Love in a Warm Climate

With its tropical charms, stable economy and tax-friendly environment, it’s hardly surprising that the island of Mauritius holds increasing appeal for those seeking a luxury getaway. Gavin Strachan reports

They may just be a few tiny specs in the middle of the Indian Ocean, but the bite-size island nation of Mauritius is still an international success story. From its status as a global business hub with a favourable fiscal regime and economic and political stability, to its well-established reputation as a top-tier holiday destination, the tropical island is also now increasingly being viewed by international buyers as a desirable location for both permanent and part-time residence.

Since the early 2000s, when Mauritius first embarked on its initiative to convert former sugarcane land for residential tourism development, investment spinoffs for the local economy and its residents have been quick to evolve, and the island has never looked back.

In 2002, legislation was introduced to allow foreign ownership of residential property in terms of what was known as the Integrated Resort Scheme (IRS) and subsequently in 2006, the Real Estate Scheme (RES). Apart from building strong, new inward investment streams into a fledgling real estate market, both initiatives were instrumental in encouraging overseas buyers to establish and register their businesses in Mauritius all the while helped by an investor-friendly, low tax base.

Taking their place in 2015 – the Property Development Scheme (PDS) gathered the former RES and IRS to harmonise and facilitate access to property on the island. While all new real estate construction projects today have to meet the PDS scheme, the former investment schemes are still applicable to villas and real estate complexes already built.

Under the current PDS programme, non-Mauritian citizens are eligible for a residency permit (as is a spouse and offspring under 24 years of age), when they buy a property for more than US$375,000. Foreigners are only allowed to invest in dedicated, approved IRS, RES, PDS and Smart Cities developments.

“As a resident, you are free to come and go as you please (although, to be considered a ‘tax resident’ for tax purposes, you need to be in Mauritius for a minimum of 183 days per calendar year),” confirms Philippe de Beer, CEO of leading agents Park Lane Properties. “You also have the option of letting your property using a number of reputable real estate agents, who will find tenants and manage the rental of your property while you are away, whether for the whole year, or part thereof.”

Conditions of the PDS scheme are similar to previous initiatives, to the extent that residences need to be secured and the infrastructures, as well as the integration of several services need to be introduced within the resort development area with amenities such as a gym, a spa, a club house, a commercial space or other services alike.

The scheme is proving popular with a wide-reaching HNW foreign buyer base. A further contributory factor to investor interest is the additional protection afforded to overseas buyers of a completion guarantee provided by banks while their home is being built. During the development, payments are made in controlled stages through the notary; so from a cash flow point of view, payments are staggered over a 12 to 24 month period while the building is being completed. Peace of mind for the buyer is top priority.

Acknowledged as an attractive environment in which to live and to conduct business, foreigners also benefit from the favourable 15% flat rate of tax rate for both companies and individuals, as well as a registration fee of just 5% on real estate transactions. There is no tax on capital gains if the property is sold, no withholding taxes on interest and dividends, exemption from customs duties on equipment and free repatriation of profits, dividends and capital.

Adds de Beer: “Mauritius ticks a lot of boxes when it comes to buying property. Those looking for a change of lifestyle away from the hustle of the city, can put down permanent roots and enjoy quality time with their families and a solid capital appreciation of their investment. As for those not yet able to make a complete break, there’s always a second home option, a haven to escape to as often as possible with good rental yields for the making in between visits.”