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Cape Verde's tourism numbers are up
Tourist arrivals were up by 13.2% in 2016, according to the National Statistics Institute (INE), Cape Verde. The rise brought direct contribution of travel and tourism to around 17.2% of Cape Verde's GDP in 2016, and total contribution to around 44.5% of GDP, according to the World Travel & Tourism Council's (WTTC) 2017 report.
Tourism in the country has rapidly grown in the last decade, with tourist arrivals rising from 150,000 in 2003 to around 569,000 in 2015.
Most of Cape Verde's tourists came from the United Kingdom (20.5%), Germany (11.1%), Portugal and France (both 10.1%). These tourists mostly visited the island of Sal, accounting for around 45.6% of hotel entries, and Boa Vista (31.6%).
"The fact that Cape Verde is experiencing a tourism boom tells us there is a continued demand for holiday rental properties, from private villas right through to beachfront holiday resorts," according to Rich Moore, UK sales director for The Resort Group, in OPP Today.
On March 16, 2017, Cape Verde's first casino was officially opened. Casino Royal, a €5 million-project attached to the Hilton Hotel located on Santa Maria on the island of Sal. The casino is expected to employ more than 80 people.
In February 2016, Macau Legend Development, a Macau-based casino and hotel operator, also started constructing a €250 million casino resort on Praia on Santiago Island. The introduction of gambling in Cape Verde was seen by the government as a chance to further boost the country's attractiveness.
The government also signed a memorandum of understanding with Spain in January 2017 covering a wide range of assistance to enhance Cape Verde's air and sea transport facilities and infrastructures.
French business groups are also studying investing in the country.
“In the first week of next year (2017), we will receive a visit from three or four big French companies, in the second week, we will have other companies, notably related to maritime transport,” said Prime Minister Ulisses Correia e Silva.
The Cape Verdean government is also studying the possibility joining the Schengen area, an agreement among 30 European countries that allows the free movement of people between the member countries.
Property is selling like hot cakes in Cape Verde
About 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.
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, up to 35%.
Total transaction costs are high in Cape Verde
The 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.
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.
Robust economic growth to continue in 2017Cape Verde's economy has posted strong growth for the fourth consecutive quarter in Q3 2016. Cape Verde's GDP went up by 4% during the year to Q3 2016, beating the previous quarter's 3.8% y-o-y growth and up from 1.1% y-o-y contraction in Q3 2015, according to the National Statistics Institute (INE), Cape Verde.
"The better dynamics of economic activity was due to decisive contributions, on the supply side, from the public administration, agriculture, and accommodation and catering sectors", according to the Bank of Cabo Verde's (BCV) Monetary Policy Report in October 2016. The BCV also noted that on the public sector side, the growth of current expenditures slowed and investment sharply contracted, "reflecting possible administrative constraints related to the change of government and the phasing- out of the public investment program".
In 2016, the economy was expected to have grown by 3.6%, and predicted to further rise by around 4% in 2017, according to the IMF. The country's economic growth was slower from 2012 to 2015, with growth of 1.1% in 2012, 0.8% in 2013, 0.6% in 2014, and 1.1% in 2015, based on the figures from the INE Cape Verde.
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%. Unemployment was at 12.4% in 2015, down from 15.8% in 2014, 16.4% in 2013, and 16.8% in 2012.
Prices in Cape Verde are deflating, as inflation stood at -0.4% in January 2017, an improvement from -1.2% in January 2016.