Buying property off-plan in the Cape Verdes
Risk of off-plan property buying
Most developers are Italian. Some may have marked up prices by buying and
selling speculatively amongst their expatriate community. Buying from a
Cape Verde builder could be cheaper. Some dealers mark up prices, concealed
as a deposit to secure the property. You may not be able to recover this
if you change your mind. Under Portuguese law used in the Cape Verdes the
buyer is at risk from the time of paying deposits and stage payments up
to the conclusion of the escritura, with the notary. Either developer or
promoter may cease trading in this interlude. You should consult a solicitor
before making payment. T from Barcelona takes a cool professional view.
"I am a estate agent based in Spain, I was hoping to sell properties to
my customers who are looking for investments, unfortunately I don`t feel
the islands to be a sound investment due to lack of infrastructure, ie decent
roads, communications, I used a phone for thirteen minutes and got a bill
for€ 200 thanks to Cape Verde Telecom.
I looked at both Sal and Santiago I met the owner of Santiago Golf and even
managed to get photos of the elusive Samabala project which is actually
being built. My main concerns regarding the islands are the lack of direct
flights from the UK and the fact that many developments are being sold with
no guarantees or mortgages, but what really worries me is that many developments
have been sold and money taken but work is not being started, this concerns
me in case the builders just walk off with the money, I don`t want to be
associated with any scam or to risk my customers money!!!!
The prices being asked today do not reflect the real build costs or reflect
the fact that this is a very early stage to be buying into the islands and
the risks associated, if 2 bedroom properties were for sale at around €50,000
and if the customer was fully aware of the facts and seen the islands for
themselves it may be worth the gamble however today a normal sized 2 bedroom
apartment is being sold for around €120,000 and even this would not
get a sea view and these are being sold to investors who have not bothered
to fly down to the islands for themselves thus creating a false market.
I believe that the current sales pitch being given and the prices being
asked will only give the islands a false start with interest dropping off
very quickly and even dramatically if or when a developer does walk away
with a few hundred deposits.
On the upside the people and climate are great and I believe the island
will have a good future with more and more hotels opening up bringing more
much needed tourists euros to the islands.
I was going to go to Boa Vista to see if this could be of interest, but
again decided against until direct flights become a reality and even then
we would probably look to buy land and develop it ourselves to bring security
to the project and any possible purchaser.
I wish you well with your website and your interest in the islands. We may
meet one day for a cold beer."
Buying property and solicitors
Purchase is by the Continental system using notaries. Government tax and legal
costs generally adds 6% to the asking price. But it is secure as you should
not part with money until you and the seller are both in front of the government
notary. Use of a local solicitor is advisable and we can reccomend some who
speak english. Some of the other local solicitors just don't make it to meetings
or answer phones, which can be very frustrating.
Off-Plan property
In many cases developers need upfront payments to finance further development
of the property. Local capital markets are poor and costly. Sometimes work
stops until more units have been sold. Promoters in the UK or Europe who
sell for Cape Verdean developers, take an upfront deposit to secure a booking.
This can be as much as 10% to 20% of the price and may not be refunded.
You could pay this instead through a solicitor into a bonded account. K
from Cornwall feels her brother was cheated.
"My brother went to the Place In The Sun exhibition at Excel and
paid a deposit with AIC (now in Receivership). A few weeks later he went
out to check it over and was gutted to find that he could have bought the
exact same apartment with a local agent for approx €10,000 less, including
all agency fees. What was just as bad was the fact that he wasn't actually
sold the property which he thought he was getting, i.e south facing with
unbroken views to the sea which was the main reason to buy. He has since
pulled out of the purchase, getting his 10% deposit back but not the €2000
(plus 16% VAT) registration fee on the grounds that he was not sold the
apartment he was promised, in fact it was on the totally opposite side of
the building. "
C from Birmingham suggests going direct although she has since become
an agent herself in Santa Maria and adds a percentage fee.
"If you meet a developer through an introduction through an agent,
there are some concerns from the developer who says that the agents ask
for a percentage. Its best to deal direct with the developer I think."
Land property purchase
Land is given free to Cape Verde citizens to build their own homes. Development
land with water, sewage, electricity and dirt track usually costs £33 a
sqm on Sal or Santiago, but it can obviously be marked up for visitors.
Some have paid £130 for land in Santa Maria. Buying land and getting planning
permission is lengthy and you should consult a local solicitor. Each plot
has a ratio, establishing how much can be built over. Generally 3m clearance
is required on all sides, but balconies can overhang the street.
Speculative buying and selling
It can be difficult in the Cape Verde islands to know whom you are buying
from and how much it might have been marked up compared to the builder's price.
G from Italy knows this.
"Yes, there is a problem with speculation in Boavista and Sal, and
in almost all of the Cape Verde islands. Some Italians are selling and reselling
and reselling speculatively very small apartments, but so small. I can't
stay more than a week in an apartment like this! Because of the speculation,
the market is out of control and costs are increasing... but the quality
remains mainly low and many projects are bad. All construction costs are
rising rapidly! Many are after easy money. Some promoters ask for 30% of
the price just to book an apartment! "
M from Yorks comments
"Similar comments from those I met out there that had been to Santiago
to find Sambala Village. All the British that I met believed that only Sal
had investment/holiday market established that is workable now and showed
huge potential for the future. We all went out there with our eyes open
- only the blind would have not seen it as it was. I am concerned about
the number of British that are buying blind on the internet, they will get
a huge culture shock when they arrive on the other islands. Also concerned
about the lack of structured marketing on the islands. Agents are very poor
in replying to emails, vague about the developments that they offer and
the prices vary depending upon who you talk with.The potential is wonderful
if it is presented honestly with a careful marketing plan."
Visiting the property
The best insurance you can take is to spend £600 per person for a
week`s holiday to check the feel, look, smell and views from the location
where you are thinking of buying. Unaccountably about 90% of British purchasers
fail to do this.
I from the Algarve understands the psychology of buyers that makes them so
vulnerableto buying a pig in a poke.
"Having read lots over the last few months, I suspect many people have
bought blind. Everyone has a right to spend their money in whatever way
they choose, but if the people who bought blind on Cape Verde were asked
to do so at home, they would ask you if you thought they were crazy. I hate
to see people asking what their apartment is like, and they were told it
was 500m from the beach, will they really need a taxi to get there? It will
be OK for some, but I am sure a few will regret it. Of course it is human
nature to feel that if you don't make a move quickly, you will miss the
boat. Now this is my own opinion based on discussions with people in the
business, and having visited both Sal and Boavista. I would suggest waiting
until you visit before you spend any money. There are new developments coming
on stream all the time. You must also be sure you are choosing the correct
island. As I have said already, I have only visited Sal and Boavista, and
I agree with the people who feel that Boavista is quite a long way behind
Sal. "