27
01/12
15:31
Why Cape Verde Property is Not Simply a Bubble Market
To say that cape verde property is yet another bubble property market is entirely ignorant.
Evan Davies mentioned in a recent Radio 4 report on Cape Verde that the property market is a bubble. This was wrong because Cape Verde is far too small to be a bubble market which pops at the top. Bubbles in property marketes occur when demand outweighs supply and then through a sudden change in demand supply suddenly becomes far greater stimuating a price drop or a ‘crash’.
When we think of real bubble markets, we are talking about Spain where millions of properties are now sitting vacant. It is simply impossible for that to happen in Cape Verde. There is a government set restriction of a 25:75 build ratio; meaning that 75% of the tiny islands will remain unbuilt.
So taking into account the special conditions of Cape Verde, it would be inacurate to describe it a bubble market.