What is the current best overseas investment for rental returns?

[Horizon Property Group]

Canary Islands & Cape Verde

The Canary Islands have always been a region where good rental potential is available. Also now the Cape Verde Islands are well worth looking at as most developers are offering guaranteed rental contracts to all buyers.

 

[Lysos]

Guaranteed rentals are invariably factored into your purchase price. So, you are paying over the odds to get your own money back, on which you may be liable for tax !.

 

[Horizon Property Group]

Rental Returns

In most areas guaranteed rental returns are "built" into the sale price, however with Cape Verde this does not seem to apply. The islands need to increase their tourism to continue building their economy and with a greater range of developments coming onto the market every month the developers need to compete. So as one developer started offering guaranteed rentals to entice buyers all the others have started following this trend but without a noticable price "hike" to compensate. This can only be good news for the schrewd investor.

 

[Investy]

Apart from Berlin Ive also invested in the Government mega resorts of Morocco, namely SAIDIA.

I am an overly careful investor but this definitely surpases all other touristic developments.

1) Strict laws guarantee the development will be bustling year round - almost no toher resort Ive ever seen can boast this. The Government insist 70% of the properties go into the rental pool and many are expecting yields of over 10%. On site rental agents of the highest calibre are insisted upon by the Government.

2) The largest marina in the Med able to take 300 foot yatchs

3) Leisure facilites have no compare, thats why dozens of Premeiership footballers bought property in Saidia

4) 11 onsite 4 and 5* hotels bringing bums on seats - yet a relatively small number of rental properties compared to the 30,000 guest per week staying at the site

5) The new trendy middle class place to be seen (once finished in 2010)

6) 500 shop onsite shopping centre plus souk etc, including many trend setters such as Gucci, Channel and Budha Bars

7) On site hospital

8) 3 hours from the UK YET A YEAR ROUND RESORT

9) Spectaculor 6km private beach

10) 2 onsite Carrefour supermarkets

11) 3 championship golf courses ON SITE - not down the road

12) Swimming lagoons and Olympic standard swimming pools

13) 10 yr European build quality guarantees

14) Provisions ensure these properties are immaculatley maintained.

15) The King is batting for your team as this is his showcase to the world (the pinnacle of a huge plan called Plan Azure)

16) 17 on site Club Houses with very refined lounges etc

17) Multiple helipads

18) Small football stadium

19) Cinemas and bowling alleys


I bought a property by LEJARDINDEFLEUR. Owners can use all the facilities for free which LJDF have been involved with (11 different development in the one site) to include the luxury 5* Sahara Sands hotel.

Whilst I appreciate there are some good development in Cape Verde - nothing comes anywhere close to this and the same can be said of Spain and Portugal.

COMPARE THE PRESTIGIOUS LA MANGA CLUB IN SPAIn WHICH IS 4 X MORE EXPENSIVE = no beach (to speak of),no marina (this is a crucial factor),2 hotels (not 11),fairly run of the mill sports and leisure facilities, not a year round resort, no Government backed interest in the site, a few shops, no hospital - just no where near as .. ermm...... flash really.

I dont like flash but this place will definately keep many people attracted all year. Imagine everything you could possibly want in one site come rain or shine.

 

[The Soup Dragon]

Horizon Property Group.

I looked at Cape Verde some time ago and noticed more and more offerings having guaranteed rentals. In my opinion, the most upmarket resort at the time had comparable or even lower prices than those that emerged with guaranteed rentals. That was around 2 years ago and the development was on Santiago Island, not far from the capital. On a gentle hill, perhaps a kilometre from the ocean, the site afforded terrific views over 2 or 3 golf holes and onto the ocean. Front line 3 bed golf villas had their own pools and could be picked up for little more than £100k.

I didn’t invest as I had concerns about:
1) Hurricanes. (Didn’t get a satisfactory explanation for those making their way to the Caribbean missing the Cape Verde islands)
2) Construction quality of new builds on the island.
3) Infrastructure not being good.
4) Front line properties on above development were all taken and non front line properties were more expensive. (Due to having larger plots.)

 

[najnaj]

Hi, guys, yes, all of these places are exotic indeed, but let's back again in Europe. Having in mind temps of economical development of new member-states of EU, the biggest potential for money back investment is in Bulgaria.
beautiful nature, no disasters like earthquake or hurricanes, natural phenomenons, very rich cultural-historical heritage, not explored market with many opportunities for inovations, cheap properties etc.

 

[Investy]

I did Bulgaria 5 years ok, now the investment thinkers have moved on.

2 important downsides 1) inadequate state legal infrastructure and weak natural law mean crooks abound 2) short season means rent for just 2 or 3 months - thats not an investment

Morocco is also as close as Gibralter so closer than many parts of Europe are to the UK.

Year round rent, safe Government backed mega resorts far better weather than Bulgaria

 

[Horizon Property Group]

The Soup Dragon

I know the developments that you mention on Santiago and these were a good investment. It is a pity that at the time you did not find answers to the concerns you mentioned so I will answer them for you now.

1) Hurricanes - All the hurricanes that affect the Caribbean and the South USA are born off the east coast of the Cape Verde Islands and then go towards the Caribbean they have never turned around and hit the Cape Verde Islands as the atmospheric conditions that create them take them in the direction of the Caribbean.

2) Construction Quality - All the developers that we work with are all the major players in the market, they all construct to European standards or above.

3) Infrastructure - The has been a company created called Cabocan, this is part Cape Verdean and part Canarian. This company has the responsibility to make all the infrastructure across all the islands. It has even received official recognition by the USA´s Millennium Challenge Corporation, which has invested 2.5 billion dollars so far, with a further 3 billion dollars pledged for later in 2007.

4) Developments that we have at present have front-line properties available and 2nd line properties are less expensive because of the position.

 

[The Soup Dragon]

Thanks Horizon Property Group.

I’m still concerned by the hurricanes. It doesn’t take much of a deviance to their routes for them to hit the islands. (It’s a while since I researched this but I think the hurricanes were originating to the South East and missing Cape Verde by around 200kms or miles (sorry, can’t remember which) on their way North West to the Caribbean.) I still don’t feel comfortable about this, though I found much evidence that hurricanes were passing the islands by rather than hitting them.

I hadn’t realised that so much was being pumped into the infrastructure. (Had realized the new international airport on Santiago Island was open, but that was about it.)

Point I was originally making was that 2 to 3 years ago the developments that were being sold out didn’t have the rental guarantees. Those that came along about 2 years ago with the guaranteed rentals were more expensive and I see many are still on the market.

One of the positive notes from my research was that expats from the Canaries were upping sticks to the Cape Verde islands. That was a while ago though, the timing might not be as good now.

 

[Horizon Property Group]

Cape Verde

Reply to The Soup Dragon

The best place for information I have found on the Hurricanes is by doing a Google search Cape Verde hurricanes and then clicking on the link through to Wikipedia Cape Verde Type Hurricane this shows all the major hurricanes that start in the area and where they went.

Yes 2 or 3 years ago developments were being sold without the rental guarantees as there was very little to choose from, however as more of the developers/land owners have had projects passed this has bought more availability to the market and therefore the need to compete. This is why now some of the large resorts are offering the rental guarantee. This is also being offered because of the increasing demand by tour operators for beds especially on Sal. The tourism industry in Cape Verde is increasing rapidly. The official figures supplied to us by Cape Verde Ministry of Tourism are:-
2004 - 145,000
2005 - 185,000
2006 - 226,000

and the forcast figures are:-
2007 - 282,000
2008 - 353,000
2009 - 442,000
2010 - 552,000

Also as in most popular areas property prices are increasing and Cape Verde has seen a dramatic % increase in the past 3 years as the figures below show:-
2004 - 23.8%
2005 - 21.5%
2006 - 19%
2007 - 19.8% this trend is forcast to increase by the same annual rate until 2009 then from 2010 they anticipate this increasing to an annual rate of 25-26%

There are expats from the Canaries, Italy, Portugal, UK and Spain still looking to relocate to Cape Verde as the future for the islands is incredible.

 

[Investy]

Soup

I really spent quite a bit of time considering the CVs and to this day Im still unsure.

On the plus side is the weather and pristine beaches.

On the down for me were the low lying land, lack of robust state controls and lack of accesable legal redress, and most of all at that time (2 yrs ago) the developers did'nt give me confidence - I was concerned they could just dissapear with my money and the state officials would be powerless or worst still coniving.

 

[The Soup Dragon]

Thanks for the response Horizon.

Was interesting looking at the typical paths of the hurricanes – starting as tropical storm / cyclone, passing close to Cape Verde, and developing into full blown hurricanes by the time they cross the Atlantic. Can’t say I’m sold on the idea of them always missing Cape Verde, but link has appeased my concerns to a great degree. (Low probability of being hit and lower impact if hit.)

I’m skeptical about forecasted house price inflation you presented. Prices simply can’t rise by an average of 20% year on year for a prolonged period of time. Of course, most considering buying will do their own research as to where they feel prices are going.

Investy:- It is easy enough to identify areas where the land isn’t too low. I believe Sal is fairly flat, but you shouldn’t have much problem finding developments with decent elevation on some of the other islands. I’d have thought Santiago would be the pick in the long term. (International airport, capital of region, more culture than Sal.)

There’s a little bit of me that wishes I had spotted my favoured development in Cape Verde earlier. I think I would have taken the plunge if any of the front line golf properties had been available and the pound strengthening against the dollar would have reduced the cost for me. Still, most of us have kicked ourselves at some point for talking ourselves out of what were very good opportunities. I probably won’t consider Cape Verde further as feel the strong appreciation has passed and I don’t want to over extend myself.

 

[FJCOM]

I'm becoming an Investy fan.

 

[Horizon Property Group]

Investy

Sorry to read that you did not have the confidence in the developers 2 years ago to buy in Cape Verde.

The islands are VERY economically and politically stable since gaining their independance from Portugal in 1972. All their laws and buying processes are still based heavily on the Portuguese legal system. All contracts of purchase are drawn up in Portuguese and English making them easily understandable for English purchasers. However as a company we recommend that all clients use a lawyer and we highly recommend Neville de Rougemont as they are one of Portugal's largest legal firms but for English clients the great benefit is they have an office in the UK and Sal, Cape Verde. Before instructing a client to sign their contracts they will have performed all the necessary checks to make sure that the developer a) owns the land b) has the necessary licences c) that the developer is sufficiently cash rich to be able to complete the project. In some cases the developers offer bank guarantees or payments can be made to a lawyers escrow account. So sufficient safeguards are in place for prospective purchasers to feel safe.

At the end of the day you would not buy a property in the UK without using a lawyer so why do it abroad...

 

[Investy]

Soup

On the CV price inflation I think the best comparible would be the Caribean / Bahamas.
A beachfront property in these islands will tend to be very highly priced, certainly in the Bahamas you would be looking at a minimum $700,000 if the beach is good and even more if you add in golf.

As ever comparisons are very hit and miss.

The trick would be to spot the zones that will appeal to the rich - so the equivolent of say the British Virgin Islands, The Caymans, Abaco, Turks & Caicos, Barbados, Anguilla, Great Exuma etc

I was highly recommended to buy a plot of land on the rocky shore of Great Exuma in about 2004 for $140,000. I went there and then talked myself out of it. I checked about 8 months ago and saw the exact same plots (none have any advantage over one another) had risen to $800,000 - grrrrrrr

 

[Horizon Property Group]

Dear Soup Dragon,

Glad you liked the information about the hurricanes I have always used this info for people with these concerns as it is very informative.

The figures I quoted are official government statistics for the years past since development hit the islands and their forcast for the future. I know it seems incredible that prices will rise by these amounts but the government are confident in this. Investment in Cape Verde is long term not short term as it has been in the past here in the Canary Islands. We don't recommend anybody to buy in Cape Verde with the idea of buying today to sell tomorrow. There is money to be made but by buying and sitting on the property for 5+ years, you have 2 years for construction and then 3 years where the property can and would be rented to give a good return on the investment before then looking to sell on.

Land too low - I agree with your comments to Investy, the islands are similar to the Canary Islands in that the landscape is different on each Island. Sal is very flat but has incredible beaches, Boavista is similar although there are a few higher parts but the beaches here are the best of the islands. Santiago is similar to Tenerife in that it's centre is mountainous, although not as high as Mt Teide, giving dramatic landscapes and variations. Also as you point out Santiago is the capital and because of this has more culture. However Sao Vicente is one of my favourite islands, although it is a small island it has beautiful scenery and again beaches. The culture here is second to non and a great place to meet the locals and mix with them.

Sal has had an international airport for many years and was the first in the islands, Santiago's international airport opened at the end of last year although currently all direct flights from the UK are going to Sal. Boavista's international airport is now finished and only waiting for it's relevant licences. Astraeus expect to include this island in it's schedule from the UK by the end of this year. The airport in Sao Vicente is also very near to being completed to international status and they hope that sometime next year direct flights from the UK will arrive.

 

[Horizon Property Group]

Dear Investy,

Glad I am not the only one that missed out on land, about 10 years ago same thing happened with Cape Verde, we were offered beach front land at approx € 0.50 m² today that same land would sell for around € 2,500 m² if it was still available...

We tend to promote the islands as the new Caribbean into the UK market because they are the best example, weather, beaches, sea and people all very similar. But the CV islands are 4/5 hours closer by air.

My wife and I have spent a lot of time in the islands over the past couple of years on business and I have to drag her back to the Canaries everytime kicking and screaming, she would move their tomorrow but unfortunatly for me and the business it is not viable....yet.. We got married in the Caribbean on St Thomas and go their every year for our anniversary and she still prefers Cape Verde, mind you she hates flying so this could be one reason.

 

[DC]

I like 13 years at 8% at banyan you get 104% back on your investment.

an important point my clients made were that over time money depreciates in value so being tied in to a guaranteed return investment sometimes is not the only way to go. the truth is it is easy. The problem is nothing in life is easy if you want to make money you have to work at it.

 

[Investy]

Horizon

I've had my eye on another small group of islands South of you which are as yet un developed. PLEASE PLEASE CALL ME IF YOU HEAR OF LAND THERE FOR SALE.

The islands are known as SAO TOME.

Very poor just like CV was not long ago, but proper tropical islands.

The Americans have discovered oil there and have bought the rights to drill last I heard.

One guy from S Africa said he could get me land there but the price was really high so I'm thinking he was trying me for a sucker.

It's always been an ambition of mine to buy land way before anyone else has spotted a location and this is the only such candidate Iv'e found.

 

[ricardothered]

Berlin

Hi

I am interested in the Berlin investments you have found - could you private message me with the details please?

Thanks

Forget the Kent flat, your too late, all the easy money has gone and the B2L market is seriously crowded. Furthermore you should know many lenders have stopped lending on B2L new build property as there is mass over supply leading to high repossession numbers (ie whole blocks come to market all seeking tenants so rents are driven down). Buying new is also a mistake as you overpay for the 'new' factor hence there is often no capital growth for 2 - 3 years.

Rising interest rates makes the cocktail even more risky.

UK property does not pay for its self as you imply - I know as Ive recently sold my B2Ls. Work out the cost of your deposit (ie loss of potential savings interest or if you borrowed the deposit the cost of that borrowing),plus the mortgage cost plus your maiantainance, accountants fees, the odd repair or rat removal etc etc. You will find that you will subsidise the investment if you do your numbers properly and then remember there is 40% capital gains tax when you sell (unless you sell when you have very low income in which case say 25%).

The US venture has better prospects but you need to think like an investor. Holiday rents in Florida can be not worthwhile and I often hear the costs never end (pool stops working etc etc).
Better to buy in a US city such as Atlanta and get year round rent or Toronto (Canada) with underground lift access to avoid snow pile ups.

Or join me in Berlin where I am investing heavily. Its right on your doorstep and like London 15 years ago. Ive just found 2 bed appartments fully maaintained with 10 year Government rent guarantees in a nice green family locale for £35000 or so.