Cape Verde’s market is enjoying sustainable growth in the economy, tourism and the local housing market, all of which will be reflected in unparalleled returns to investors.
A study reported by the ‘Noscasa Property Index’ showed capital appreciation in real estate of 17% during 2007. This growth is forecast to continue with levels of 20-30% anticipated for 2008/9.
Realistic Forecast Rental Returns.
Calculations of Net Yields have been provided, based on the following assumptions:
Two Bedroom Resort Apartments
• Liquid Cash Required: €50,000 + €30,000 = €80,000
(50,000€ required on Deposit – 30,000€ payable 2010)
Using a two-bedroom apartment on the five star Paradise Beach Spa development on the Island of Sal for illustrative purposes the capital investment requirement for freehold purchase is:
80,000€ (40% of overall property price based on a two bedroom 200,000€ property)
Weekly Gross Rental Income
A standard two-bedroom apartment (sleeps 6) currently rents for the same amount as a standard hotel room (sleeps 2).
Cost per night for one bedroom in a four star hotel on the Island of Sal:
• 125€ per night (calculation based on: The Morabeza Hotel, Sal, Cape Verde)
• 875€ per week (calculation based on seven nights)
Annual Gross Rental Income – 35,000€ per annum
Forecast rental income based on a 40 week basis at a conservative 75% occupancy rate (allowing for three months of the year unrented or for personal use) will generate 35,000€ per annum (Calculation based on weekly rate for a single room in the Morebeza Hotel).
There are two main options available for the rental of self catering accommodation:
Option 1. Property is rented via a local property management company – providing net Annual Yields of 10%
Option 2. Property is rented direct by the owner via one of the various property rental portals – providing net Annual Yields of 17%
According to a Mintel study relating to holiday booking trends – 60% of all UK tourists now book self-catering accommodation with in excess of 35% being booked directly with the owners online, illustrating the demand for owner direct bookings.
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