How to be a Good Guest

Foreigners have shown massive interest in moving to Mauritius over the last two years. The advent of the Integrated Resort Scheme, and the introduction of the user-friendly Occupation Permit put Mauritius on the Movers' Map.

We now have a crop of Recently Settled Expatriates (RSE's) many of whom have found settling in Mauritius to be quite taxing! Maybe they should have read my blogs because much of the whining and complaining includes getting kids into private schools, housing issues, and bureaucratic frustrations.

When we moved here in 1993, it was also not easy adjusting to all the different things that make Mauritius unique. If we had been able to speak better French or Creole, things may have been easier, but we enjoyed the difference and each time I solved a problem I realised that my future competitors (who as yet had not arrived in Mauritius) would have to jump that hurdle too.

When we moved here, we understood that Mauritius is a different country to the South Africa we had left behind. We embraced the new and strange. We marvelled at how easy it was for those with connections to get things done. The Community of the Connected was what my wife called it.

Now we have the connections. For example, I needed to clear the bush from a property we have near Grand Bay. If I was an RSE I would have asked my landlord who would have referred me to his friend who would have quoted a ridiculously large fee for the service (Rs200 000 or USD5800 in this true life example). Instead, I had a chat to a good friend who works for a construction company and got the use of an earthmover for two days for Rs20 000.

This kind of thing can get the RSE into a state of permanent distrust and alienation. To the point that even when the price of something is reasonable, the RSE will automatically assume it is too high and someone is trying to rip him off.

From here on it is a slippery slide to an RSE vs The Rest of Mauritius state of mind. The side effects are easy to see:

• Anything that goes wrong is blamed on Mauritius.
  
• Everything that is different is now automatically wrong or inferior.
• Hankering for many of the good things left behind in the Other Country become obsessions.
• Frustration at having made 'the mistake' of moving to Mauritius.
• Limiting of friends to include only RSE's. This one is a bit hard not to do as many who are not RSE's cannot abide their negative attitude and choose to avoid them.
  

I remember when Mugabe took over Rhodesia and renamed it Zimbabwe (after the ruins that it became). Many Rhodesians moved to South Africa. No sooner had they settled when they would nostalgically mention things like:

'When we were in Rhodesia, the beer was always colder'
'When we were in Rhodesia, the servants were far more enthusiastic'
'When we were in Rhodesia, the meat was cheaper and tastier'.

We called them Whenwe's.

Even if these comments were true, how quickly did they forget their fenced-in farms, the land mines, the personal tragedies, the lack of opportunities for their children.

RSE's behave like in-laws that come and stay with their children. Enjoying the hospitality but feeling free to complain and criticize at will. This can be very testing for the hosts and the HSE's (Happily Settled Expats).

So you want to leave your current country of residence?

Write down your list of reasons for wanting to leave your home country. Then, when you get to Mauritius or any other place you have picked, stick this list on the inside of your toilet door.

This will keep your focus on the big issues and keep your niggles in perspective.

Mixed Message

March is here already.  This post is long overdue.  My reasons for the silence are: 

• Festive Season
• Post Festive Season
• Ski Holiday
• No clear ideas of what to write in this mixed-up world. 

The top three excuses are behind me now, but unfortunately I still don’t know what my message must be.  My ingredients are listed below.  What would you cook up with these? 

• I hear there are hotels and hotel groups that are experiencing very low occupancies.
• I am told about hotels (big nice ones) that are 100% full.
• My diving buddy says his income from February is higher than last year even with a week closed due to cyclonic activity.
• My hotel management mate says occupancies look like they will be down 25% this year (this is not as much as many fear).
• Some self catering properties have halved their prices.
• Hotels are under pressure from the Tourism Authority to offer better value (see my previous blog about the rip-off on booze prices).
• IRS looks very quiet
• Construction costs are coming down
• Virgin and Comair have suspended flights
• Air Mauritius is putting pilots to pasture
• The Chinese Premier promised billions on his visit last week
• RES looks as busy as it was.
• There are buyers stalking good value properties
• There are still South Africans interested in moving to Mauritius
• Quality rentals are still rocketing up.  Over Rs100 000 (nearly $3 000) per month for a good four bedroom house.  This time last year, we were looking at Rs75 000.
• The Mauritian rupee is falling against most currencies (not the rand).  Last year it was stronger than more than half of the majors.
• The Government is looking for ways to make it easier to invest capital (purchase property) in Mauritius.                             

I am a devout optimist.  I look at the above mixed messages and conclude that we will come out of this long dark tunnel stronger and sharper.  Many people will suffer hardship and insecurity.  We will be less arrogant, and will know what it is like to work harder and longer for less. 

Time will tell.

Christmas Cheer and the Price of Beer

It's December.  The Festive Season usually means the hotels in Mauritius are full to bursting. But the global economic crash has hit tourism right between the eyes.   

I hear that some hotels are OK this year, with occupancy for December in the 75% region. While that's 25% off target, those hotels will make money.  Other hotels are frighteningly empty. And forward bookings into 2009 are sparse for everyone.  I would not be surprised if more than one hotel closes down until things get better. 

'So what good can come of this?' I ask myself.

The price of drinks in hotels is a source of constant complaint, irritation and anger.  Hotels mark up their drinks (including water and soft drinks) by as much as ten times the cost.  So, at the Ile Aux Cerfs Golf Club, a beer (Phoenix, in a 340 ml bottle) costs me Eur 5.00. The price in the shop in Grand Bay is Eur 0.50 (Rs2o).  

To put this into perspective, when I  go on holiday to Switzerland (a famously expensive country), I pay the same price (Eur5.00) for 500ml of Weisbeir on the top of a snow covered mountain.  The beer is transported by cable-car and ski doo.  The staff earn ten times what the local staff in Mauritius earn.  The cost of that beer in the shop in the Swiss valley is Eur2.5, so the mark up is only twice the cost.  Not ten times.

My wife had a golf group from the UK staying at a major golfing hotel on the east coast.

  They complained constantly about the drinks prices.  The wine given as prizes in the daily competition went down extremely well.   Wealthy guests hate getting ripped off just as much other guests.   The bar prices spoilt the experience for our golfers, and many had negative comments to say on the questionnaires that were passed out afterwards.

Many hotel guests solve the problem by sneaking off to the nearest shop and buying a few six packs and some water, and then ferreting these away into their rooms.  But take a tip from an old hand:  Check the brands in the mini-bar before you make your purchase.  If the cleaning staff spot strange items in the little fridge under the TV, it could be locked for the duration of your stay.  Then you will have to sneak out, buy a cool box, find some ice and make your own bar.  I have done this before!  Game sells good cooler boxes, but it is a long taxi ride from any beachfront hotel.

In fact, one weekend when we went to stay at one of these Euro based rip-off hotels, I filled a huge cooler box with enough drinks for ten of my friends and myself.  I then topped it up with ice.  It weighed a ton. The porters at the front desk struggled to carry it to my room.  

'Weren't you embarrassed to ask them to carry it?'  a friend asked me.  

'They should be embarrassed to charge those prices.' I replied.

We had a great weekend!

Hotels in Mauritius have had average occupancies of 85% every year. While these occupancies remained high the management could justifiably not give a stuff if anyone felt ripped off.

But the game is different now.  If the hotels don't wake up quickly, they will help Mauritius off the tourist map.  It is the era of shopping around. Other hotels will offer better deals. And not just hotels.  Bars and restaurants have already started lowering their prices.  In Grand Bay, The Beach House bar charges just Eur1.50 for a beer (Rs60) and you are sitting on the beach. Spinnakers is about the same. The Thaifoon Restaurant marks its wine up only 2 times, and serves great authentic Thai food. 

If choosing to play golf, a beer costs Rs80 at the Belle Ombre Golf course (Golf du Chate

au) and Rs100 at Tamarina Golf Club.

The best golf course in Mauritius without any doubt is the Anahita Golf Course, run by Four Seasons Hotel.  Your car is valet parked, you are ushered into a cool well sized change room by friendly professional staff.  Your bags are waiting on your cart.  Your name and handicap are entered into the huge GPS that even shows mini movies of each hole as you approach the tee box.  You are brought little cups of cold water while at the driving range, and chocolate chip cookies, fruit, cold towels and iced tea on the way to the first and the tenth.  Tiny smoked salmon sandwiches are delivered to you in the middle of each nine.  

The course is an Ernie Els layout, with ample fairways, challenging greens and bunkers. The sea views are stunning, and in December, the gentlest of cooling breezes takes the sting out of the humidity. The course is immaculate, the greens consistent and true.  Rock walls and canals thread through fairways, adding to the challenge.  I looked with envy at the lucky few who are building villas along the sparkling coastline.  

All too soon it was over and we were back in the club house.  The showers in the change room are the best in the world sending a cascade of water from a dizzy height, as you look through a glass wall onto a private garden.  

We got a special local price of Eur60 per person for the round (Rs2 400 or ZAR750) and it was worth it.  Freshly cleaned and happy from the sublime golf experience offered by Anahita, we then head for the bar...

A shandy cost me Rs345.00 (Eur9.20 or ZAR115).  Here is the slip:

And before you teetotal golfers get too excited, the standard walk-in rate for a round of golf at Anahita is Eur175.00 (Rs7 000 or ZAR2 187). 

As the Greeks once said, 'There's many a slip twixt the cup and the lip."

Why would I buy an IRS Unit?

The Mauritian property market has a number of unique features, some of them of particular interest to South African investors.

There is not a lot of property available. We are a small island and the most desirable property is along the coast, particularly the north and west coasts from a weather and infrastructure perspective, although there are also very good opportunities on the east and south coasts.

Foreigners can invest only in IRS or RES properties, or qualify after three years to purchase elsewhere as Permanent Residents.

IRS and RES is typically not beach front property as this is government leasehold land and therefore investors cannot take title (a requirement of RES and IRS).

Holders of IRS and RES property have residence for themselves and their immediate family as long as they hold the property. This is mistakenly referred to by some as Permanent Residence, but this is misleading as it does not confer on the holder the right to purchase other property in Mauritius, even after three years.

Tax residents in Mauritius (who live here more than 182 days a year) pay only 15% tax on their domestic remissions, and are not taxed on their worldwide income. South Africans are further protected by the SA Mauritius Double Tax Avoidance Treaty, so if you are a tax resident in the one county, you cannot be one in the other country too.

There is no capital gains or inheritance tax or exchange control.

South Africans typically can invest a maximum of R2m rand per person in foreign property, and even with the current collapse in values, this does not buy much.

South Africans, as part of SADC can invest in a holiday home in Mauritius without limit. This creates an excellent rand hedge for those trapped with a large amount of rands and no way of reducing the currency risk.

Mauritius is 4 hours flight from SA, so not only does this property investment constitute one of the best rand hedges around, it also provides an alternative place to live, and a new or second base for business.

The market is definitely quieter, and marginal buyers from South Africa are finding their new commitments hard to meet. A $1million commitment made a year ago was going to cost R7m. Now it's R10m. This could create some buying opportunities for those hunting for bargains. We know of some, so contact us if you are interested.

All IRS developers have yet to break even and are pouring money into golf courses and infrastructure provided for unsold units, so buyers could have the upper hand.

IRS and RES property is seen as expensive when compared to 'normal' building costs. The comparison is a bit unfair, as finishes are vastley superior plus roads, water, waste water treatment, electrical reticulation, and security installations all have to be paid for, in addition to the buidling itself. And then the developer has to show a profit to justify selling sugar land that has been held for centuries by the family.

So how much does a unit cost? Tamarina was launched two years ago at $650 000 for the cheapest four bedroom house on 3000 m2 of property. A year later, unbuilt homes were selling for over $1m and completed homes are now on the market for $2m.

River Club, launched a year ago at $850 000 for a three bedroom unit on a smaller piece of land were recently selling (still unbuilt) for $1.1m.

Villa Val Riche (was $1m, now $1.5m) is located on the South coast, the most beautiful of all our coasts. They have recently started construction on their homes and offer the best views of any development. Plus you get an established golf course that is maintained not only for the home owners, but also for the two hotels nearby. Residents also get access to a beach house at Le Telfair Hotel, so the best of all worlds is on offer.

The apartments at Anahita launched 18 months ago for about $800 000 are now completed and are selling for about $1.2m. They have just been finished and are available for December rental. Beach bars, swimming pools, golf courses, free waterskiing, kyaking and sailing.

I might try one myself!

Will Mauritius Survive this Financial Tsunami?

The Mauritius property boom started when the country opened its borders to investors three years ago with the launch of the Integrated Resort Scheme (IRS).

Before this, Mauritius property owners were 'Buy and Hold' investors, with few sales, almost no estate agents, and very little happening in the absence of buyers or sellers, or money.

Now we have an estate agent on every corner, with web sites and sign boards and marketing agents and banks with specialist property services, notaries so overworked they provide no services, and international developers searching for opportunities.

The IRS developments were well timed. International property markets were booming and there was great investment interest from all parts of the world. In the first year and a half, one third of sales went to Europe, one third to South Africa and the last third to the rest of the world, such as Dubai, Russia, or the East.

Then the lights went out in South Africa and the wealthy Rand investor started having doubts about the abilities of the South African leadership to continue to manage the country as a thriving developing economy.

This increased the interest from South Africa in IRS projects. The popping of the Northern Hemisphere property bubble decreased the potential of this buying market. So the ratios have changed, and at the moment the dominant investor is South African. Partly because the Northern Hemispheric buyer has lost some interest, but more so because demand from SA has exploded.

Another contributing factor is that most of those marketing IRS properties have ties to South Africa.

Mauritius has a lot more projects selling now than two years ago: Anahita, Tamarina, Val Riche, River Club, Les Salines, La Balise, Matala are all selling. Tamarina and Anahita have finished homes available for resale. River Club has 80 percent of units confirmed sold with deposits paid. Val Riche is building madly. Les Salines has been taken over by the Beachcomber Group and promises a good product. La Balise Marina is all but sold out - with practically no marketing. Matala Equestrian IRS started sales this week with good interest.

There are those who shake their heads saying that there is too much on offer with no buyers. What these people need to realise is that Mauritius is TINY and the rest of the world is HUGE. The property market on our perfect bit of paradise is so small it qualifies as some of the most exclusive property in the world.

So will it be affected by global collapses in property and banking?

Yes, it will be harder to borrow money to buy a unit. Banks aren't in a lending mood these days. This makes it harder to buy and harder to sell.

Yes, there will be fewer people looking to buy property anywhere, but remember, we are special by virtue of our lack of size, so this may not affect us too much.

And then there is a benefit: We are pretty insulated from global events. Our economy is self serving with little effect on anything else in other economies. The world passes us by.

Why is this a benefit? Our markets are insulated. When the worlds property markets drop ours keeps on rising. Maybe not as fast as before, but still up.

When the Asian Tsunami hit the Indian Ocean on 26 December 2004, destruction and loss of life and property was experienced as far away as Kenya and Mozambique.

In Mauritius we got one very high tide and one very low tide. Zero damage. We are protected by one of the largest ring reefs in the world. This barrier takes the force out of the waves.

I firmly believe that our property market is equally insulated and will weather this financial Tsunami better than anywhere else.

What does Permanent Residence mean in Mauritius?

I get a lot of emails from people thinking of moving their families to Mauritius, particularly from South Africa. These emails invariably display some confusion. So here is my attempt to clarify things a bit.

Emigration: Migration from your home country in order to settle in another.

What this means is that you move your permanent residence to Mauritius. In South Africa, it has another twist, in that it is the only way that South African Exchange Control lets their captive population take all their assets out of South Africa. Unfortunately it also involves a tax of 10%.

A common myth is that Emigration involves losing your nationality. Not true. Just because you change your place of permanent residence does not mean you have to change your passport. It is entirely possibly to be a permanent resident of a country but be a citizen of another.

The focus of Emigration is that it involves leaving your home country - it does not involve an equal and opposite Immigration in Mauritius. We Mauritians give you a menu of options as to how you can settle on our precious Island.



The Mauritius Menu of Residential Options

Starter

• Occupation Permit without the option to convert to Permanent Residence

Main Courses

• Occupation Permit with the option to convert to Permanent Residence
• Retirement Residential Permit with option to convert to Permanent Residence
• Right to Occupation Permit due to ownership of an IRS unit.
• Permanent Residence

Desert

• Citizenship
• Tax residence
  

Occupation Permit without the option to convert to Permanent Residence

This is the closest thing to the old combination work and residence permit. It is issued for a period of three years, and can be renewed on application, indefinitely. The minimum requirement is that the bread winner earns a salary of more than Rs30 000 per month. This is a little more than $1000 per month. The breadwinner and his dependent family may work and live in Mauritius. As soon as a child turns 18 and is not a student, they need to get a job or get out. That job also has to pay more than Rs30 000 per month.

Other ways to qualify for this permit are to

• have a company with turnover of Rs3 million ($110 000 at time of writing)
• be self employed and earn Rs600 000 p. a. ($22 000)

Occupation Permit with the option to convert to Permanent Residence

In order to have the option to convert to Permanent Residence, the holder must achieve the following minimum levels for three consecutive years and then apply:

• have a salary of over Rs150 000 per month ($5, 500)
• have a company with turnover of at least Rs15m p.a. ($555 000)
• be self employed and earn at least Rs3m p.a. ($111 000)

Retirement Residential Permit with option to convert to Permanent Residence

A retiree may acquire a residential permit (that does not permit him to work, obviously because he is retired!) by depositing $40 000 per annum into his personal rupee account in Mauritius. He may then spend this amount as he sees fit. This requirement refers to only one individual in the family.

After three years, the retiree may apply for Permanent Residence.

Right to Occupation Permit due to ownership of an IRS unit

The owner of an IRS (Integrated Resort Scheme) unit may acquire an Occupation Permit that entitles him to live and work in Mauritius. After three years this may not be converted to Permanent Residence - this is a common misunderstanding. If the IRS is owned by a Company, then this company can nominate one individual to be the 'resident' who then gets the occupation permit.

Permanent Residence

What's so great about Permanent Residence? The main benefit of being a Permanent Resident is that you may apply to purchase a home anywhere in Mauritius. This is a much cheaper option than purchasing a home in an IRS, unless you want a house on the beach. In this case, I refer you to my blog on property.

The finer details of permanent residence are still being thrashed out by the government and we eagerly await clarification on a number of issues. Of particular interest is the the question of how long this 'permanence' is. When the dispensation was first described, it set the term for ten years. Some have said that implicit in this ten year threshold, is the ability for the permanent resident to apply of citizenship. Watch this space.

Citizenship

A person may apply for citizenship by Naturalisation if one has lived 'continuously' in Mauritius for 5 years. The law is vague and the application thereof highly discretionary. The Prime Minister administers this and citizenship is a privilege. If someone has been living in Mauritius for over five years (aggregate having subtracted all the times of absence) they may start the application process. It may be declined or it may be successful. I don't know of any magic formula that can guarantee success. Perhaps it will be easier for permanent residents to apply for citizenship in the years ahead. I hope so.

Tax Residence

Tax residency has got nothing to do with any type of permit or citizenship or residence status.

You have to reside in Mauritius for 182 days per year in the first two years, and 91 days each year thereafter to qualify for tax residency. When you have stayed in Mauritius for the first 182 days that year, you may apply to the Mauritius Revenue Authority for a tax residence certificate. Once this is in your possession, it is possible that you may not be taxed in other countries that have tax treaties with Mauritius (including UK and South Africa).

Extinct Scheme for Residence

Please note that the Permanent Residence Scheme whereby an investment of $500 000 in Mauritius gave one permanent residence status is now, like the Dodo, extinct.

For more detailed information on any of the above schemes please go to http://frontfin.com/prs

Mama Afrika just got over her PMT.

My sporting sojourn to England is behind me. Well done the Proteas. Sorry Retief, but you looked good when I watched you. Ernie...eeish!

I feel very proud of my South African heritage (my ring tone is boeremusiek), while at the same time am very comfortable in my Mauritian skin. To complicate matters further, I am also a British subject. But I love lots of stuff in South Africa, cherish my memories, and marvel at her mood swings.

Mad Bob has decided he can take on a co-star in the final act of his play, "I had a farm in Africa."

Clem Sunter, Master Scenario Artist, says SA is poised for windfall profits when Zimbabwe gets rebuilt, and suddenly, SA is happy again. The rand is strong, Mbeki is cool, Eskom can get away with half of Koeberg broken, and property prices go back up.

I made the last one up but believe that it could come true. Don't forget 2010.

Go to Clem Sunter's great web site, http://www.mindofafox.com. Not only will you get a chance to see how crazy the world is and where it can head, and you can also see what can happen to SA through both an optimist and a pessimist's eyes.

You can also evaluate your own position, and decide on the basis of your analysis if you are in or if you are out.

Or if you can't decide, maybe now is a good time to hedge your bets.

The big problem with PMT is that it comes back!