Assetz® News - Laying the foundations for property investment

Laying the foundations for property investment

29th June 2009 |

Despite all the possible effects of the world economic downturn in the near term, Cape Verde may have much to celebrate just now. Even if investment in tourism and property has been reduced by the credit crunch, the country has just been given a long-term boost by the addition of its first capital city - Cidade Velha - to the Unesco world heritage list.

This is something that could bring extra tourist interest to the archipelago and focus more development on Santiago, which despite being the largest island and housing the modern capital Praia is very much second to Sal as a tourism destination just now.

But for property investors, it is not just the well-preserved roads and buildings of an abandoned historic city that matter. New ones are of particular importance. Such a point was emphasised by property editor for overseas investor magazine BuyAssociation Paul Collins, who noted the importance of location in emerging markets where the provision of good infrastructure makes a huge difference.

Commenting on a new ring road on Fogo island that will link four municipalities, he observed: "In terms of overseas property it tends to be that people like to buy within an hour's drive of an international airport." On this basis, better roads means more existing homes and possible new developments come within the range required to be attractive to overseas buyers.

For this reason, it may be heartening to those considering property investment in Cape Verde that the government has concentrated a lot of its public spending on infrastructure development, much as public works projects have formed a part of stimulus packages in many lands.

According to the country's central bank, this "anti-cyclical policy based on strong public investment" will help boost Cape Verde's gross domestic product, ensuring that while it is down on last year's seven per cent figure, it remains a healthy 4.7 to 5.7 per cent, Macauhub reports.

But while that might help in the short run, investors may be keen on the fact that such public investment has focused on improving ports and roads, with the latter adding to the possible significance of Mr Collins' comments.

Being close to Praia and its airport may prove particularly good news for the tourism - and tourist rental - prospects of the area around Cidade Velha. The key to success for that district in the long term could be ensuring that the development is carried out in the right fashion. As well as awarding the site its new status, Unesco's meeting this month withdrew the honour from the Dresden-Elbe valley due to the failure of the authorities to maintain its "outstanding universal value as inscribed". The problem arose when a four-lane bridge was built in the "heart of the cultural landscape".

So Cape Verde will have to be sensible with its infrastructure development, not least near its new jewel in the crown. But if the warning given by Dresden's fate is heeded, the investment carried out in the downturn could bring good news for investors as the property market picks up.