Mauritius attracts attention

Mauritius attracts attention

Category Property News

The devaluation of the Rand against hard currencies at a rate of 6% a year, the political instability, and lowgrowth environment in South Africa in recent years has precipitated an increase in offshore investment as South Africans diversify in an attempt to hedge against political and economic risk. But as the Rand continues to perform badly, offshore options have become more limited and sawy investors and businesses are now looking at dollarbased economies closer to home, to stable economies like Mauritius where the Rand still has considerable investment value. Lew Geffen, Chairman of Lew Geffen Sotheby's International Realty, says that South Africans have become increasingly aware of the long and shortterm financial gains of investing in Mauritius, which counts South Africa as one of its main regional markets. "South Africa now accounts for almost one fifth of foreign direct investment in Mauritius and around 40% of the buyers in property development schemes and, between January 2015 and April last year, 516 residence permits were issued to South Africans, most of whom are investors and professionals." Geared for investment Traditionally a monoagricultural economic model, dramatic transformation in recent years has seen Mauritius emerge as an investorfriendly diversified economy which now has one of the highest per capita incomes in Africa. It is also ranked by the World Bank as the easiest place in Africa to do business and by the African Development Bank as its most competitive economy in subSaharan Africa. Jennifer Hirst, a Senior Real Estate Consultant and Manager of Mauritius Sotheby's International Realty says: "Based on current figures on key sectors of the economy as well as on past trends, Statistics Mauritius has forecasted a growth rate of 3.8%, up from 3.5% growth in 2016." She attributes the country's economic success to several factors, including the continuous regulatory reforms the country has introduced since 2005 and its adherence to good global practices when doing business. "A major contributing factor has been the easing on land acquisition by foreigners as well as on immigration restrictions with a residence permit now being issued to investors who purchase property in excess of 8500 000." According to statistics published by the Bank of Mauritius, the foreign Direct Investment FDI flows into the Mauritian economy increased by 41% between 2015 and 2016, with FDI inflows of MUR 9.7 billion and MUR 13 billion respectively. "The real estate market currently attracts by far the largest share of FDI in Mauritius," says Hirst, "accounting for around 80 percent of the foreign investment received. "The appetite the South African buyer has for the Mauritius property market has always been healthy, but recently there has been a marked increase in demand for properties within the 500,000 800,000 USD bracket, which are primarily modern apartments and duplexes." She adds that this trend is very much linked to the ZARUSD performance of late. In 2010 a 1.5M USD property equated to roughly 12M ZAR whereas that same property now costs in the region of 19M ZAR. However, a key advantage is that it allows South Africans to use their Rands to invest in a Dollarbased property market. "One of the most soughtafter developments is the awardwinning luxury residential estate Villas Valriche in the South, which has sold more units to South Africans than other local development and whom now account for more than 30% of its residents. "Another development that is popular with South African investors is La Balise Marina in the Black River region, the island's only residential Marina. Both these estates have an array of worldclass amenities and offer residents the ultimate luxury island lifestyle." The land of opportunity In addition to the most obvious benefits Mauritius's proximity to South Africa and the leisurely lifestyle it offers there are also numerous other compelling benefits and drawcards for investors. Says Geffen: "'Mauritius offers social and political stability, it has a strong and diversified economy and a sophisticated financial services industry as well as an educated bilingual workforce and a pool of skilled and qualified professionals. "Mauritian taxation is also more favourable to both individuals and corporate entities, which are taxed at a flat rate of only 15%. Additionally, there is no Capital Gains Tax and Mauritian authorities do not require any Estate Duty should an owner pass away." Hirst says that another appeal factor is Mauritius's deep rooted ancestral connections with both France and Britain and its continued close ties with Europe through tourism, trade, global business and varying degrees of cultural influences. "In Mauritius, like in South Africa you find undeniable parallels with the European way of life, which has great appeal to the South African buyer as the familiarity makes it easier to adapt." Familiar favourites She adds that because so many local brands are now available in Mauritius, South Africans can still watch DSTV and shop at their favourite stores like Woolworths. Mauritius's ambitious plans include becoming a highincome economy by 2020 and to this end it currently provides fiscal incentives for investment into a range of sectors including logistics, manufacturing, ICTs, film production and real estate development. Because Mauritius is an Island and most commodities are imported, Geffen points out that the one discernible disadvantage is that the cost of living is slightly higher than in South Africa. "However, most people regard this as a very small price to pay in exchange for the benefits of low taxation, a safe environment, unparalleled lifestyle, connectivity to Europe and UAE and second home ownership with permanent residency."

Author: Lew Geffen Sotheby's International Realty