The Cape Verde Islands, an archipelago off the West African coast, continue to capture the attention of global investors and developers, solidifying their position as one of the most exciting new property investment locations in recent times. Long recognized for their potential, these islands were notably highlighted by the UK Channel 4 TV programme “A Place In The Sun” as a top property investment destination in the mid-2000s. Today, in 2025, property prices in Cape Verde remain highly competitive when compared to many established European holiday destinations, fostering increasing popularity among international buyers as the sheer wealth of investment potential becomes undeniably evident.
Why Invest in Cape Verde in 2025?
Cape Verde stands out as a premier investment hotspot globally, currently undergoing substantial development in its tourism infrastructure. This strategic growth positions the property market for significant appreciation, as Cape Verde rapidly establishes itself as a leading international holiday destination. Several compelling factors contribute to its attractiveness:
- Growing Accessibility: Direct flights from key international hubs, including those from the UK, have significantly improved connectivity. This increased air travel capacity is a major catalyst for tourism growth and, consequently, property demand.
- Tax Incentives: The Cape Verdean government actively entices foreign property purchasers with appealing tax holiday incentives. These include initial tax exemptions and reductions on corporate tax for a substantial period, making investment financially attractive.
- Economic Stability and Growth: Cape Verde boasts a strong economic position, with projected growth rates supporting high returns on investment. This macroeconomic stability provides a secure environment for foreign capital.
- Natural Allure: The islands are blessed with stunning white-sand beaches, exotic tropical plantations, and breathtaking volcanic mountains, all serving as powerful magnets for tourists worldwide.
- Affordable Living: A comparatively low cost of living translates into more affordable holidays for tourists, further boosting visitor numbers and rental demand.
- Euro Pegged Currency: The local currency’s value is fixed to the Euro, providing stability and reducing exchange rate risks for Euro-based investors.
- Stable Democracy: As a multi-party, stable democracy, Cape Verde maintains a political environment highly supportive of foreign direct investment, fostering confidence and security for international stakeholders.
- Significant Appreciation Potential: Analysts continue to predict substantial increases in property values, with some areas expecting considerable growth over the short to medium term as development matures and tourism flourishes.
Cape Verde’s Forward-Looking Foreign Investment Policy
Cape Verde proactively encourages private foreign investment, recognizing it as a vital engine for sustainable economic growth, primarily through job creation and capital infusion, which in turn generates tax revenues. Legislation designed to attract external private purchasing of investment property in Cape Verde has been in place for decades, with the ‘Lei de Investimento Externo’ (‘External Investment Law’) introduced in 1993, specifically broadening and enhancing incentives for non-Cape Verdean nationals.
This comprehensive law offers a 5-year initial tax holiday for foreign investors, followed by a 50% reduction on corporate tax (currently 30%) for the subsequent 10 years. Crucially, these incentives can be extended indefinitely, provided adequate re-investment is made, creating a highly favorable long-term environment for investors. For tourism investments, exemptions are granted on import duties for materials essential for construction and installation projects. Furthermore, all net revenues are guaranteed full transference out of Cape Verde, and foreign currency bank accounts are readily available, ensuring liquidity and ease of financial management for international investors.
To further encourage investment, private foreign investors who invest more than approximately €35,000 or employ in excess of 13 nationals are entitled to residency in Cape Verde. Caboverde Investimentos, the government agency responsible for promoting tourism, investment, and exports, serves as the primary point of contact for potential investors, facilitating project approvals and necessary governmental authorizations.
National Development Plan and Infrastructure Advancement
A robust tourism industry remains the central pillar of the Cape Verdean government’s strategy for sustainable economic development. Supported by international donors, the government continues to implement ambitious programs through its National Development Plan (NDP), focusing on improving the critical infrastructure necessary for the archipelago to evolve into a premier quality tourism destination.
Key areas of development under the NDP include significant enhancements in transportation (air, maritime, inter-island, and road networks), communications, banking services, health provision, and fundamental utilities such as electricity, water, and sanitation. Extensive resources are also being allocated to professional training to ensure a skilled workforce capable of supporting the burgeoning tourism sector. This strategic, holistic approach to infrastructure development is designed to support long-term, sustainable growth, making Cape Verde an increasingly attractive and functional destination for both tourists and investors.
Tourism and Air Infrastructure: Expanding Gateways
The expansion of air infrastructure is a cornerstone of Cape Verde’s tourism development. The new airport on Santiago Island (Praia) has solidified its role as a vital international gateway, complementing existing facilities like Sal’s Amílcar Cabral International Airport (SID). These modern airports are equipped to handle common international aircraft, facilitating direct flights from Europe and beyond. The increased accessibility is seen as the dawn of a bright future for tourism in Cape Verde, promising to significantly boost Return on Investment (ROI) prospects for early property investors across the islands.
The Cape Verde national airline, TACV, along with an “Open Skies” policy, allows other international airlines to operate routes to Cape Verde. This fosters healthy competition, driving down airfares and making the islands more accessible to a wider global audience. To meet the anticipated surge in demand, there are ongoing plans for new high-class accommodation, including five-star hotels and commercial hotel developments. Existing hotels are also actively upgrading and expanding their facilities to accommodate the growing influx of air travelers, ensuring that the supply of quality accommodation matches the increasing demand.
Natural, Cultural, and Economic Factors
The Cape Verde Islands enjoy an exceptional climate, characterized as “dry tropical” with low humidity and an average temperature ranging between 22°C and 26°C throughout the year. With a distinct dry season from November to July and a humid season from August to October (receiving about ten inches of rain annually), the islands boast abundant sunshine – roughly seven hours per day during the wet season and extending to around twelve hours during the dry season. A consistent average wind speed of approximately eleven knots provides a pleasant cooling breeze, making the climate comfortable year-round. Water temperatures ranging from 22°C to 27°C ensure that swimming and water activities are enjoyable throughout the year. Importantly, due to specific natural factors, the Cape Verde Islands are largely insulated from the risk of hurricanes, a common concern in some other tropical destinations like the Caribbean. This superior climate, often compared favorably to the Canary Islands, is a significant natural advantage for tourism.
Beyond climate, Cape Verde offers stunning tropical beaches with crystal-clear waters and white sands, positioning it as a major tourist destination in the coming years. The islands also feature impressive mountain views and breathtaking tropical plantations, providing a genuine sense of tropical adventure and a compelling alternative to other nearby destinations for European travelers.
Economically, the Cape Verdean government’s heavy investment in tourism is designed to maximize ROI for investors, anticipating a substantial increase in tourist interest as planned infrastructure comes online. This growth potential for tourism is immense, with indications suggesting Cape Verde could rival or even surpass the popularity of destinations like the Canary Islands. The unique blend of European and African cultures, luxury accommodation, relatively short travel times from Europe, and stunning natural scenery, combined with attractive economic incentives, will undeniably add considerable value to property on the islands. The earliest investors are consistently positioned to gain the largest returns.
A compelling indicator of the expected market growth is the significant public and private investment currently flowing into the islands. This has led to Cape Verde being re-classified from a “low-income” to a “middle-income” country, showcasing that investment is already yielding tangible results. Tourism-generated revenues are expected to further bolster these economic figures. The government’s active encouragement of investment, offering a 5-year initial tax holiday and a subsequent 50% reduction on corporate tax for the following 10 years, along with import duty exemptions for building materials, highlights its strong determination to establish a stable, tourism-based economy.
Furthermore, Cape Verde operates as a multi-party stable democracy, with all political parties supporting macroeconomic and reform policies recommended by the IMF and the World Bank. This political stability, coupled with efforts to control public spending, reduce domestic debt, privatize state companies, and improve social services, fosters a secure environment for foreign direct investment, particularly in the tourism sector. The United Nations Development Programme consistently highlights Cape Verde’s high Human Development Index among African nations, underscoring its progress in areas like GDP, life expectancy, and education. The islands’ geographical isolation means that regional conflicts have negligible impact, and violent crime is uncommon. A relatively strong justice system and local institutions, with corruption not being a widespread concern, further enhance investor confidence.
Property Investment Strategies for Cape Verde
Cape Verde offers diverse strategies for property investors:
- The “Pure Investment” Market: This involves purchasing property and land at very competitive prices during the early stages of development. As infrastructure matures, tourism increases, and global awareness grows, property prices are anticipated to appreciate steeply. Early investors are poised to make the largest profit gains, akin to those who acquired prime beachfront property in the Canary Islands before their surge in popularity. This strategy focuses on short-term gains by selling to secondary buyers once values increase.
- The “Buy-to-Let” Market: While still emerging, Cape Verde is rapidly developing into a major international tourist resort. The anticipated influx of tourists, coupled with the need for a larger workforce to facilitate tourism, will create significant demand for rental properties. Early investors in new developments, particularly off-plan properties, can acquire assets at lower prices and then benefit from strong rental income from the growing tourist industry, alongside considerable property appreciation during this period.
- Off-Plan Property Investment: Purchasing off-plan villas, townhouses, or apartments offers beneficial payment schemes and allows investors to secure properties at lower prices before or during construction. Developers offer these incentives to mitigate their financial risk. Payment schemes typically involve an average down payment of around 30%, often spread over 18 to 24 months, with the balance due upon completion. By completion, market forces and the appeal of a finished property typically lead to price increases, allowing investors to sell for excellent returns without having paid the full purchase price. Analysts often predict substantial price rises for off-plan properties. Investors should choose locations with high resale potential or strong rental demand. Even if a property cannot be sold immediately upon completion, developers may offer financing for the final balance, with rental income potentially covering loan payments and yielding further ROI.
Financing Property Investment in Cape Verde
While traditional mortgage finance from local Cape Verdean banks is not yet widely available for foreign investors, some specific projects may have mortgage products arranged through overseas locations (e.g., Portugal). The future availability of broader mortgage products is expected to significantly boost real estate prices by increasing the pool of potential buyers.
Current investors often finance their purchases by releasing equity from other properties in their country of origin or other investment locations. Equity release schemes, particularly for those in their mid-50s or older who own their homes, can provide a cash lump sum or regular income to fund investments in Cape Verde.
Typical payment schedules for off-plan properties in Cape Verde involve 5 stage payments during the development period. Investors fund these stages, with the possibility of securing up to a 70% “mortgage” based on the finished property’s valuation upon completion.
Taxation of Property Investments in Cape Verde (2025)
Several taxes are applicable to property investments in Cape Verde:
- Property Transfer Tax (IUP): This is paid by the buyer before the Purchase and Sale Agreements are signed. The rate is a flat 3% of the property value or the Property Tax Value (whichever is higher).
- Annual Holding Taxes (IUP – Imposto Único sobre o Património): Paid by the owner annually, calculated at a flat rate of 3% on 25% of the attributed value of the property. This can be paid in two installments (April and September).
- Capital Gains Tax (Imposto sobre Mais-Valias): This is paid by the seller if the sale value exceeds the original purchase price (or adjusted acquisition value). It is taxed at a flat rate of 15% on the gain made from the sale of immovable property. This tax is payable within 30 days of the Deed signatures, accompanied by a Declaração de Mais-Valias (capital gains statement).
- Inheritance or Gift Tax: Charged on all property transferred by inheritance or gift in Cape Verde, at a flat rate of 3% of the attributed value.
It is highly advisable for foreign property owners to have a local will drawn up in Cape Verde. While a non-local will may be valid, a Cape Verdean will significantly simplifies probate procedures, making the inheritance process much smoother and more efficient for beneficiaries.
Summary and Outlook
It is widely believed that Cape Verde is currently on the brink of a significant economic boom. Heavy government and private investment in tourism, coupled with increasing foreign direct investment in property, creates an ideal environment for substantial returns on investment within this emerging market. With enhanced direct flight services from Europe, the islands’ true potential as a mainstream holiday destination is becoming increasingly apparent.
The allure of being Europe’s closest tropical, African-based tourist destination continues to draw increasing numbers of tourists. With expanded infrastructure and accommodation becoming available, these figures are expected to soar. The popularity of Cape Verde is rapidly increasing as investors recognize its unparalleled potential. For those interested in the potential market growth in Cape Verde, acting swiftly is advised, as many of the best-priced developments are already selling rapidly, and prices are set to rise in the very near future.
