Five ways to profit from property in Mauritius
Sandee Teeroovengadum, operations and business development manager at real estate agency Davyland Properties, looks at five areas that hold potential for property investors in Mauritius.
1. Niche opportunity in tourism
With its amazing beaches, Mauritius is well known as a holiday destination. The island catered for 950,000 tourists in 2011. Although the number of hotels amount to 109 with net room capacity of 11,925, we still observe a niche opportunity for 3-star and boutique hotels.
Mauritius has always been perceived as a luxury destination and the prevailing hospitality service has shaped itself to serve such demand. Today 66% of the room distribution is based in hotels of 4-star and above.
However, with the global economic trend, tourists have become more cost vs quality conscious, and seek for a more personalised and friendly service at reasonable cost. There are therefore opportunities to develop new smaller boutique hotels with less investment on the cost of infrastructure and less manpower, but with a most competitive price positioning.
2. Allying coastal apartments with hospitality
Further to boutique hotel development, we also note another trend for tourists to stay outside the usual all inclusive resorts and who too often find themselves bounded by the operational rules of the resort rather than freely enjoying their holidays. Around 28% of tourists arriving in the country reside in rented bungalows and at friends and families. This new trend creates another opportunity for the real estate sector to develop coastal apartment communities, inclusive of hospitality services such as housekeeping, laundry, and food and beverages.
The beachfront apartments are commonly based on leasehold land with the lease being evenly distributed amongst all the apartment owners. Given the demand, the developer can create its own management and rental company or partner with an existing company. Occupancy is estimated at 55% with a return of US$60,000 yearly. These beachfront apartments, though few existing ones in Mauritius, are being sold at an average of $517,000 for a decent size of 180 m2, i.e. ranging from $2,700 to $2,900 per m2. Backed by their return on rental of 8% per annum, these all inclusive beachfront apartments are an attractive real estate investment.
3. High growth in city apartments
Over the past five years, city apartments have become a common trend in Mauritius. Being an agricultural-based country, the population is mostly land driven, however, the new generation is geared towards modern architecture, interior decoration and technologically driven properties. This generation seeks ready-made accommodation units such as apartments with facilities like restaurants, gym, swimming pool, resident caretaker, etc.
The city apartments are a choice of living for some and a choice of investment for others. Indeed, the value of these apartments has significantly gone up in the last three years, with an asset appreciation of 15% per year. Investors also leverage on the rental, which adds a 5% return over twelve months.
4. Living in communities
In terms of residential, we also note a trend amongst the population to live in communities. During a quantitative survey undertaken with around 900 respondents, we found that generally Mauritians prefer the purchase of a property within a community to that of standalone plots. In our survey, we also noted that the population is geared towards gated communities mainly for the additional security and leisure parks. The gated community concept also allows residents to have a grip on the aesthetic display and maintenance of their surrounding environment, which positively affects the value of their property. At the end of 2011, two major gated community projects with a net sales value of $50m were sold out within three months of its launching, which again proves the welcoming of such projects by the Mauritian community.
5. Offices as a new trend
We also note a new mode of investment in the real estate sector, being office spaces. In 2001, the government embarked on the decentralisation of the CBD ‘Port Louis’ by identifying new areas for business parks and establishing a new road network. In line with its vision to make Mauritius a financial and services hub, the government also undertook major reforms such as the Business Facilitation Act, which eases the implementation of offshore companies. There is also the double taxation treaty with India, which encourages Indian companies to establish part of their operations in Mauritius to avoid tax on their investments. These measures have led to the creation of new business districts in the north and the centre of the island. Offices are now being looked upon as a new investment product in the real estate sector with a return on rental of 10% per year.
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