Cape Verde: the new Bulgaria

Cape Verde is being touted as one of the next European property hotspots but investors are better off relying on the more traditional markets housed in the continent's biggest economies, claims an industry expert.

The archipelago in the Atlantic Ocean has seen a surge in tourism over the last few years as the remote islands offer Caribbean style beaches that are untainted by mass tourist development and are close to Europe.

Due to their mass market appeal, the former Portuguese colony has been dubbed 'the new Canaries', as some consider not only the country's tourist appeal but the real estate potential to be comparable to the Spanish islands.

However, Cape Verde is still a highly underdeveloped nation that is heavily reliant on foreign aid so other voices within the property trade speculate that capital appreciation cannot function at a profitable, yet sustainable level.

Rhiannon Williamson, co-owner of Amberlamb, believes that the property market on the islands is likely to mirror the fortunes of another supposed real estate Mecca: Bulgaria.

"Everyone wants you to believe that Cape Verde is going to be the next big thing in terms of being a market with a surging wave of property price growth supported by burgeoning tourism demand," she says.

"Cape Verde will go the same way as Bulgaria; it will become over saturated with real estate, tourism demand will surge initially and then dwindle down before finding a natural level."

Bulgaria saw initial booms in the price of real estate in certain areas, but as the wave of British investors caught wind of the gains to be made, property developers went on a building spree and in some areas at least, have saturated the market. Bankso, the ski resort in the east of the former communist nation, is one such example of this.

Furthermore, tourists seeking Caribbean-style holidays closer to home are likely to flock to hotels and specially built resorts – as they do in the real Caribbean – rather than hole up for a number of weeks in a countryside villa in France of Spain.

A more attractive investment opportunity appears to gathering weight in Germany, where the property market in beginning to recover after years of stagnation.

"Berlin is certainly an attractive proposition for the buy-to-let investor, due to the high proportion of Berliners who rent, rather than buy," said Paul Collins, overseas property editor for BuyAssociation.

He added described the potential for investment in the German capital as another world from London.

"UK investors are sometimes buying whole blocks of city apartments to renovate and rent out themselves, or investing in refurbished apartments in classic neighbourhoods to make their profits."