What are the impacts on real estate investment in Mauritius?

Describes Time Magazine As ‘Final election year’By 2024, about half of the world’s population will go to the polls. This wave of political change has already affected or will in any case affect many countries, thus affecting investment decisions. As Mauritius is also in the midst of an election period, it would be wise to carefully monitor political developments in major markets such as France, the United Kingdom and South Africa, while not forgetting the US elections, which will play a major role in the global economy.

The real estate market is directly linked to political and economic stability, as well as political decisions such as taxation, and is particularly sensitive during elections. In this context, real estate brand Sotheby’s International Realty has taken the pulse of its global agencies and analyzed the impact of this election period on real estate purchasing demand through its semi-annual luxury report. Outlook Report.

In the UK, the Labour Party was elected in the last legislative election and Sir Keir Starmer was elected Prime Minister. “Every election year, the market weakens. Due to this uncertainty, investors are more on the sidelines, which causes market growth to temporarily weaken. That said, uncertain markets can provide good opportunities for those willing to make risky investments or have a long-term perspective.explained Claire Reynolds, managing partner of UK Sotheby’s International Realty, in a commentary.

According to the Economic Development Board (EDB), the British make up 7% of homebuyers in Mauritius, so can we expect this change in government to have an impact on the market? “The UK market, although it has grown recently, does not have a big impact on us. UK Ultra High Net Worth Individuals (UHNWIs) are more lifestyle buyers rather than buyers seeking significant tax benefits, so I do not think the New Labour government will have a significant impact on the number of Brits choosing Mauritius as a second or third property investment destination”explains Timo Geldenhuys, Director of Mauritius Sotheby’s International Realty.

In addition to the UK, the people of South Africa also went to the polls in May, but the results were equally unsettling. This was the first time since 1994 that the ruling African National Congress (ANC) did not receive an outright majority,” said Hein Pretorius, a real estate expert at Lew Geffen Sotheby’s International Realty in South Africa, in the report. Mind you, South Africans make up 22% of foreign homebuyers in Mauritius, and an alliance between the ANC and the Democratic Alliance could bring a sense of stability to South Africa. “South Africa has always been a major investor in the Mauritian economy, contributing significantly to foreign direct investment flows, including real estate investment. South Africans buy for different reasons, the most prominent being to obtain permanent residency in Mauritius and invest their South African Rand in overseas assets. This will not change, and we can expect the South African market to remain the same, and possibly even grow.”, adds Timo Geldenhuis.

Another priority market for Mauritian real estate is obviously France, which, according to EDB data, accounts for 42% of the country’s buyers. The French election shocked many, with the left-wing coalition becoming the dominant force in France’s semi-cycle. Here, Mauritian real estate offers may become even more attractive. “The unrest in France has increased the attractiveness of Mauritius as a relocation destination and we have also seen an increase in demand from key European markets. Many French investors are concerned about a tax system that is unfavorable to the wealthy in the short term. Mauritius should therefore highlight all the major benefits of investing and residing on the island, thus making our beautiful island a viable option. Indeed, the government and the private sector should take advantage of the current situation”he continued.

The results of the French legislative elections also pose an economic uncertainty. According to Le Tribune, Moody’s rating agency stressed that “difficulty” The international agency currently rates the country Aa2 with a stable outlook, and warns that the outlook could be downgraded to “Negative” Depending on the impact of political negotiations on the budget or growth trajectory. Therefore, in this context, it is particularly important to monitor trends in France, especially immigration trends.“The unexpected results of the recent elections have raised concerns about future economic stability. The tax reforms envisaged and often mentioned in the media and their potential impact on inheritance have aroused the concern of a large section of the population. Faced with this uncertainty, many are considering investing or relocating abroad. Mauritius appears to be an attractive destination. Its favourable climate, favorable taxation and permanent residency offer a reassuring option for those seeking to protect their assets and benefit from a stable environment. This trend highlights the growing desire among French people to diversify their investments and secure their future in the context of an increasingly volatile global economy.” explains Ninon Manaranche-Michel, founder and manager of Amanthée Patrimoine, a wealth organization consulting and strategy firm based in France and collaborator of Mauritius Sotheby’s International Realty.

Economist Éric Ng has a different view on this. He believes that in addition to the tax perspective, it is important that the country’s economic environment is attractive, which can encourage French companies to relocate to Mauritius, create company branches or simply start new companies. “We must not forget that entrepreneurs and business leaders will think about the future of their businesses and will ask themselves if they can live and work in Mauritius. The decline in French purchasing power could have a negative impact on Mauritian tourism or exports, although the continued depreciation of the rupee would help these sectors a lot. Therefore, if our economy and structure are not particularly conducive to the creation of businesses, I don’t think we will necessarily see a significant increase in the French expatriate population to Mauritius.”

Furthermore, it is obvious that apart from political issues, the control of local inflation and the impact on interest rates also play a vital role in the decision to buy real estate. Therefore, if the international situation we find ourselves in is conducive to the growth of the Mauritian real estate market, this must go hand in hand with the country’s pleasant living environment. If all roads lead to Rome, all analysis will lead to the same conclusion: strengthening our economic fundamentals. Therefore, measures such as controlling inflation, reviving the Mauritian Rupee, controlling current account deficits including trade deficit, and controlling debt levels should be the first measures to be considered. A healthy and prosperous economy can only have a positive domino effect on all economic sectors of the country.