Cape Verde property to make 'big impact'

Wednesday, 27 June 2007 12:00 AM

Cape Verde property is "about to make a big impact" on the overseas housing market in emerging investment locations, a leading property group predicts.

Assetz explains the introduction of mortgages on the group of islands off Africa's west coast will create "huge opportunities" for investors as Cape Verde properties are relatively cheap, costing around £75,000 for a two-bedroom apartment.

The overseas property group says high rental yields of nine per cent plus the capital growth of 11 per cent over the last year should see strong returns.

The new lending opportunities for Cape Verde homes mean investors now need to find just 25 per cent of the total cost of the property up front, rather than the full cost required before.

Additionally, cheap flights to Cape Verde are also set to boost tourism.

"Cape Verde is looking like a very interesting prospect, as tourism levels soar and the introduction of mortgages opens the floodgates to investors," commented Stuart Law, Assetz managing director.

"As with all emerging markets, it is important to take a long-term view and ensure there is a strong rental demand to cover costs."

Looking at the bigger overseas property market, Mr Law said: "There is a significant trend developing in the global property market. The start of a general slowdown in the rate of capital growth is occurring worldwide, while simultaneously mortgages are becoming increasingly competitive and lenders are requiring smaller deposits for property purchases.

"Consequently, investors are able to leverage their money more effectively, investing less, borrowing more and therefore as a result of gearing, benefiting from much higher overall returns on cash invested.

"This is countering the effect of slowing growth, with the general outlook for the global property market remaining extremely good for the medium to long term. The rate of growth in many countries, such as Poland and Bulgaria, could not continue at a rate of 20 to 30 per cent, and a reduction to a more stable and realistic rate of growth was necessary."

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