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Mauritius is an island nation located in the Indian Ocean, known for its stunning beaches, tropical climate, and multicultural population. The country's property market has grown significantly over the past decade, attracting investors from around the world.
The property market in Mauritius is characterized by high demand for both residential and commercial properties, particularly in prime locations such as the capital city of Port Louis, the coastal town of Grand Baie, and the eastern village of Belle Mare. According to a report by property consultancy firm Knight Frank, property prices in Mauritius have increased by around 5% per year on average over the past five years.
How did the inheritance tax hinder property sales?
The Mauritius inheritance tax was scrapped in 2006 as part of a broader reform of the country's tax system aimed at attracting foreign investment and stimulating economic growth. The tax had been in place since 1955 and was levied on the value of assets transferred by inheritance, with rates ranging from 5% to 15%. The decision to abolish the inheritance tax had a significant impact on the property market in Mauritius, particularly in terms of increased demand from foreign buyers.
With the tax removed, investors were no longer discouraged by the prospect of having to pay a significant portion of their assets to the government upon their death. This led to a surge in interest from foreign buyers looking to invest in the country's property market, particularly in high-end properties in sought-after locations.
The removal of the inheritance tax also made it easier for families to pass down property to future generations without incurring a heavy financial burden. This has encouraged more Mauritians to invest in property as a long-term asset, contributing to the overall growth of the property market.
How can foreigners invest in Mauritius real estate?
The Integrated Resort Scheme (IRS) is a real estate investment scheme in Mauritius that was introduced in 2002 to encourage foreign investment in the country's tourism sector. The scheme allows foreign buyers to purchase luxury villas or apartments in designated areas, typically located near the coast, and receive Mauritian residency status.
Under the IRS, property developers are required to invest a minimum of USD 5 million in a tourism-related development project, such as a hotel, golf course, or marina. In exchange, they are granted a license to sell individual units to foreign buyers. The development must also meet certain standards and provide a range of facilities and services to residents, such as security, landscaping, and maintenance.
To be eligible to participate in the IRS, foreign buyers must purchase a property with a minimum value of USD 500,000. They are also required to hold the property for a minimum of two years before selling it and may only sell to another foreign buyer who meets the same criteria. One of the benefits of the IRS for foreign buyers is the ability to obtain residency status in Mauritius. This provides access to a range of services and benefits, including tax incentives, visa-free travel to many countries, and the ability to work and conduct business in Mauritius.
According to statistics published by Bank of Mauritius, foreign direct investment in high-end properties in Mauritius, which relies mostly on tourism and manufacturing exports for foreign currency, totalled $1.368bn between 2014 and mid-2022, or approximately 40% of all inflow. The number has been steadily increasing since then. Last year, the finance ministry said property sales helped push inflows to MUR25bn ($540m). In addition, property sales have fuelled the tourism and hospitality sector, which employs about 100,000 people in the country, where the average minimum wage is MUR13,075 ($284) a month, and youth unemployment was nearly 25% in the third quarter of 2022.
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