AFRICA
MAURITIUS
Attracts Attention
Experts weigh in on investment
BY TRACY BARTLETT
T he devaluation of the Rand against hard currencies at a rate of 6 % a year , the political instability , and low-growth 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 savvy investors and businesses are now looking at dollar-based 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 short-term 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 mono-agricultural economic model , dramatic transformation in recent years has seen Mauritius emerge as an investor-friendly 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 sub-Saharan 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 $ 500 000 .”
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 ZAR / USD 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 Dollar-based property market .
“ One of the most sought-after developments is the award-winning 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 world-class 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
“ A visit to a mall won ’ t have them feeling as if they have been shopping in a foreign country .
“ 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 high-income 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 .”
54 SEPTEMBER 2017 SA Real Estate Investor Magazine