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!