Real estate remains the sector which injects the most Foreign Direct Investment (FDI) into the Mauritian economy. Generally speaking, since 2006 real estate sector has generated more than Rs. 30 billion out which Rs.19,5 billion coming from IRS (Integrated Resort Scheme) and RES (Real Estate Scheme).

In 2013, growth within the real estate sector was largely boosted up by luxury residential development, namely IRS (Integrated Resort Scheme) and RES (Real Estate Scheme). In 2013 alone, the number of villas under construction amounted to more than 200 for some 41 projects. In the same year, the Board of Investment Mauritius approved some 18 projects for a total investment of Rs.5,9 billion compared to Rs.1,6 billion in 2012.

Flashback : Integrated Resort Scheme was implemented in 2002 by the Mauritian government to allow foreigners to buy a real estate property in Mauritius under certain criteria : IRS aims at land surfaces superior to 10 hectares and according to the current legislation, the selling price of IRS units should be higher than 370 000 euros (500 000 USD). Geared towards high-end residential properties, buyers of IRS units are automatically granted a Mauritian residence permit. The first IRS projects, Le Tamarina Golf, Spa & Beach Club, was developed by Médine Group in 2005.

In 2008, the Real Estate Scheme was introduced in Mauritius. Being more accessible to foreigners, this second scheme also enables foreigners to acquire a property in the island. RES aims at reduced development surfaces, 1 acre minimum and not exceeding 10 hectares. There is no minimum price for a RES but acquisition of property worth at least 370 000 euros (500 000 USD) entitles the owner a Mauritian residence permit.

Any project regarding subdivision of land requires the approval of the Board of Investment Mauritius but IRS and RES are not subject to those conditions, reason why this type of projects are so rapidly implemented. The demand for luxury villas from South-Africans and French is consistent. This is mainly due to the implementation of various taxes which discourage French citizens thus encouraging them to turn towards Mauritius.

While in 2009, the price per m2 regarding IRS units was between the range of 4 889 – 8 357 euros, today it is within the range of 2 548 – 4 799 euros. Concerning RES, in 2009 it was between 2 126 – 3 320 euros compared to 2 126 – 4145 in 2013.

IRS-RES: good return on investment
According to L’Eco Austral Magazine, investing in IRS-RES in Mauritius may yield decent annual rental income (6% to 9% – better than in Paris or on Côte d’Azur)provided that the project has been well designed and ideally located, for example in the region of Grand Bay, Tamarin or Floréal. It is important to note that rental income, just like any income tax is Mauritius is taxable at 15% and residents can benefit from tax deductions. Moreover, there is no capital gain tax but only a flat-rate tax of 5% on resale. Land Transfer Tax at 5% will be applicable on transfer immovable properties where deeds are registered on or after 1st January 2014 irrespective of the period of ownership.

IRS-RES units are sold in off-plan mode
(VEFA) Buying off-plan implies buying a property from architects’ drawings as opposed to a finished drawing. Under the VEFA scheme (Vente en Etat Futuer d’Achèvement), the project developer should give good financial guarantee to his bank for the GFA (Garantie Financière d’Achèvement) to be delivered to him. GFA is a legal document issued by the bank that must be met by any vendor the VEFA regime for the buyers’ protection regarding the project completion.

Why invest in IRS-RES?
The buyer of an IRS-RES unit of more than 370 000 euros (500 000 USD) are eligible for a Mauritian residence permit which grants him the following fiscal benefits:

  • Net worth tax not levied
  • No capital gain tax
  • Insignificant property tax
  • No inheritance tax

The latest measures taken by the Mauritian government to boost up the IRS-RES segment:

1. Regarding the opening of the Mauritian real estate market to foreigners, Mauritian authorities have implemented the budgetary measures taken in the last budget geared towards boosting up the IRS-RES segment. Those measures are applicable since last month. Criteria allowing foreigners to buy a property in Mauritius have been softened. This aims at consolidating the reputation of Mauritius within the international real estate market. Among those measures, there is the use of the Mauritius offshore sector as a platform to boost up the IRS-RES segment. As from now, owners of offshore companies (having a Global Business License Category 1) may purchase an IRS –RES unit in Mauritius under the name of their companies.

2. Concerning retired pensioners, according to Roubesh Jhumun, Investment Advisor at the Board of Investment Mauritius: “retired foreigners may buy an apartment for more than 120 000 USD (Rs. 3,6 million) while applying for a permanent resident permit in Mauritius.” Furthermore, retired foreigners do not have to wait for 3 years under the Retired Non-Citizen Permit anymore to be eligible to apply for a permanent resident permit which is an essential criterion to be able to purchase an apartment in Mauritius.

3. Finally, in line with its strategy of attracting more foreign investment, Mauritian authorities are targeting foreign professionals having an Occupation Permit with a monthly salary of 3 000 USD. He may now buy an apartment in a 2-storey building.