Mauritius Property Investment Guide for South Africans | Residency & ROI Explained

Why in Mauritius?

Against this backdrop, Mauritius emerges as a compelling alternative for South African investors. This island paradise not only basks in social and political stability but also provides a profound solution to the exchange control risk dilemma. Mauritius' appeal to expatriates worldwide has led to a phenomenon like that seen on South Africa's Atlantic seaboard - high-end properties are primarily transacted in Euros, Pounds, or US Dollars. This distinctive feature ensures that your asset remains stable and resilient, unaffected by local currency fluctuations, and you finally get to build wealth in a stable currency.

To safeguard the local residential property market, the Mauritian government has established regulations that limit non-citizens' property acquisitions to specific schemes. While the names of these schemes have evolved over the years, it's imperative to collaborate with a reputable agency when making property investments as a foreigner.

Presently, these schemes are known as RES (Real Estate Scheme), IRS (Integrated Resort Scheme), PDS (Property Development Scheme), as well as Smart City Scheme. Notably, purchasing a property valued at over $375,000 within one of these schemes renders you eligible for permanent residency.

For those seeking more budget-friendly options, there's the G+2 scheme, which offers apartments at a minimum value of Rs 6,000,000 Mauritian Rupees (approximately R2,500,000).

Please see Annexure A for a detailed breakdown of the schemes.

These price points often leave even Capetonian buyers surprised, so let's take a deeper look at the upsides:

- Growth

Capital Appreciation: Mauritius real estate has demonstrated consistent growth, particularly in sought-after areas like Grand Baie, Tamarin, and Black River. These high-demand regions attract foreign buyers, driving up property prices. Investing in off-plan properties often yields the best capital appreciation as the European investors tend to want complete built units and are willing to pay the premium. This investment strategy also offers flexible payment plans, making it an attractive option for South Africans navigating exchange control restrictions. It's common to see significant appreciation, around 20%, over an 18-month period, with post-construction returns stabilising at around 5% annually.

Rental Income: The rental market in Mauritius, especially for short-term rentals in tourist hotspots, offers high returns. Long-term rentals targeting expatriates and business professionals are also lucrative, with net yields ranging from 4-7% (In dollar terms). Well-managed short-term rentals can generate even higher returns.

Understanding Investment Returns: While the real return on property investments in Mauritius may seem modest compared to the 10% figures South Africans might expect, it's important to consider the unique advantages. For instance, investments in Mauritius often enjoy underlying protection from US Dollars or Euros, providing a safeguard against the steady decline of the South African Rand. This baseline return can be exceeded in prime locations and within the short-term rental market.

Development Considerations: In Mauritius, property developments require 70% of units to be sold before construction can commence. Developers typically ask for a 5% deposit, offering investors both flexibility and security. All developments in Mauritius are protected by a Guarantee for Completion (GFA), which is a financial guarantee by a bank ensuring that construction will be completed even if the developer faces challenges or bankruptcy. This provides peace of mind, assuring buyers that their investment is secure and the project will be completed as agreed.

- Residency Benefits

Holders of the infamous Green Mamba passport enjoy the privilege of visiting Mauritius visa-free for up to 3 months at a time as a tourist.

Owning a property valued over $375,000 within one of the qualifying schemes grants you the right to apply for permanent residency. Additionally, your spouse, parents, and unmarried, financially dependent children may also apply for a dependent permit, bestowing them with similar rights, except for the right to work, which necessitates a work permit and a job offer. Permanent residency means the right to live and work indefinitely in Mauritius.

While permanent residency doesn't lead to citizenship, it does offer a secure and comfortable safety net. It provides you and your family with the assurance of long-term residence and the opportunity to partake in Mauritius' vibrant community.

Unfortunately acquiring a number of cheaper units and building the portfolio towards $375 000 does not qualify you for residency. What some investors opt for is buying cheaper units off-plan, and on-selling once the units are completed and then using the sale price as entry point to higher end-property. For instance, owning three properties worth $200,000 each wouldn't qualify for residency. However, if you and a family member jointly purchase a property valued at $800,000, you both can apply as main applicants for permanent residency. This flexibility allows you to tailor your residency plans to your specific needs and investment goals.

Properties owned in trusts or companies also provide the Ultimate Beneficial Owner with access to apply for residency.

One significant advantage of investing in Mauritius is the flexibility around residency permits. You don't need to reside in the property to be eligible for a residency permit, allowing you to rent out the property as you see fit. This flexibility enables you to maximise your investment returns while still securing residency in this enchanting island nation.

- Lifestyle

Safety

Mauritius enjoys low crime rates and the little crime that does occur is non-violent and petty in nature. The country also enjoys a high level of political stability and cultural cohesion. In addition to personal and political safety, the country boasts a robust legal system inherited by both the British and French imperial powers:

The Mauritian legal system is characterised by:

● Supreme Court: The highest jurisdiction in Mauritius, overseeing a wide range of legal matters.

● District Courts: Handle local cases and smaller disputes.

● Intermediate Court: Deals with more serious cases that exceed the jurisdiction of the district courts.

● Employment Relations Tribunal: Addresses employment-related disputes.

● Judicial Committee of the Privy Council: Serves as the final court of appeal for Mauritian cases. (Privy Council is UK Based, and on occasion situated in the jurisdiction where the dispute originated)

The legal system ensures that the rights of all individuals are respected, with a plethora of courts, rules of law, legislations, and regulations, all overseen by competent judges and magistrates.

For anyone interested in the specifics of the Mauritian legal system or seeking legal advice, FFG Global can provide an introduction to trusted local legal experts who are well-versed in both the civil and common law aspects of the system. They can provide guidance on how the law applies to specific circumstances and help navigate the legal processes in Mauritius.

- Amenities

Mauritius offers first world amenities with world class medical care, shopping destinations and infrastructure to support a vibrant and growing economy.

The expat population is centred around Tamarin (The West) and Grand Baie (The North):

Tamarin and Grand Baie in Mauritius offer distinct living experiences. Tamarin is known for its natural beauty, tranquillity, and outdoor activities like surfing and hiking. It provides a more authentic Mauritian experience with a strong community feel and recent luxury developments. However, it has fewer amenities when compared to Grand Baie. On the other hand, Grand Baie is a bustling tourism hub with vibrant nightlife, numerous restaurants, and extensive shopping options. It's well-connected and offers beautiful beaches and water sports. The area is more crowded and commercialised, with a higher cost of living, but it provides convenience and a lively atmosphere. Your choice depends on whether you prefer a quieter, nature-oriented lifestyle or a vibrant, amenity-rich environment.

- Natural Beauty

The natural beauty of Mauritius is nothing short of breathtaking. The island is famed for its stunning beaches, featuring pristine white sands and crystal-clear turquoise waters. The pleasant climate, characterised by warm temperatures and gentle breezes, allows residents to enjoy outdoor activities year-round. Mauritius is also home to a variety of recreational activities, from water sports like snorkelling and diving to hiking in its lush mountainous regions. This diverse array of natural attractions makes it an ideal place for nature lovers and adventure enthusiasts.

- Friendly Environment

The island has always been multiethnic and multicultural and is very welcoming to foreigners, with a significant portion of its residents being foreign born or first generation Mauritians. The expatriates are generally laid back and affluent and this combination leads to very active sport, social and cultural clubs.

Annexure A: Property Schemes Available to Foreign Investors in Mauritius