Heres’s a quote from the British Government website of the Foreign and Commonwealth Office for Cape Verde on the subject.
Many British nationals have experienced serious problems when buying property in Cape Verde. Before buying property anywhere on the islands, you should seek independent qualified legal advice.
My First Buy
When we first came to Sal in 2006, I was already set and researching a country to purchase a holiday home. For me, it was not an investment but a bolt hole. A place in the sun where we could come any time of the year. We stayed at the RIU Funanna on our first trip which was mediocre (if you’re into all inclusive deals), but I wanted to get out of the acomplex and experience local village culture. It was not long before I was traversing the myriad of ‘Real Estate Investment’ companies.
The benefits of buying in Cape Verde were a stable government, a location with no real natural disasters, a stable currency pegged to the Euro and of course, 365 days a year of sunshine and an average air remperatue of 26degC. It was not long before I was being ferried around the island, looking at barren rocks and sand, trying to envisage what the off plan ‘investment’ would look like. That was the big issue for me, everyone was talking investment and maybe I should have smelled a rat right there and then. However, I had a romance with the sunshine and blue sea. A place with no McDonals, no KFC, no Pizza Hut, no Benidormian knotted hanky head attire or British Bulldog pub selling all day breakfasts. This was a place that no-one at home had ever heard of.
I signed on the dotted line. A small three bedroom and two bathroom penthouse apartment at Praia Antonio Souza on the ‘Front Line’ of the so called ‘new residential’ area of the village. There was no road, no piped water, no sewage and waste water facilities. However, these services, the boardwalk and prominard and central plaza were on the map. So, let’s get in early I thought.
My Second Purchase
Two years later and coincidentally one day back in the UK, a Sales Rep from one of my key suppliers in the UK made mention that he had ‘invested in Cape Verde’ and it became apparent that his property was in the same residential area, albeit on the forth line. As our family was growing, my knee jerk was to upgrade to a larger property and sell the smaller front line property. A second deal was cemented with the developer and we purchased two adjoining penthouse apartments, combining the two units into a four bedroom and two bathroom accommodation with office mezzanine and whopping open plan kitchen and living area all wrapped with a magnificent and panoramic balcony.
That’s when things started to go sour. The year was 2009/2010 and the global economy was in decline. Properties and real estate investment around the world was crashing but to me, this was not a problem as we did not invest for a monetary return. We had a holiday home.
Flights were coming abundant and the thought of selling our front line property was promising. But hold on, the larger communities of Villa Verde, Tortuga and Paradise Beach were also still being sold off plan. Resale prices were plummeting as there was a plethora of ‘distressed sales’ bargains coming onto the market. The property boom had collapsed and supply had outstripped demand. Akin to places like Dubai, the market was in turmoil and the proverbial shit had hit the fan. Some developers had paused building and anyone who had purchased off plan with staged payments had their money tied up with a stalled build.
So, why didn’t you rent your smaller apartment I hear you ask. Take a read of the ‘Property Rental Market In Cape Verde‘.
But the property slump was not the biggest issue for us. The biggest problem was the ‘Condominium Charge’ or plainly put, the annual community charge for the building complex to cover general running, maintenance and utilities. In essence, a service charge.
Ten years later and in both apartment complexes, we continually fight the non paying owners of the Condominium fees. There are two separate columns on the payment schedule, those who pay and those that don’t and at every annual Condominium meeting, voices are raised and tempers ignite in a constant barrage of poor excuses while people do not pay. There is always a reason as to why some will not pay.
We have one belligerent British owner who mandates that simply as his unit is a future investment and has no furniture, fixtures and fittings, he does not have to pay. Wake up kind sir, the building has to pay for cleaning, security, communal lighting and other ancillaries. Cape Verdian law stipulates that these Condominium fees need to be paid and if you do not, then you risk your property being compulsory purchased and resold to pay your debt. Then there are the Cape Verdian neighbours who, for some fairytale rationale, forensically account to bicker and argue the smallest detail in a way so not to pay a proportion of their bill. There is one Cape Verdian who simply ignores every annual Condominium request since building completion, but rubs salt into the wound to the annoyance of the paying owners, by renting his apartment for financial reward. Both buildings cannot function on a partly funded budget and with lack of preventative maintenance, are falling foul of the harsh sunshine where paint is delaminating from woodwork, cracks are appearing in walls and the vibrant paintwork is bleaching in the harsh sun.
My woes are not restricted to the two apartments we own, but I hear of similar and worse horror stories of other owners.
Location, Location, Location
Another consideration is ‘what line’ your property enjoys of the beach and sea. As aforementioned, we purchased our initial apartment off plan with an ‘elevated front line aspect’. What a load of bollocks. The government subsequently made a deal with a Spanish investment company and built ‘Fashion Beach’ right outside the so called front line buildings on Praia Antonio Souza. For sure, bringing a little mote life to that end of town, an eye sore for sure and talks of litigation to those real estate agents who did sell an unobstructed sea view.
It’s taking a long time but rules, laws and acceptance of non paying Condominium owners are changing. If you buy into the romance and culture that this island has to offer, let me recommend that you research in depth first. Obtain from the seller a list of other owners in the complex you are interested in buying. Ask for all past Condominium meeting minutes, financial operating statements from the Administrator to include income and expenditure and cash flow. Obtain the list of late and non paying owners and be aware, very aware that in Cape Verdian law that the Condominium fees are levied against the unit and not the owner. If you by a property with an outstanding Condominium dept by any previous owner, you will inherit that debt!
Do your due diligence in gusto and do not rely on sales agents patter alone. Go to the bars in the evening and talk to people already living or holidaying here within their own properties. We have lost money on the property value without doubt, so there are some bargains to be had today. However in this second hand resale market, be aware of historical Condominium fee debts and future local developments.
Today, buying off plan is a mission to heartache and headache. Trust me! My recommendation is to buy secondhand. Not only will you benefit from present lower prices in case of any upturn, you will have some history if you do your due diligence. Granted you may not experience the plush smell of new paint, but the snagging cracks will be filled and the Condominium operations ironed out.
If you are looking for a large fully furnished, debt free, risk adverse and central located family apartment or two on the outskirts of Santa Maria with sea views, please let me know! Jesting aside, if you are looking for a third party sounding board, you are more than welcome to get in touch and I’ll be happy to try and answer your questions.