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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. "