How to join the tax-exiled jet set in Mauritius

Sunday September 24th 2006

Faith Glasgow

If you were asked to name a handful of unspoilt tropical paradises offering the promise of blissful holidays for wealthy western tourists, the chances are that Mauritius would appear among them. It ticks all the boxes as far as the standard requirements for any tropical paradise is concerned: pointy peaks and lush forest as a backdrop to bleached sandy beaches fringed with palms; calm turquoise waters protected by a coral reef bursting with marine life; temperatures averaging around 30C year-round and friendly locals bearing rum punch in coconuts.

The island?s tourist industry is well-established ? but it is largely top-end and confined to a cluster of resorts along the northern coast of the island (much of the rest of the island is still given over to the traditional economic base of sugar cane plantations). And that is how the government wants to keep things.

Over the last 25 years, the tourist trade, together with the island?s thriving financial services industry, has come to the fore, underpinning much of the island?s growing prosperity (economic growth has averaged around 6% a year over that time). Both industries have been well served by the fact that Mauritius is a politically stable democracy ? and also that it has a real melting-pot of a cultural heritage, with Dutch, French and British colonial influences, plus many Indian, Chinese and African settlers, all rubbing along harmoniously enough these days.

Until recently, it was not possible for foreigners to indulge their dreams and buy a holiday property on the island. But that has all changed, as of this spring. The government has decided to encourage foreign investment and diversify the tourist industry, with the introduction of ?Integrated Resort Schemes? (IRS).

Holiday havens

Five IRS sites have been earmarked for Mauritius, incorporating a total of 1,500 homes as well as on-site luxury hotels, golf courses, spas, beach clubs and all the other requirements for posh 21st century holidays in paradise. Buyers will also be granted Mauritian residency for as long as they own their property, so they will be free to spend as much time as they want there without having to apply for work or residency permits. When they are not on the island, the IRS legislation allows them to rent out their homes, though it must be arranged through the IRS developer or their appointed agent.

So far, one IRS ? the Tamarina Golf and Beach Club ? is under construction, on a 42-hectares site overlooking Tamarin Bay. The scheme comprises 119 villas, varying from 350m2 to 600m2, laid out around an 18-hole golf course, with a beach club nearby.

On a considerably larger scale, the 300-hectares Anahita scheme was given a high-profile international launch this spring. The Mauritian developer, Ciel Investment, has a grand vision, involving not only 300 luxury villas and apartments but also a six-star Four Seasons hotel and spa centre, a ?village centre? with restaurants and shops, a championship golf course designed by Ernie Els, a marina, and the preservation of the indigenous forest and conservation of endemic species.

Anahita?s site lies on the east coast, fronting the calm waters of the large lagoon formed by the coral reefs offshore. It is an old sugar estate, acquired back in 1948 by the grandfather of Jean Pierre Dalais, chief executive of Ciel Investment.

It also boasts 6km of waterfront ? a unique selling point as an IRS, according to Dalais. ?The rest of the shoreline is state-owned and therefore waterfront properties can only be bought on a leasehold basis,? he explains, ?but the properties at Anahita are sold freehold.? Do not expect open access straight from your own veranda to sandy beaches, though ? most of the water frontage is fringed with protected mangroves.

However, as Dalais, who lives locally, points out, if you want beaches, you simply wander down to the marina and take a boat out to a nearby island.

So what is the catch with Mauritius?s IRS programme? At this early stage, the most obvious drawback for many is the fact that the government?s interest is focused specificially on wealthy buyers, so it has stipulated a minimum entry level of $500,000 ? around £285,000 ? for the smallest property. That sum includes a hefty fixed registration duty of £40,000 on the newbuild purchase, which goes straight to the government.

Money talks

In reality, the signs are that buyers will probably need considerably more to get a foot in the door ? at Anahita anyway. Villas there are likely to range from around £570,000 up to almost £3m, with apartments from around £456,000. Tamarina?s prices are pitched more affordably: they are expected to start at around the entry level of £285,000.

There is also the practical difficulty that Mauritius is a 12-hour flight from the UK, though it is only four hours ahead, and therefore a less gruelling trip in some ways than the flight to Caribbean destinations.

Beyond that, though, the deal sounds attractive on paper. It is easy enough to arrange a mortgage locally, through the Mauritian branches of Barclays or HSBC. Capital values in these schemes should be preserved by the fact that only a limited number of properties will actually be available to foreign holidaymakers. If you do want to sell your property in due course, there are no restrictions on the amount of funds you may take out of the island (though vendors will be stung for a £28,000 land transfer tax on the sale).

Contacts

Tamarina:
www.maurinet.com/tamarina

Anahita:
www.anahitamauritius.com


Money Observer
www.moneyobserver.com

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