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Cape Verde

Cape Verde: Ebola was a scare, the Zika virus is for real

Last Updated: February 22, 2016

Cape Verde lives off tourism, and nothing seems to detract from its attractions - not even Ebola.  The 2014-15 scare about Ebola in neighbouring West Africa cut the number of hotel guests in Cape Verde by only 2.3% to around 540,000 (and nights spent in Cape Verde fell only 0.6%). 

The tourists made the correct judgment - in fact no cases of Ebola were actually recorded in Cape Verde, and by early 2015 tourist arrivals were up by 2% y-o-y, bringing the direct contribution of travel and tourism to Cape Verde's GDP to 15.2%, and its total contribution to 40% of GDP, according to the World Travel & Tourism Council's (WTTC) 2015 report.  In Q2 2015, around 116,200 tourists flocked tp the country, a 4.8% increase from the same period last year.

Here comes the Zika Virus
Now comes something more serious: the Zika Virus. On October 21, 2015, the World Health Organization (WHO) was notified of the first reported outbreak of the Zika virus infection in Cape Verde, and by February 6, 2016, the Cape Verde Ministry of Health had recorded around 7,164 cases of the viral infection.

The municipality of Praia on Santiago Island had most cases (4,837), followed by Fogo Island's São Filipe (1,230), and Maio Island (501). 

The U.S. Centers for Disease Control (CDC) issued a Level 2 travel alert (Practice Enhanced Precautions) on Cape Verde and other Zika-affected countries in January 2016. Pregnant women, in particular, were advised not to travel in the affected areas. According to Jorge Barreto, a representative of the National Directorate of Health in Cape Verde, the US travel warning was not meant to be a travel ban, but rather a precautionary measure for pregnant women who might want to visit Zika-stricken areas.

Portugal’s “communities portal” also issued a warning travellers to Cape Verde to take all necessary precautions to protect themselves from the Zika virus, signed by health chief Francisco George.

“Cape Verde has historical links with Brazil and it seems very likely it has got there from Brazil,” explained Zika expert Nick Beeching of the Liverpool School of Tropical Medicine.

But the Cape Verdean government is having none of it. “The tourist islands have practically not registered any case” of Zika, said minister for tourism Leonesa Fortes, adding that Cape Verde’s health ministry is working hard to get the republic’s name removed from the danger list.  No-one on Cape Verde is believed to have died as a result of infection, and there have been no reports of any babies born with shrunken heads.

It remains to be seen how all this will impact tourism. But with no cure for Zika yet in sight, and the trajectory of the outbreak unknown, things are not looking good for tourism in 2016.
Rental Yields Last Updated: February 22, 2016

Property is selling like hot cakes in Cape Verde

cape verde residential properties and real estateAbout half of the 482,000 population live in the biggest island, Santiago, which is home to the capital city, Praia. However, tourism is largely concentrated in the island of Sal, which has the country’s only international airport capable of receiving charter flights from Europe. New and bigger international airports are scheduled to be opened in Santiago, San Vicente, and Boa Vista.

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Taxes and Costs Last Updated: February 22, 2016

Income tax in Cape Verde is moderate

Rental Income: Rental income earned by nonresidents from leasing Cape Verde property is subject to 20% final withholding tax.

Capital Gains: Capital gains earned by nonresidents aretaxed at a flat rate of 20%.

Inheritance: Any property transmitted by inheritance or by gift is taxed at a flat rate of 3%.

Residents: Residents are taxed on their income from Cape Verde at progressive rates, from 15% to 45%.

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Buying Guide Last Updated: February 22, 2016

Total transaction costs are high in Cape Verde

cape verde beach front propertiesThe total roundtrip transactions cost, i.e., the cost of buying and selling a property, is around 13.5%. The seller pays for the 5% real estate agent’s commission. The buyer pays all the other costs: transfer tax (3%), registration fee (2.5%), and legal fee (3%).

Property buyers are advised to open two accounts, one in Escudo and the other in Euro. Escudo cannot be transferred out of the country but Euro can.

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Landlord and Tenant Last Updated: February 22, 2016

Cape Verde’s residential tenancy law is strongly pro tenant

Rents: The landlord and tenant are free to agree on the rent, and the due date of payment.

Tenant Eviction: The lease is automatically renewed at the end of the term, and the landlord may only terminate in very limited cases. He needs to file an eviction request in court, involving substantial delays.

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ECONOMIC GROWTH Last Updated: February 22, 2016

Strong economy forecast for 2016

Growth in gross domestic product (GDP) per capita averaged 7.1% between 2005 and 2008, well above the average for sub-Saharan Africa. From 2002 to 2010, the national poverty headcount rate dropped from 37% to 27%, while the extreme-poverty rate dropped from 21% to 12%.

However Cape Verde did not escape the global financial crisis, which led its economy to contract by 1.3% in 2009. In 2010, the economy slightly gained by 1.5%, followed by a modest recovery of almost 4% in 2011.

The country's economic growth has been slower from 2012 to 2014, with growth of 1.1% in 2012, 1% in 2013, and 1.8% in 2014, according to the IMF.

In Q3 2015, Cape Verde's GDP rose by 1.4% y-o-y, according to the National Statistics Institute (INE), Cape Verde.  According to the recent Monetary Policy Report of the Bank of Cabo Verde (BCV), the economy is believed to have grown by 1% to 2% in 2015.

Cape Verde interest rateThe BCV forecast a better economic outlook in 2016, seeing real GDP growth of 2.5% to 3.5%. However, it seems likely that the arrival of the Zika virus may cause reconsideration of these figures.

On March 20 the election of the 72 members of Parliament will take place, the two main contesting parties being the PAICV and the MPD. A new party, the Popular Party, has announced its entry to the election. MPs are elected via proportional representation from 16 multi-member constituencies ranging in size from 2 to 15 seats.

Aside from the 2016 parliamentary elections, Cape Verde's presidential elections will take place in August 2016. President Fonseca (MpD) is aiming for a second term as the country's head of state, and is expected to stand against Prime Minister José Neves (PAICV) for the same position.   Both candidates are sensible, technocratic types.

Title: Property in Cape Verde | Cape Verdean Real Estate Investment

Description: A look at real estate investment in Cape Verde from the perspective of property income, taxes and Cape Verdean investment prospects

Keywords: global property guide, property guide, global property, Cape Verde, rental yields, overseas property, property markets, property investments