For a while residential schemes for foreigners (IRS and RES) were the obvious market to look into for investment, since it provided residency rights for properties purchased above US $500,000 and interesting capital growth as a long term investment, but these options are losing their appeal due to a lack of new offerings on the market and the price points proposed. Indeed, the residency rights only become attractive if the foreign buyer stays in the country for more than six months, thus benefiting from a lower tax regime as taxation occurs in Mauritius, and capital growth is less attractive given the rates at which they are pitched and their overall price.
Prime coastal regions South West to North East of the island have been developed, pushing investors to start looking to the Eastern side of the island. The Mauritian government has also put in place plans to build a new Eastern motorway but these plans will only be finalised in the next four to five years.
For the majority of South Africans Mauritius is nothing more than a holiday resort. A place to unwind surrounded by sandy beaches and palm trees.
On a global and local scale, developers have been subject to the economic crisis over the last four years. The interesting learning curve since then has pushed to the conclusion that it is not the market that dictates the success of a project but the demand that is created via creative and innovative offerings.
Therefore, considering the existing high investment demand still available on the island given its stability and its unique lifestyle offerings, developers are investigating alternative types of projects to refuel the existing investment interest from potential buyers.
Alternative Investment Options
Amongst the new innovative schemes put on the market, we note the creation of a new scheme below that has proved successful so far.
Invest Hotel Scheme
In this scheme, investors have the option of purchasing a room in a resort.
Having evolved from the timeshare (shared ownership) business model where properties such as destination clubs, private residence clubs, cottages and condo hotels would have a number of individuals as part owners, investors have the option of purchasing a room in a resort.
Once the room has been purchased the new owner can have use of the unit for no more than 45-days a year and the rest of the period it’s placed in a rental pool with the owner receiving rental income. The Long Beach Resort has been the pioneer of this scheme in Mauritius with 90 units selling at an average of EU250 000 each and only a few units remain.
This scheme has been amazing not only for the developer and the investors but also for the government as it has brought about innovative ways for them to get hotels built and expanded without the need for bank funding. So any hotel developer has the option and prospects of selling the units thereby giving the bank more security.
Return on Investment
As with any transaction the rental pool structure needs to be adequate for the buyer in order to give them the security that they will get return on investment as appropriately implemented at Long Beach. In these split structures, resorts offer the profit calculated not on the individual occupancy but the total room rental. This ensures that regardless of whether a room is occupied or not over a period of time the owner will still get a share of the profit.
While the temptation might be to purchase a larger unit or supersize villas the results are usually less returns but better capital growth potential. Smaller rooms, due to their lower rates, show slightly more returns for investor. This has been so successful that over 70% of the units have been sold since the launch of the Long Beach scheme in September 2010, making it an investment worth investigating.
As with any venture anyone looking to invest must check and confirm the credibility of the developer and construction company to avoid losing their hard earned cash. The Property Annex is a Property Development Services Company that can assist in any queries regarding property development in Mauritius.
The Property Annex
2nd Floor, Suite 2IJ
19 Cybercity, Ebene
Republic of Mauritius
Phone: +230 468 1222/1223
Fax: +230 468 1224