Although the Seychelles gave the go-ahead to building resort communities for overseas buyers four years ago, tight planning controls mean only four schemes have homes for sale. Prior to the collapse of several banks like Lehman Brothers, last autumn, sales had been good.
On the west coast of Mahe, the Seychelles' principal island, 18 of 28 villas at the highly exclusive Four Seasons Private Residences were sold within a couple of months of coming onto the market in May 2008, most in pre-sales. The least expensive home, a three bed residence, is USD7million. Two buyers come from Singapore, most of the rest from Europe and the Middle East. Over the last six months no villas have been sold at this project.Only one villa from 13 on offer at the Banyan Tree Seychelles resort on Mahe island has been sold. Prices start from USD1.5million for a one bedroom villa. Eden Island, the first, largest and least expensive of the resort communities was mostly sold before credit began to be crunched. Two-thirds of its 450 villas, duplexes and apartments are sold with South Africans and Britons the biggest groups of buyers. Prices start at USD375,000.
Sales were strongest over the past six months at Zil Pasyon on Felicite Island where prices start at USD3million for a three bed home. Nine of its 28 villas have been sold to buyers from across the world, including a Hong Kong-based western expatriate. However, some buyers were having financial difficulties project developer, Per Aquum Residences, revealed.
“Some buyers have asked for extensions on payment schemes,” said Jenni Beggs, managing director of Per Aquum Residences, “Two UK buyers from Monaco put down deposits and have withdrawn. We've found that the UK market has been hardest hit.”
James Davies, director at London-based Hamptons International, sales agents for Four Seasons Private Residences, said the global economic slump had dampened sales of homes, but buyer enquiries had grown since December.
“Inevitably, like everything, there were buyers, but then their circumstances have changed, both at the high end and entry level,” he said, “Since the end of last year we have had more interest from individuals looking to relocate, some for tax reasons. Also we have entrepreneurs looking for somewhere to chill out.”
He anticipated sales would start to pick up at Four Seasons following the opening of its hotel on 5th February, because visiting holidaymakers would be able to view nine villas completed in January.
“We are very confident that we will have sold out by end of 2009, because it will all be built, the hotel is open and it is one of the best resorts in the world,” he said.
With only a few luxury homes being built in the Seychelles, estate agents and developers are confident they can ride out the downturn, especially since these properties are rent-able to holidaymakers.
“The key is that it is a very limited market,” said Mr. Davies, “The Seychelles has very high environmental standards, so getting planning permission takes years and years and years. Also, it has the highest average hotel room rates in the world and consistently higher occupancy levels.”
Each resort scheme is highly distinctive. Situated on steep hillsides overlooking a quiet bay, the Four Seasons villas are built on stilts from stone and wood in the creole-style with steep metal roofs to shoot heavy rain. Residents can use Four Seasons hotel facilities.
The strikingly minimalist Zil Pasyon villas designed by British architectural practice, Richard Hywel Evans, have James Bond baddie-levels of over-the-top glamour. Each villa has a glass bottomed swimming pool outside the first floor master bedroom which forms part of the ceiling of the lounge below.
Each Banyan Tree villa has a surround sound home theatre system, steam room, jet pool, sun deck, private swimming pool and access to the beach, although the sea is rough here, so not ideal for swimming. Residents can use the resort's spa.
Eden Island is a marina complex built on reclaimed land off the coast Mahe, close to the airport. Mr. Davies said there was a growing trend for overseas investors to buy land on the Seychelles's 115 islands, so they could build their own home. Hamptons was helping six foreigners, including a Hong Kong-based British expatriate, to buy land.
“They are looking for sites that range from one to 20 acres,” he said, “You can pay GBP5 million for a few acres of beach-front, or get something significantly better for GBP2million, because owners are picking valuations out of the air. It is a brand new market, so it is very difficult to get good valuations. “As soon as you step back from the beach prices fall right back. You can get a couple of acres of property with ocean views for a GBP300,000.”
SEYCHELLES HOME BUYER'S GUIDE
The Seychelles is a tax haven which gives permanent residency to overseas second home buyers. As residents, they benefit from paying no tax on income, inheritance and capital gains.
A minimum of SCR1 million (one million Seychelles rupees) must be spent on a property to gain residency.
Property taxes can be high or low depending on where you buy. Stamp duty is higher for properties bought outside of holiday home estates. The tax ranges from 2 per cent at resort community, Eden Island, to 30 per cent in the general housing market.
Placing your home in an estate's rental pool may reduce your stamp duty liability – at resort community, Zil Pasyon, home-buyers pay 6.5 per cent stamp duty if they allow the estate's management to rent out their home, but 10 per cent if they don't.
Buying properties on holiday home estates can incur some huge service charges. At Four Seasons Private Residences, they levy USD65,000 to USD85,000 per year service charges and at Zil Pasyon, USD100 per square meter per year. Since Zil Pasyon's villas range from 612 square meters to 1400 sq m in area, that means owners could pay a whopping USD140,000 in management charges each year.
Developers say high service charges are needed to pay for expensive construction and maintenance costs. At Four Seasons Private Residences, hotel facilities were enlarged to accommodate villa owners and basic infrastructure like water desalienation and power generation had to be built. Providing security guards and golf buggies for residents raised costs further.
Properties at Four Seasons and the Banyan Tree Seychelles resort can be bought freehold, so too individual homes and undeveloped plots. At Zil Pasyon and Eden Island homes are leasehold.
Rental income is classed as business revenue, so it is taxed at a progressive rate from 25 per cent to 40 per cent. Tax deductible expenses can be claimed.
James Davies, director at estate agency, Hamptons International, said the second home sales and rentals market on the islands was too “immature” to estimate potential rental yields accurately. Rental returns could be given at the Four Seasons project in six months time when its rental programme was up and running and it was known how much rent holidaymakers were willing to pay, he said.
However, Banyan Tree guarantees villa buyers gross returns of 6 per cent per year for six years and use of the villa for a maximum of 60 days each year. Owners can use some of this time at the operator's other resorts.
Independent estate agents offer completed homes and undeveloped plots for sale, including the occasional private island.
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