South African businessman Sol Kerzner knew the pulling power of coral reefs and white-sand beaches when he opened the luxury resort of St Géran on the island of Mauritius some 40 years ago. Billed as a palm-draped paradise for well-heeled Parisians, word has since spread. These days, the Indian Ocean island’s clientele is a cosmopolitan mix of British, Scandinavian and central European sunseekers with a smattering of enlightened South Africans and Americans fleeing the hard sell of the Caribbean.
Today, like many castaway islands, tourism is a pillar of the economy, but the place is also promoting its profile as an offshore tax haven and regional hub for blue-chip corporates. Plans to become a duty-free island - giving Hong Kong and Singapore a run for their money - bolstered by tax-free incentives and progressive business policies, are already paying dividends. Over 9,000 offshore companies have put down roots and GDP growth is climbing at steady five to six per cent per annum.
“Economic diversification has been on the cards for some time,” said Ragu Jadoo, head of the government’s board of investment. “Mauritian sugar and textile industries have declined in the past decade due to flagging European Union quotas and increased competition from emerging Far East markets. To counter this, measures have been introduced to support developing sectors. Alongside finance and commerce, residential tourism is replacing waning exports, with a sizeable lift in foreign direct investment in the past six years.”
The residential tourism ball has been set in motion - 2006 saw the launch of the first real estate investment scheme specifically aimed at foreigners, allowing the purchase of property in designated resorts approved by the board of investment.
“Integrated Resort Scheme (IRS) developments contain only luxury homes with a stipulated minimum purchase price of $500,000 (US),” said Jonathan Tagg of international agents Pam Golding Associates. “Most projects are planned around golf courses and marinas, with high rises forbidden and generous minimum plot sizes to prevent overcrowding. A key investment incentive for foreigners is residency status, which is automatically granted to owners and their immediate family at the time of purchase, with a flat 15 per cent tax rate including income and corporation tax.”
To date, just a handful of developments have been granted IRS status, with investors enjoying solid pre-recession annual capital growth of between 10 per cent and 15 per cent. Now, with expansion on the island’s north east coast, Azuri - the destination’s largest and fastest-selling project to date - is raising the investment stakes.
The ethos behind the project is one of inclusivity according to Murray Adair, CEO of Mauritian-based development company IOREC.
“For the first time, we’re blending residential options for both Mauritian and foreign owners to live side by side,” he said. “The development will also include the island’s first international school, enabling expat families to plan for the long term. Residency status under the government’s approved IRS scheme is also granted to buyers, making relocation more feasible and less involved.”
When complete in 2014, the 420-acre resort will include 278 luxury beach and lagoon front residences, with on-site leisure, retail and commercial amenities. Prices start from $500,000 for a two-bed apartment rising to $825,000 for a luxury villa.
Building on the success of the IRS scheme, and seen by many as a natural extension of the programme, the Real Estate Scheme (RES) initiative, which grants landowners permission to develop freehold land of no more than 10 hectares for sale to non-citizens, is also seeing heightened interest levels. “RES schemes give investors with smaller budgets the opportunity to buy in sectional-title type developments,” said Jean-Michel Martial of development consultancy Espral.
“All the benefits available to buyers in IRS resorts still apply to RES developments. The key differences are there is no minimum property price and residency isn’t automatically offered to those buying in, which makes it better suited to second home owners.”
He added: “Latest figures show that Mauritius counts among the world’s top 20 hot spots in terms of house price growth. This, coupled with phased new development and infrastructure improvements, bodes well for future investment gains.”
A few years ago, the RES projects (Residential Estate Scheme) and IRS (Integrated Resort Scheme) were the most powerful magnets in foreign direct investment in the country. With a thousand villas sold to date, the account looks good. However, in 2011 and 2012, a slowdown was noted in this activity.
10 years, 9 months ago