IRS-RES: A 'Rethinking' is Needed

8 years, 6 months ago - December 13, 2013
In general, the real estate sector is slowing down. Some projects IRS-RES then stagnate others are reluctant to get started. Proponents believe that 'rethinking complete sector is necessary because the market and competition still stuck in the past ...

With a dozen IRS and RES projects sixty projects, the real estate sector, mainly for foreigners, has not yet reached saturation. These projects always attract, but nevertheless, some face difficulties. Other promoters are reluctant to commit, pending developments.

There are no official statistics on the number of houses sold so far, but according to the figures of foreign direct investment received to date, it is the IRS-RES sector size that the lion's share each year. Since 2006, the IRS / RES segment attracted nearly 19.5 billion investment.

We surveyed some developers to get their opinions. They are all unanimous that the sector has not really evolved in Mauritius, while our competitors abroad innovate to remain competitive. For example, the IRS plan, which dates from 2002, has remained more or less unchanged. The same for the RES, introduced in 2008.

Indicators

Sector IRS-RES fishing a crucial economic indicators to guide developers on the market trend is missing. While FDI figures indicate an honorable performance of the sector, the authorities concerned do not provide sales figures, the distribution of buyers by country of origin or age and occupation group. What is the percentage of institutional buyers?

All these information are important because they provide an indication of the sponsors of the promotion method to adopt or type of customer to target. Monthly indicators have allowed the industry to better position themselves. Be aware of the trend will allow new developers to avoid past mistakes. More data are collected regularly but no analysis is made. It is therefore essential that the official figures are released.

Innovation

So far, we have only two levels are alike. The sales formula remains the same, that is to say the off-plan (Auction future state of completion). However, the limited options exclude a good number of potential customers who turn to our competitors. Yet, just innovate reinvigorate the sector. Ideas abound. After the bursting of the housing bubble in Spain during the recent economic crisis, the country has been innovating to save his real estate sector. Maghreb countries, for example, designing luxury real estate projects tailored to the French customers.

Residence permit

One of the attractions of a well RES-IRS is the possibility of obtaining a residence permit. However, an acquirer obtains that if the price of the property exceeds 500 000,00 dollars or the equivalent in euros. Residence permit remains valid as long as the owner keeps his property.

But the permit does not give the right to work or invest in a sector of economic activity. There has been no study undertaken to see if all eligible purchasers assert their right to a residence permit. According to a developer, the 20 villas that he has sold only four buyers have requested a residence permit, the other is not interested, although they are eligible. However, the objective of granting the permit is to encourage foreign buyers to live and spend in Mauritius.

Unfortunately, many already acquired villas remain empty. A thorough study will show if there is a big craze for permits residences. If not, better to lower the eligibility threshold of 500 350 000,00 000,00 dollars dollars for example, to boost the sector. What is it to maintain an unaffordable level when we know that small malignant abuse of our systems and get the residence (or nationality) Mauritian through a marriage, without investing a penny? As to benefit the real investors.

Comparative studies

There has been no comparative studies between our real estate products and those of our competitors. It also requires a study to determine the attractiveness of Mauritius as an international real estate destination. Such studies could identify our strengths and weaknesses, but also give us ideas to improve our offerings. Who are foreign nationals interested in having a foothold here? What are they looking for exactly? What are the alternative offered by our competitors? How to encourage buyers to spend much time in Mauritius? How to encourage them to invest in other sectors? Today, these are studies with more than participation in a fair marketing.

Resale

The real estate market is not sufficiently vibrant, there is not much resale. This would have a strong inflow of foreign exchange into the coffers of the State in the form of taxes. The near impossibility of resale scares potential buyers. The current legislative framework does not promote the exchange of villas or apartments because transfers are costly. Similarly, the regulations limit the membership opportunities for international real estate clubs.

RES: big or small developers?

The RES was introduced in 2008 as an alternative to the IRS, to allow small landowners and small developers to enter the real estate luxury once reserved for a handful of investors. But this segment was quickly monopolized by big developers at the expense of small developers. While the law prohibits RES an owner of more than 10 hectares of land, this is possible by circumventing the law.

For example, a large 'landowner' may sell a portion of land to a developer and then becomes an investor in the project, legally. There has also been an explosion of apartment RES projects, thus limiting the scope of small land developers. Finally, the fall of a large project has a negative impact on the sector in general.

Limit the number of projects?

With the number of IRS and RES projects, is not it time to temporarily freeze new applications to limit supply, to ensure the survival of existing projects? Better encourage potential investors to invest in projects, instead of setting up new projects.

New competition

Seychelles is also part. Madagascar is also looking to position themselves in the global market for luxury real estate. Even in Africa, some countries such as Mozambique are beginning to develop their real estate. The Indian real estate sector also attracts foreign investors. The situation in Dubai is improving after the recent housing crisis.

New opportunities

Accommodate 100,000 students with us in the near future requires that we look at the appropriate slot required. So, this has an impact on the real estate sector should provide rental apartments for foreign students. Such projects should be set up, and incentives will revive the sector.

Other constraints

Administrative barriers affecting the sector of rental villas RES. Purchasers of villas or apartments RES wishing to rent their homes to tourists must obtain the approval of the Tourism Authority, but the procedures for renting a villa is the same as a hotel or a 'Guest House'. Thus, a buyer prefers to avoid all the red tape. Similarly, the conditions for Tourism Enterprise License are costly. Also, the return on investment of RES villa for rent is minimal, as the hotels

 

 

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