Holiday home projects have sprung up on the coastline since the Indian Ocean island opened its doors to overseas property buyers in 2005. These developments are mostly gated communities with leisure facilities including golf courses, spas and restaurants. There are two types of communities - Integrated Resort Schemes (IRS), launched four years ago, in which villas are mostly available, and smaller, less expensive Real Estate Schemes (RES), started 18 months ago, which are apartments and houses.
IRS project Villas Valriche, on the southwest coast, will comprise 52 homes in phase two, seven of which have been sold since marketing started last November. Its developers, South Africa-based Second Lifestyle and Mauritian landowner Hector Espitalier-Noel, said completion of the second and third phases might be delayed if sales remained slow. This is because they cannot build the homes until buyers decide what style of villa they want. Twenty four styles are on offer."Phase two was launched at the end of 2008 and, although interest has been very high, the global market conditions have slowed buyers' willingness to put down deposits," said Robert Green, director of Cluttons, the sales agents for Villas Valriche. Prices start at US$950,000 for the estate's freehold villas.
Harry Lewis, international residential director at estate agency Savills, said sales were traditionally weak at this time of year which exacerbated the downturn.
"We've seen a mirror situation to all high-end resort developments worldwide," he said. "There has been a substantial reduction in inquiries, prices are softening but not as quickly as many would hope, and everyone forgets that January and February is traditionally our slowest selling period of the year."
The slowdown follows strong sales at initial IRS projects until last year. Anahita and the Tamarina Golf Estate and Beach Club are both sold out. At Villas Valriche, 123 of 132 plots in phase one were sold following its launch in May 2007.
Mr Green said resale prices for Tamarina properties were double their initial sales prices because of that growth. Prices rose 20 per cent at Villas Valriche last year, he added.
The nationality of buyers has altered since the IRS initiative was launched.
"The profile of buyers has changed as a result of the global financial crisis," Mr Green said. "The South African and British markets, previously regarded as the two biggest, have retracted largely due to weakening exchange rates and, as a result, other markets, particularly in the euro zone, have increased interest."
Some buyers are western expatriates based in the Middle East.
Projects had not been marketed in East Asia, so few buyers had come from there, Mr Green said. With demand drying up elsewhere, developers considered these markets potentially important now, so exhibitions might be held in Hong Kong soon, he added.
Several developments are scheduled for completion over the next couple of years.
South African estate agency Pam Golding Properties, which is affiliated to British agency Savills, is marketing two schemes that will be completed next year, including The River Club where half of its 250 homes have been sold. Prices start from US$825,000. It is also marketing Corniche Bay on the southwest coast which is centred on an 18-hole Gary Player-designed golf course. Ten of its 120 wavy-roofed villas, designed by Norman Foster, have been reserved. Prices start at US$3 million.
RES schemes include Cape Bay Beach Resort Mauritius where 22 of the 41 apartments have been sold. Prices for the remaining units start at US$355,000. Prices at RES project Le Residence start at US$352,000 for a two-bedroom, two-bathroom first floor apartment with roof terrace.
Jonathan Tagg, managing director of Pam Golding Properties, said even though the launch of the RES sector coincided with the start of the credit crunch, it had withstood the property market downturn because few properties were on the market.
"The shortage of resales of RES units has kept prices high and the crisis has not affected prices substantially," he said.
Mr Tagg forecast lower-priced RES and IRS properties coming on the market this year.
"We will see more IRS developments priced at about US$1 million as opposed to the conventional pricing of around US$2 million," he said. " RES developments are likely to be priced from US$300,000 to take advantage of a lower price bracket of buyers."
He said prices in Mauritius were, until recently, expensive but that there were some nice apartment blocks and small housing developments coming onto the market at prices ranging from US$250,000 to US$500,000.
MAURITIUS HOME BUYER'S GUIDE
Overseas buyers of Mauritian homes, sold for US$500,000 or more, will gain permanent residency on the island. Investors can only buy these properties at Integrated Resort Schemes (IRS) which are holiday home communities dotted round the island's coastline.
Permanent residency brings several advantages including tax. Income tax is levied at a flat rate of 15 per cent on their worldwide income. Expenses, losses and debts can be offset against this. Depending on the taxpayer's circumstances a certain amount of income is tax-free. There is no capital gains tax or inheritance tax.
On the downside, IRS homebuyers must pay a US$70,000 purchase tax.
Alternatively, overseas investors can buy less expensive homes at Real Estate Schemes (RES) where prices start at about US$300,000. However, they will not gain permanent residency by investing in these projects. Investors in new RES units must pay US$25,000 registration duty. Buyers of resale RES homes pay this charge plus a 5 per cent land transfer tax.
In a separate government initiative, retired foreigners can live in Mauritius provided they deposit a minimum of US$40,000 into a local bank account each year. These retirees can buy IRS and RES properties.
The Permanent Residence Scheme (PRS) awards permanent residence to foreigners who invest US$500,000 or more to start a business. These overseas businessmen are allowed to buy a home on the island. Foreigners with sought-after professional skills can gain permanent residency under another scheme and buy property.
Robert Green, director of Cluttons estate agent, said the IRS and RES rental markets were untested, so rental returns were impossible to calculate. The developers of Villas Valriche estimate 8 per cent yields are possible at their IRS project. According to the Global Property Guide, rental yields are 6.17 per cent in the general housing market.
IRS and RES home owners, who let their properties through the development's management company, must pay it a letting fee of about 20 per cent of the rent. Rental income is taxable.
More than 60 per cent of Mauritians are of Indian origin, 25 per cent Creole, 3 per cent Chinese (mainly Hakka) and 2 per cent Europeans. English is the official language.
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