Dubai: In any mention of today's real estate hotspots or choice locations for second homes, it is quite unlikely Mauritius will even get a serious look. Maybe it's time to revisit this mindset.
While the island state continues to pull its weight as a prime tourism destination, its authorities and a select band of developers are looking at recreating the same in the residential space. This way they are targeting wealthy property investors who are willing to look beyond the tried and tested destinations.
One such developer is Iorec, which is helming a project — Azuri — under the ‘integrated resort scheme' (IRS) and allowing foreign ownership.
"We are now seeing an uptake in interest from foreign owners again with more residences sold to them in the first six months of 2011 that in the whole of 2009 and 2010 combined," said Murray Adair, chief executive.
"The period in between saw limited sales on existing IRS projects and as they had a very high price point and limited success in the market."
According to property market sources, South African expatriates here had up until late 2008 shown serious interest in Mauritius for second-home investments. During the global downturn, the interest did taper off significantly. Now the time may be once again right for a revisit.
In fact, the original IRS projects in Mauritius were delivered as highly fortified golf resorts based around a South African template. The concept was conceived to offer investors upmarket homes and the benefit of Mauritian residence.
A recent real estate report by Ernst & Young confirms that investor demand for IRS projects in Mauritius has picked up since last year. Foreign investment in the country's construction sector touched an all-time high, while as of last July more than 700 villas have non-resident buyers, the report added.
But there are caveats to the interest shown by foreign investors. "The luxurious residential market experienced mixed reactions with large-format units showing a decline in sale," the report said. "On the other hand, the small-format market showed increasing activity."
A feedback duly noted by Azuri's promoters. "The residential accommodation was developed to be affordable to a wider sector of the community than the existing IRS offering," said Adair.
"People may not be aware, but the average price of an IRS in Mauritius today is $1.6 million (Dh5.87 million).
"Our lowest priced unit is $500,000 and our most expensive is $800,000. As such the project offers capital growth upside to investors in terms of the per square metre cost we are charging in comparison to the rest of the market."
It is clear why developers are taking a bet on Mauritius' prospects. Given its location, the country easily straddles the trade routes between Africa and Asia. The government has also done its part in creating a profile for the country that is investor-friendly.
"Mauritius currently scores in the top two for all 53 African countries in terms of the World Bank's rankings for personal security, investment, business and rule of law," said Adair. "In the next three to five years, we see it being the premier destination in Africa for investors to establish their base and has huge benefits in terms of taxation, security, the workforce and connectivity."
The Ernst & Young report echoes the bullishness. "Mauritius is emerging as a financial, trade and global business destination with a stable political environment," it said.
"A residency permit entitles the resident to apply for an occupation certificate and start a business.
"The banking sector [forecast to grow] was relatively unaffected by the global financial crisis on account of sound fundamentals and likely to pave the way for strong growth."
And enough for its property sector to pick up speed.
Marketing: Campaign begins
The marketing campaign for the Azuri — the first IRS approved project since 2008 — started last month with construction activity to commence next April. Completion is scheduled for August 2013.
Set on a 400-acre beachfront site, it will have a hotel managed by Thailand's Centara Hotels and Resorts as well as community facilities over and above the residences.
"For the first time in Mauritius we will be blending residences for both Mauritian and foreign owners to live side by side," said Murray Adair of Iorec. "Projects to date have underestimated the attraction that people feel to a truly "integrated" solution and we hope that this will become a viable model on all future projects."
Vision: Shopping and leisure
The government has plans to transition Mauritius into a duty-free shopping and leisure destination. A ‘vision' document has focused on the provision of developing shopping venues and creating a conducive environment for investors, said the Ernst & Young report.