in which to invest. This is due, mostly, to the government and its supportive views towards investment (see below). Cape Verde investments also offer many of the features you would expect from any tried and tested Spanish investment such as the "Guaranteed Rental" schemes for up to 3 years.

Local Currency Fixed to the Euro

Since 1998, the exchange value of the Cape Verde Escudo has been fixed, firstly to the Portuguese Escudo and subsequently to the Euro (1 Euro = 110.265 CVEsc). This has obvious benefits and is seen as a positive initial step to ultimately adopting the Euro.

A Multi-party Very Stable Democracy, Supportive of Foreign Direct Investment

Cape Verde is a socially and politically stable country with all political parties (whether in Government or in Opposition) supporting macroeconomic and reform policies recommended by the IMF and the World Bank.

Policies are followed to take control of public spending, reduce domestic debt, privatise state companies and improve social services. All political parties are determined to attract foreign private investment, particularly into the development of the tourism sector.

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, life expectancy, adult literacy, education etc) of all African nations behind only the Seychelles, Mauritius and Tunisia.

The geographical isolation of the Islands means that conflicts in the West African region have negligible impact. Violent crime is not common. The justice system and local institutions are relatively strong by the standards of most African countries and corruption, whilst not unknown, is not a preoccupying concern."

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