The Resort Group PLC - Questions & Answers Sheet.



This Q+A sheet has been prepared so that potential investors have an informed view on overseas property investment opportunities. Remember that ALL property investments are speculative and there are NO guarantees of financial returns, especially in today’s market!

On no circumstances should an investor proceed based upon the developers sales literature. Investors must fully evaluate each opportunity and then ensure that their capital investment is protected from rogue developers by means of bank guarantee. Guarantees offered by a developer will be useless if they cease to trade. Parent company or bank guarantees are recommended.

REMEMBER YOU ARE THE ONE TAKING THE RISK. DEVELOPERS ARE USING YOUR MONEY TO SPECULATE AND YOU ARE THE ONLY ONE WHO WILL LOOSE IF THE DEVELOPMENT ISN’T SUCCESSFUL.

  • What investment opportunities are there in Sal, Cape Verde?
    Tortuga Beach Resort + Spa is the only major development started in Sal over the past few years. All other major investment opportunities have stopped as they run out of funding from the banks. All major banks have declined to invest in new Cape Verde developments and currently, not considering any new funding opportunities unless heavily secured. Property values have fallen in excess of 20% as investors scramble to sell on their ‘off-plan’ purchases as they can’t obtain a mortgage. This has produced a ‘glut’ of re-sales as original purchasers fail to complete.

    Any investors being promised mortgages by any developers should satisfy themselves that a mortgage is available otherwise investor’s deposits WILL not be refunded should the developer fail to deliver on promises.

    It is rumoured that The Resort Group’s Dunas Beach Resort will commence construction shortly. Caution should be exercised as this will probably be limited to minor works only and these works are only designed to encourage new sales and deposits. If you are interested in purchasing one of these properties it is recommended that you obtain a development programme and ask for confirmation that the project has bank funding. If the developer relies on completion monies to fund construction there will be serious implications if investors fail to complete on their purchases as the developer will run out of money.

    YOUR INVESTMENT IS AT SERIOUS RISK < Back to Top >
  • What return will I get on my investment?
    There are NO short term financial returns on property investments in Sal. Developers like the Resort Group plc have increased their property costs to a level not sustainable on the island then offer discounts to incentives customers to think they are getting a good deal. The only deal is to get customers to part with a deposit. Investment reports, used to illustrate profits, were produced in 2007 and are now 3 years out of date. This investment data does not reflect current market values and were produced before the recession. Returns, if any, will be many years in the making. Investors MUST be prepared to finance/maintain mortgages they may have to purchase their property.

    Investors thinking about using their pension fund MUST seriously consider all of the risks. There are NO guarantees your purchase will be a good investment especially in Cape Verde.

    DO NOT RELY ON A RENTAL INCOME or any sales literature. The information contained within is designed to encourage investors to purchase thinking there will be sufficient rentals to cover mortgages. There is NO historical data to support this claim.

    AS TO SEE THE DEVELOPER/HOTEL OPERATOR AGREEMENT AND CALL THE HOTEL OPERATOR DIRECT
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  • What income yield will be achieved?
    All statements concerning yields are 100% subjective and should not be taken as achievable returns. NO developer can guarantee a yield of any kind in today’s market. Advertised yields are based upon data some 3 years out of date and achieved at the peak of an investment property market. Investors MUST insist on reviewing the latest data before making a decision. DO NOT ACCEPT SALES INFORMATION PROVIDED BY THE DEVELPOER. SEEK INDEPENDENT ADVICE. Do not forget that the developers mission is to obtain a sale and sales deposit. Once an investor signs a contract deposits are NOT refundable.
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  • How safe is my deposit?
    Your deposit, which can be 30%-40% of the purchase price, is NOT safe unless you receive a guarantee from the developer or even better a bank guarantee. On NO circumstances should you give a deposit to any developer without a guarantee that protects your investment. If the developer has appropriate bank funding this will not be an issue. If the developer cannot provide security this would indicate that they do not have appropriate bank funding and is using the sales deposits to finance their operational and construction costs. This means the developer is not risking any of its own money. Investors MUST understand how the developer intends to finance project. If sales deposits slow together with slow construction and higher construction costs it is likely that the developer will cease to trade unless additional bank funding is granted.
    Investors should satisfy themselves funding is in place otherwise you WILL loose your money
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  • What happens if the developer ‘goes bust’
    Basically, the investor will loose their deposits. It is not unusual for 30-40% deposits to be taken and you WILL loose everything.
    Make sure your investment is protected with security.
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  • Who will complete the development if the developer ‘goes bust’
    Nobody as there are ANY guarantees in place. Another contractor could complete the project but this will only be an additional cost to the investor.
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  • If the developer offers a rental scheme will this cover any mortgages the investor may have on their property?
    There are NO guarantees of rental income as this will presume that there is a large community of holiday makers wishing to rent. The holiday season in Sal is cyclic and numbers have fallen substantially over the past few years. Investors MUST not rely on a rental income as this is highly unlikely to be achieved in the first few years.
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  • Who will be the resort management company?
    An investor should ask to see sight of the agreement made between the developer and resort operating company. Research the operator yourself as this will be the company managing your rental. Ask the right questions. What experience do they have in this market? Have they operated a similar resort before? What has been their market performance over the past 3 years? Satisfy yourself that your investment will be managed efficiently.
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  • What guarantee’s are there if the sales literature regarding boasts ‘high occupancy rates’
    NO resort operator can boast ‘ high occupancy rates’ especially when they have NO experience of hotel operations in Sal. It is recommended that any investors request to see historic rentals for island/resort. These kind of statements are untrue and do not provide any comfort to an investor that they will receive a rental income. DO NOT RELY ON A RENTAL INCOME TO COVER MORTGAGE PAYMENTS
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  • What resort facilities will be provided?
    Each hotel operator will, depending on the quality and star rating, publish a minimum set of requirements ranging from the size of the swimming pools, hotel ‘offer’ to pay per view, swipe card access control and site security. If an investor is planning on entering into a formal contract and becoming part of the developer’s rental pool they MUST understand what the hotel operators resort management will offer.

    FULLY INVESTIGATE WHAT FACILITIES ARE BEING OFFERED AS THESE WILL ATTRACT PEOPLE IN THE FUTURE TO THE RESORT
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  • Will the investor receive a rental income if the previous occupants have caused damaged to the apartment/villa?
    If the apartment/villa is under repair it is highly unlikely that the investor will receive any income. Replacement products can take months to be delivered to Sal and therefore no rental income will be made. The investor must ensure that they are happy with the quality of the furnishings and that they are ‘fit for purpose’.

    Poor quality products will mean regular repairs and replacement. Investors MUST understand what level of spares the hotel operator will maintain to prevent long periods of properties not available for rent.

    Investors should be aware that import tax, after construction, will be very high. Duty can be 50% plus tax. This makes importing products to Cape Verde extremely expensive
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  • When will the hotel operator start the management service?
    It is likely that the hotel operator will not commence the management of the resort until the last development phase has been completed. Many investors will have to provide their own finance to maintain any mortgages they may have on any property they may have. < Back to Top >
  • What does 5 star luxury hotel mean?
    Investors should be aware that their expectations will not be met if they expecting a European standard. 5 star European and Cape Verde standards are NOT the same. Sal 5 star is between European 3-4 stars. Investors MUST inspect the resort amenities and facilities in order to manage their expectations. DO NOT accept what developers print in their glossy sales brochures.
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  • Does Sal have a problem with petty crime?
    YES, ‘break-in’ are common so any investor must satisfy themselves that the developer has provided adequate measures to prevent break-in. This can include steel roller shutters to windows, 5 point locks to doors, locks to windows etc. Above all there must be adequate control of visitors as low perimeter walls will not prevent intruders. Investors MUST satisfy themselves that their investment is protected when unoccupied.
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  • How reliable are the utility supplies?
    The electricity company can not cope with demand on the island so there are regular power cuts up to 24 hours at a time. Investors should ascertain what standby generation the developer is providing. If there are power outages then all facilities are affected from air conditioning, security, CCTV water supplies and sewage pumping. Sal has a serious problem with a lack of water. This means that water can be turned off at anytime causing serious sanitary issues. Investors MUST obtain a clear strategy from the developer to how the water and electricity will be managed. Cold water holding tanks and standby generation should be a minimum requirement.
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  • What indigenous plants can be found on the island?
    There are no indigenous plant species to talk about. All plants are imported and die if not maintained and cared for properly. Plants are watered by means of ‘grey water’ This water is normal sewage water with the solids removed and filtered. The utility company pumps the water back to each resort for watering of the plants. This has two problems, (1) the smell and (2) the water is often rationed to the larger and more established resorts. This will mean all planting could die. Investors should understand how the developer will manage this issue and at who’s cost.
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  • How much experience does the developer have?
    Investors should satisfy themselves that the developer has a track record of development and construction of similar resorts. Developers like The Resort Group plc have NO experience of ‘in-house’ construction and have only previously sold off plan developments constructed by other developers. They have NEVER managed their own construction works. Investors should be wary of developers boasting an impressive portfolio as selling off plan for another builder is not the same as construction and selling yourself.
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  • How windy is it?
    Sal is recognised as an excellent place to wind surf etc due to the strong winds. Properties close to the sea will require regular painting as sand is blown around all of the time. Doors may need to kept shut to prevent sand/dust being blown into the property. Pool maintenance will also be regular otherwise the filtration system will be affected by the sand deposits
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  • Will I be able to swim in the sea in front of the resort?
    There is one resort along the coast, the Moribezza hotel and beach club, where this is possible. Resorts like Tortuga Beach and Dunas beach swimming in the sea will be nearly impossible. There are very large rocks that can be seen at low tide and the sea bottom falls away sharply. Strong swimmers may wish to try the waters.
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