Actis, a pan-emerging market private equity firm with US$5 billion under management, says they have chosen to invest in Mauritius because of a number of things which include the country’s political and economic stability, openness for business and pro-activeness to attract foreign direct investments.
According to Kevin Teeroovengadum, director of real estate at Actis, Mauritius has ranked number 1 in the ease of doing business in Africa for a number of years and ranks within the top 20 globally.
Actis has invested US$4.0 billion in the emerging markets and realised US$2.2 billion from US$867 million cash invested since Actis was established in 2004.
In Lessons from Africa property investor, Teeroovengadum revealed some of the fund’s projects in Africa and how they do it.
A case for investment
When asked why individual South Africans and companies choose to invest in Mauritius, he says generally, South African investors look at the following:
- Tapping into their discretionary annual offshore allowance to place in a sound real estate product in another currency other than ZAR and hence a potential hedge against ZAR exchange rate in the future.
- Possibility of a property rental pool and benefiting from an annual return on investment.
- Obtainging permanent residency status with the possibility to retire in Mauritius given its close proximity to South Africa and good daily flight connectivity between the two countries.
Mauritius is different from what we are seeing in Africa mainland. It is an island with only 1.2 million people with no commodity resources.
However, explains Teeroovengadum, it has developed itself well in multiple sectors including financial services which aims to be a nexus of investment going to Africa and Asia.
“As for property, it is only less than a decade that the country has allowed foreigners to own residential property and we believe that as the financial services grow further and Mauritius positions itself as a financial hub, foreigners will fuel investment in the property sector either for ownership or for rentals.”
Places like Singapore and Hong Kong have an active property sector which is a subset of their respective financial services and regional hub status, he points out.
Azuri Mauritius – a new development
Dubbed the most secure property investment opportunity by its owners, Azuri Mauritius is currently under construction and the luxury homes are scheduled for completion by end of 2013.
Teeroovengadum explains that in January 2009, Actis invested in the setting up of a new real estate development company, the Indian Ocean Real Estate Company Ltd (IOREC), in Joint Venture with the biggest Mauritian Conglomerate, Groupe Mon Loisir (GML).
IOREC was then a start-up company but very quickly transformed itself to a leading company in real estate on the island within four years.
IOREC spent approximately two years doing a land assembly with another Mauritian company, Fuel Properties Ltd (FPL), giving IOREC/FPL control over 400 acres of land with almost 2kms of sea frontage, which is unique on the island.
Our Phase 1 for this grand development is currently under construction over 40 acres and consists of a 100 room 5 star hotel with the Asian hotel operator (Centara Grand), 2 500 square metres of retail/restaurants/food courts, 106 luxurious local apartments and 130 residences classified under the Integrated Resort Scheme (IRS) – targeted at expatriates and foreign buyers.
He says four contractors are currently on site with work having started at the end of 2012 and the completion of this phase expected by the end of 2013.
“We've sold all the residences for the local market and we've reached 3 digit numbers for the IRS residences.
“It has been the fastest selling real estate development ever seen on the island as the product offering is pioneering and unique,” he says.
Teeroovengadum points out that they are putting a huge emphasis on sustainability from solar water heaters/street lighting to water harvesting to implementing an internally run recycling system within the development.
With the completion of Phase 1 underway, he says they are developing the master plan for the remaining 360 acres and are looking to build a town over the medium term - and will consider a number of things including more residential units, an international school, retirement estates and office properties as they think this part of Mauritius will become one of the best developed towns on the island.
SA home buyers in Mauritius
According to Teeroovengadum, South Africans can buy within the IRS scheme and it gives them permanent residency status in Mauritius.
Under the IRS, 75 percent of buyers in Azuri are predominantly from South Africa and France, the latter given that the French market consists of a high percentage of the Mauritius tourism market, he says.
“Historically and culturally there's an affinity between France and Mauritius, the remaining 25 percent are either the Mauritian diaspora living overseas, expatriates working in Mauritius and buyers from Africa.”
As for the local residences, they have been bought by Mauritians living on the island or once more Mauritian diaspora looking to come back to the island to retire.
Luxury residences are priced from around US$550 000 to US$800 000 which is great value for money, he says.
“We think there will be a good blend of buyers who will stay there full-time to others who might use their residence as weekend getaways and others who are looking to rent for an investment perspective.”
Mauritius property market
According to the Knight Frank Africa Report 2013, the residential market is highly diversified offering freehold homes and apartments for local residents and high-end properties aimed at wealthy and foreign buyers.
Foreigners can buy properties in Mauritius through a Real Estate Scheme or IRS and some developments are specifically designed to target foreign buyers by complying with these schemes.
Major residential locations in Mauritius include Curepipe, Quatre-Bornes, Beau-Bassin, Rose-Hill, Vacoas, Flic-en-Flac, Black River, and Grand Bay.
According to the report, in Port Louis, regarded as a prime location, a four bedroom executive house commands a monthly rental of US$3 500 with yields of 8 percent.
The retail market in Mauritius is reportedly well developed and primarily centred on Port Louis although there has been a development of new shopping malls outside the city centre including Grand Bay, Tamarin, Trianon and Phoenix.
Retail space in Port Louis offers yields of 9 percent and is charged at US$45 per square metre.
The most successful shopping mall is Bagatelle Mall of Mauritius, which is located south of Port Louis on the M1 near Ebene with 130 stores, a 3D cinema and it is anchored by Woolworths, Pick n Pay and Intermart.
As for the industrial property market, areas which include Plaine Lauzun, Les Pailles, Phoenix, Coromandel, Riche Terre, Ports Area and La Tour Koenig are seen as major location hubs for businesses.
In Port Louis, rentals for industrial space command US$6.25 per square (12 percent yield) and US$34 per square metre (10 percent yield) for offices, according to Knight Frank.
As with many parts of South Africa, the office property market fell in 2012 due to the office sector’s reliance on financial services and business outsourcing, which has suffered from the general global economic slowdown.
The report notes an oversupply of office properties thus putting pressure on rentals.
According to the report, the trend is for firms to move away from the more expensive capital Port Louis to Ebene Cyber City, 10km to the south, an area set up by the government to promote the IT and back office sector.
It offers A-grade office properties connected to the country’s fibre optic network and rents are less than half those in Port Louis city centre.
Major office developments in this location include Raffles Tower, Ebene Heights, Nexteracom and One Cyber City, reveals Knight Frank.