Patricia Piper Properties ltd

Every month, the Board of Investment sends us a newsletter with great information on the island, events, living, real estate...  We'd like to share this information with you!

Sectoral Analysis - Hospitality and Property Development
1. Alternative hotel financing
The 2009 budget has introduced the concept of invest hotel or condo hotel. This concept is a new trend in the hospitality and property development sector in the world. Buyers can purchase a hotel room/villa in a luxury resort and receive rent revenue, thus helping to finance the construction of a hotel and offset the costs of ownership.
An invest hotel or condominium hotel or condo-hotel is a hotel which is put for sale to individual equity investors, where each owner acquires a room, suite, villa or studio whilst the whole hotel is managed as a hotel operation under a single brand.
2. Support to small hotel
• Small hotel of less than 50 rooms that are facing financial difficulty will be exempted from payment in increase in rental until December 2010.
• Arrears in rental for small hotels which are due to delays in coming up in new policy on industrial leases will be rescheduled to be effected as from January 2011 in 5 equal yearly installments.
• For other hotels, the rescheduling period for the arrears in rental will be 3 years and there will be no moratorium.
• SJR (Saving Jobs & Recovery Funds) will assist small hotels and restaurants to improve, refurbish and renovate.
3. Setting up of Hotel reconstruction scheme
Government will refund the lower of either 50% of the wage bill or the difference between the new rental and the old rental for such constructions provided that no workers are laid off.
4. Integrated Resort Scheme
Sale of serviced land
IRS companies can sell a maximum of 25 per cent of their residential plots as serviced land, but with an obligation for the purchaser to start building a house according to strict architectural guidelines within a 5-year time frame.
The parameters to this are:
(a) The size of each plot to be in accordance with the current regulations of no more than 1.25 arpents,
(b) The sale of each plot of land must be of an amount exceeding USD 500, 000 or equivalent,
(c) The sale is conditional to the plot being constructed by the purchaser within a 5 year time period from the date of acquisition from the IRS company,
(d) The residence permit will be granted only after the residential unit has been built,
(e) The IRS company has completed all the necessary infrastructure works and amenities (e.g. golf course, hotel, club house, spa, restaurants, beach club, etc) in accordance with the IRS certificate issued by BOI,
(f) The sale of any plot of land by the purchaser prior to completion of the residence will not be allowed.
Defer land transfer tax
In view of improving their cash flow, the mode of payment of Land Transfer Tax payable by IRS developers is being reviewed. Only 25% of this tax due will be paid by the developer at the time of signature of title deed provided that a bank guarantee equivalent to the balance due is provided. The outstanding amount due will be recouped in 3 installments until the IRS property is delivered to the client over 18 months.
Loan on local currency to buyers of IRS residential units
Foreign buyers will be allowed to have access to rupee financing provided that a minimum of 500,000 USD or in any of its equivalent in any other hard convertible foreign currency, is invested in acquisition of same. However, the servicing of the loan should be in foreign currency.
5. Land Transfer tax
Land transfer tax is brought to a flat rate of 5% till December 2010.

Turning the Crisis into Opportunities

Investor Note on the National Budget 2009: Riding out the global crisis, saving jobs - protecting people - preparing for recovery
Dear Friends,
Today's national budget speech delivered by the Vice Prime Minister and Minister of Finance and Economic Empowerment, Dr. the Hon Ramakrishna Sithanen, under the leadership of the Prime Minister, Dr. the Hon. Navinchandra Ramgoolam, provides a clear signal that the country will confidently pursue its growth objectives and prepare for the global recovery.
There is recognition that these growth objectives will require substantial public sector investments. These investments are carefully driven to productive uses, including a cushioning of high-value yet vulnerable industries such as the hospitality sector and pro-cyclical stimulation of the resilient IT-BPO and seafood sectors.
Substantial investments are also being made to prepare Mauritius for the next ladder of economic growth as the global economy recovers. The public sector investment programme component is large at more than MUR 45 billion and spans the road and bridge network, the port, airport and the energy sector, where an effort is undertaken for renewable and energy-efficient technologies. Consequent investments are also being made in capacity-building, particularly in training.
This unprecedented fiscal expansion is nevertheless highly responsible as the budget deficit forecast is approximately 4% for 2009, peaking at 5% in 2010 and, by the most conservative norms, are back to approximately 3% as the global economy recovers post 2010. These forecasts are comparable to high-performing prudent economies around the world such as Singapore and are perhaps even enviable compared to the deficits of large developed and developing economies, the UK, US or Malaysia to name but a few.
Mauritius projects to achieve this balance not by short-estimating the global recession (the national budget is based on an eighteen months recession) but because the country has adopted a series of deep reforms over the last four years which has provided a comfortable fiscal space. This fiscal space is also used to promote a social cohesion within the country, whether through targeted incentives at the enterprise level based on job considerations or through corporate social responsibility projects.
We are convinced that, with the combination of investments in infrastructure and people, and the good social, economic and doing business climate, Mauritius will prove an attractive location for promoters seeking to invest or re-invest. The decision-makers in the country have re-affirmed their commitments to continued improvements in competitiveness and ease of doing business.

This is the time where unique investment opportunities can be seized:
•    There is a political will to fast-track private sector investment projects;
•    Incentives are being provided in the hospitality sector both on the supply-side (fiscal incentives; new financing mechanisms, incentives for new hotel developments, sale of bare land on IRS plots among others) and on the demand-side with the invest-hotel concepts allowing citizens and non-citizens to invest at the hotel room levels;
•    Large public infrastructure projects and boost to the construction industry provide opportunities for foreign firms to set up local offices;
•    Within these projects, the Tianli and Highlands mega-developments by themselves provide huge investment potential at a combined MUR 120 bn value;
•    The reduction of land transfer taxes to a flat 5% provides major opportunities for real estate developments by reducing total costs of ownership;
•    The second fibre optic submarine cable project will open up major business opportunities in the IT-BPO sector. The planned reduction in connectivity costs will substantially reduce total costs of operations. The second cable will also unleash projects requiring additional capacity and full redundancy;
•    SME-level incentives which could also potentially benefit ICT companies;
•    Opportunities to invest in the Mauritius Freeport with the greater ease of doing business and more potential to sell to the local market;
•    There is an opportunity to develop 100 Mw power plant which provides flexibility for promoters to propose energy-efficient technologies as well as a wind farm project;
•    Opportunities exist for the setting up of an 8,000 student campus and provision of training services as the country embarks on a massive skilling programme;
•    Opportunities for joint ventures in agri-business and agro-technology services;
•    Funds allocated to develop the creative industry will also open up new avenues of investment.
Government has officially announced the hosting of international conferences in IT-BPO and in financial services. These on-invitation conferences, to be held in September and October of this year, will be an opportunity for international investors to obtain necessary assistance on rapidly setting up in Mauritius.
The uphill trek towards higher growth might have become steeper because of the global crisis but the Mauritian economy is well-positioned to find its way to the top. We are convinced we will steer out of the global recession as an economy open to business, with highly-trained resources, a state-of-the-art infrastructure, and strong socio-economic fundamentals. We invite you to join us in this journey,
Because our Business is You,
Raju Jaddoo
Managing Director
 

Board of Investment
Level 10, One Cathedral Square Building
16 Jules Koenig Street, Port Louis, Mauritius
Tel : +230 203 3800 - Fax : +230 208 2924
Email: contact@investmauritius.com
Website: www.investmauritius.com

Dear Friends,
We open this editorial as the world prepares for next week’s G20 summit which could truly be a turning point for the world economy. Greater certainty on proposed actions and the quantum of global fiscal stimulus should provide clearer insights into the recovery of the major markets. US President Obama is expected to request a global fiscal stimulus to help the world economy out of a recession which is now not only affecting developed nations but equally the export-led Asian economies. On moral grounds, the UK would wish to support the US request. However the dire UK public finances situation will require the British PM to be more careful in his generosity. Hints from Mr. Brown’s recent speeches on the concerted virtues of quantitative easing, the impact of last year’s fiscal stimulus and low interest rates seem to infer that additional public spending would really only be available for targeted measures. For developing countries threatened by the global financial crisis, Mr. Ban Ki-moon, United Nations secretary-general, has made a bold $1,000bn stimulus package request. This would help tackle climate change in poorer regions and provide liquidity help for emerging economies. However raising of this quantum would certainly be a challenge given the largest economies’ public deficit situation. The EU should be the greatest surprise at the summit. While the Czech Republic’s PM, and holder of the EU presidency has been actively condemning American remedies for the global recession as “the road to hell”, the EU certainly could offer some glimmer of hope for recovery.
Replacing the dollar as global reserve currency, it seems, is not on this G20 meeting’s agenda. China’s SDR currency proposition or Kazakhstan’s Acmetal will have to wait for a more appropriate timing, possibly when unknotting the intricacies of the chimérique economies would be less harmful to global capital and trade flows.
While Mauritius would hope to benefit from the global package, particularly to carry out its mandate on sustainable island development to address climate change, there is also some wariness on possible protectionist positions. The Mauritian Vice Prime Minister and Minister of Finance and Economic Empowerment, Dr. Sithanen has been in discussion with some of the G20 ministers to explain the country’s position on sensitive economic sectors such as international financial services and outsourcing activities.
Since the beginning of the year, export of IT-enabled services in Mauritius is on the rise. The industry has witnessed considerable demand from Indian technology providers, data centre and business continuity and disaster recovery centres, particularly in the light of Basel requirements. New accounting requirements in the US may also lead to an increase in F& A BPO activities. This week alone has seen Deutsche Bank opening a new office at the Ebene cyber-city for its shared services activities and the setting up of Nextira One, a French IT and ITES company servicing blue-chip clients. Newly set up international financial services and legal outsourcing firms are also recruiting on the local market, driven by very competitive local salaries. The Fortis Group, India’s No.2 in private healthcare has bought into shareholding of Clinique Darné, a high-end private clinic, ahead of the setting up of the Apollo Group, India’s No. 1 in private healthcare. Both expect to benefit from the regional client market.
In the hospitality sector, while tourist arrivals have been down in Q4, 2008 by 2.3% as a consequence of the recession in main source markets, latest published accounts of hotel groups such as Naiade have indicated a satisfactory short-term outlook for the first half of 2009 based on an increase in last minute bookings. In fact, new investments in real estate developments in the hospitality sector should continue to rise. If Naiade is an example, its latest audited accounts claim a market revaluation of its leasehold land at Rs 2bn, an increase of over 50% since the last valuation.
To put these events in perspective, during this same period in the US, retail investors have been flying from stocks and stashing their monies into bank accounts (close to $250bn in the first months of this year). It gives reassurance that the international investor continues to trust the Mauritian economy and is gearing up to take advantage in the anticipated recovery in the source markets.
We hope that you enjoy this issue of the BOI’s newsletter and look forward to be of service to you.
Because our Business is You,
Raju Jaddoo


MIPIM 2009: The world's leading real estate event

The Marché International des Professionels de l’Immobilier (MIPIM) is the world's leading real estate event. MIPIM is a property summit to promote and showcase projects on an international scale, meet with developers, industry leaders and buyers and to use the exhibition as a platform for making professional business contacts in the related industry and explore joint venture opportunities.

Mauritius was at its fourth participation in this international event with a strong delegation composed of 15 participants from both public and private sectors namely:

   1. State Land Development Co. Ltd
   2. State Property Development Co. Ltd
   3. Jeetah Foundation
   4. Price Waterhouse Coopers Mtius Ltd
   5. Mordaunt Estates Ltd
   6. Jet Seven Property Developer Co. Ltd
   7. REDS Consulting Ltd
   8. Mauritius Post and Commercial Bank
   9. Select Properties Ltd

The main objectives for the participation of the Board of Investment MIPIM 2009 were:

    * To promote Mauritius as an international real state and property development destination.
    * To promote the Real Estate Development Scheme ( IRS and RES)
    * To promote Mauritian lifestyle for Work and Live.
    * To target and attract new international potential investors in hotel, real estate and property development in Mauritius.
    * To attract real estate property funds in investing in the RES projects.
    * To provide the IRS promoters with a platform to promote their projects and also to meet with future partners.
    * To keep abreast with the latest trends in the hospitality and property development.
    * To benchmark Mauritius with what other international destination has to offer in terms of hospitality and property development.

This event was particularly successful in terms of contacts established and number of visits recorded on the Mauritian pavilion. The objectives of participation were reached and above all, the visibility of Mauritius at the level of the international property market was increased.

 Lifestyle: Hike in the Morning, Drive in the Day and Dive in Evening

Trek with the early morning rays, drive through the morning dews and dive with the evening breeze …that's what working and living in Mauritius offers.

Mauritius counts approximately 4000 professional foreigners working in sectors varying from IT to the Tourism industry. In order to cater for each individual’s unique lifestyle, so that they feel relaxed in their hectic schedule, there is a variety of activities and social circles, which are suitable for any type of individuals.

However, one common factor that everyone irrespective of culture and values will appreciate with the atmosphere is the relaxing one with the mixture of fragrance of different cultures available. Ougadi recently celebrated gave foreigners a taste of how diverse our culture can be.

Mauritius offers entertainment for each category of foreign professionals from the introverts to the extroverts. If you are a highly socializing person, nightclubs and pubs will be your paradise with a touch of weekend party organized in coastal hotels. You can also subscribe to one of those privileged and private clubs where you can enjoy some cheerful time after a hard day’s at work.

However, those want some peace and quiet, a walk on one of our sandy beaches could be ideal, or a dive in the blue lagoon, and maybe some trekking in those nature parks.

Mauritius is not only a sand, sea and sun destination but also a green destination as several trekking sites with diverse activities are for being offered. So from the beach, through night clubs and to trekking, Mauritius is a complete entertainment provider for the local as well as foreign professionals and tourists. There won’t be home sickness because variety is one of Mauritius’ best advantages. It can be said that Mauritius is the destination where everyone will get full satisfaction.

The first BOI newsletter of 2009 comes out in time for the Chinese year of the earth Ox which according to Chinese astrology is one of patience and hard work.

Hard work is indeed a major part of the strategy of Government and the investor community in Mauritius to shore up the economy during the difficult global situation ahead. A US$ 225 million pre-emptive expansionist package by Government early in the cycle, backed by an additional US$ 187m fiscal stimulus certainly helps.

Of particular interest to the construction industry, a number of public infrastructure projects have been earmarked for implementation between January 2009 and December 2010. International infrastructure companies with an expansionary view on high-return projects in Africa and the Indian Ocean are using this opportunity to build their regional presence through Mauritius.

New investments are also expected in renewable energy projects as the Maurice Ile Durable fund and the accompanying legal and regulatory framework move into play. A series of public-partnership projects - among which the new city project at Highlands, the China-driven Tianli economic zone and the Mauritius Land-Based Oceanic Park - are also expected to bring additional foreign investments in the country.

Despite the global conditions, our premium real estate industry is forecasting a growth this year with three top-end IRS developments and five high-end RES projects starting this year. A number of incentives and eased regulations provided by Government over the next two years would, we believe, help shift the balance of risks for international real estate investors not to delay their commitments in these projects.

Other sectors with expected growth in foreign investments include IT-enabled services as global companies seek cost-reduction options, private education providers with the forecasted setting up of autonomous campuses this year, and healthcare and life-sciences through a series of projects including medical schools, medical laboratories and medical tourism projects.

As an open economy, Mauritius will necessarily face the impact of the global downturn. Patience and planning become as important as hard-work in order to make the right decisions on projects requiring fast-tracking, sectors with greater value propositions in the current context and the measures and incentives being provided by policy-makers.

Indeed, as the downturn accentuates in our traditional markets, and as our Indian and Chinese partners are adjusting their economic forecasts over the next 2-3 quarters, our investors will more than ever require good information and a local partner to facilitate their project implementation. The Board of Investment is more than ever at your service to invest in Mauritius, the gateway to Africa and a global service platform.

We wish all our readers a prosperous Year of the Ox

Infrastructure and Real Estate Opportunities in Mauritius

Mauritius implemented pre-emptive expansionist measures early in the current business cycle with US$225 m to be injected in the economy on public infrastructure projects as per National Budget 2008/09. Given the length and breadth of the downturn in some of its traditional markets, the Government has earmarked an additional US$ 187m as fiscal measures to be implemented between January 2009 and December 2010 in order to shore the Mauritian economy comfortably past the turmoil. 40% of this package is on productive infrastructure projects and half of the full package is to be implemented before June 2009.

Following your meeting and discussions with BOI colleagues on infrastructure projects in the country and the region, the Board of Investment is pleased to provide an update of infrastructure and real estate opportunities associated with the above measures.

MID Fund

Implementation of a wind farm project

Financing waste to disposal component to waste to energy project

Food Security Fund:

Upgrading of veterinary services and food technology laboratory

Human Resource, Knowledge and Arts Development Fund

 Infrastructure Development including new campus for tertiary education

Local Infrastructure Fund:

Construction of Multi-Purposes Complexes

Construction of Fish Landing Stations

Construction of Market Fairs

Construction for Crematoriums

Construction of Tartan tracks

Social Housing Development Funds

Upgrading existing low income residential complexes

Airport expansion & Modernisation

Government has approved the Airport Master plan and the tendering process for the extension of the airport terminal evaluated at some US$62m would be shortly launched.

In order to ensure that the capital injection in the economic cycle reap positive results in terms of employment creation and other local benefits, partnership with local companies would be favoured for the allocation of grants and contracts from the increased public spending.

Other Local and Regional Investment Opportunities in Infrastructure & Real Estate Projects

    * Infrastructural and water resources management projects funded by the World Bank in the Sub-Saharan Africa and Indian Ocean regions representing some US$ 300 billion

    * The Mauritius Highlands project, to develop a modern town based on international standards and best practices, and evaluated at the tune of US$ 3.2 bn for which a request for qualifications is already out

    * The construction of the Tianli economic zone, which will require an approximate investment of US$ 700m, also due to start this year

    * 6 IRS and 10 RES projects which consists of building of luxury villas for high net worth individual evaluated at some US$ 610 m

    * Creation of an airport hotel as well as a business cum commercial center in the southern region at an estimated cost of US$ 31 m

    * Construction of 3 medical schools evaluated at some US$ 31m

    * Construction of an intelligent building to host ITES companies estimated at the cost of US$ 3.2 m

    * The building and management of a market and shopping mall at Rose Hill under PPP

    * Development of a 25 to 40 MW Wind Park at Bigara under PPP

    * Development and management of a shopping complex at the Mahebourg sea front under PPP

NEWS RULES FOR IRS & RES SCHEME

Following the Mini-Budget presented on 19th December by the Hon Dr Rama Sithanen, Vice Prime Minister and Minister of Finance, the Real Estate Scheme has been reviewed in a bid to make it more attractive and investor-friendly.

The following changes apply with immediate effect:-

   1. Non-citizens who purchase an immovable property worth at least 500,000 USD under the Real Estate Scheme will be eligible for a residence permit.

   2. Acquisition of property can henceforth be made in any hard convertible currency, including the South African Rand.

   3. The 5 year ownership requirement to qualify for Real Estate Scheme has now been waived. Henceforth there is no minimum ownership period required.

Property developers are reminded that the exceptional measure to “suspend the land

transfer tax and registration duty for the period 1 January 2009 to 31 December 2010 for approved projects undertaken by developers to be registered with the MRA in respect of land for a development project, provided at least Rs 50 million of construction works are completed before 30 June 2011” does NOT apply to RES projects.

Engaging the Mauritian Diaspora

From Britain to Canada , France to Australia , the Mauritian Diaspora is a movement that reaches across many borders and testifies to a modern notion of what we understand by Mauritian ‘diversity’.

Over time, there have been four major waves of emigration from Mauritius that have been identified. The first was around the time of independence in 1968.  Uncertainties arising out of the transfer of power from colonial rulers to democratically elected leaders combined with poor economic and employment prospects led to a number of Mauritians moving to Britain , France , Australia and South Africa .

Thereafter, in the seventies, a second wave of migration occurred consisting of young people or professionals mostly going to practice nursing in Europe, specifically in England .

The downturn in the economy in the eighties prompted a third wave of economic migration consisting mostly of people who had no particular skills at the time of migration and have worked their way up to some social and financial stability.

The fourth and ongoing wave consists mostly of students who have gone away to study and who have stayed back.  Professionals are also constantly seeking better jobs abroad.  It is estimated that 40 nurses leave the country every month for better job prospects in Canada , England , Australia and New Zealand .

Today, it is estimated that about 200,000 Mauritians live abroad, representing approximately 14% of our population. This is a demographic which, by all accounts, has been somewhat neglected. Mauritius has so far not had an active engagement with its diaspora and the converse is also true.  The relationship of Mauritius with its diaspora can be characterized as latent at best. Even under difficult or adverse circumstances, members of the diaspora have retained their independence and fended for themselves. Mauritius , too, has not had occasions to court its diaspora:  the original pillars of the economy remained strong in a preference-enabled world.

The need and the time to activate the relationship have arrived.  The Mauritian economy is transforming and restructuring itself over the short and medium term and the significance of diaspora contribution is now recognized.  Together with the Ministry of Industry, Science and Research, the Mauritius Research Council and International Organization for Migration, the BOI is helping set up a platform to enable Mauritians living abroad to fully participate in the development of Mauritius .

The Mauritian diaspora will have a special place in the new platform that the BOI is setting up to attract highly skilled professionals to work and live in Mauritius . Contact Mauritius , which will be operational in March 2009, will be an electronic platform which will present the numerous opportunities which the New Mauritius is now offering. It would be a platform which would welcome the Mauritian diaspora back home.

LIFESTYLE

CHINESE NEW YEAR OF THE OX 2009

Amidst the panoramic festivals celebrated in Mauritius , we rejoice the Chinese New Year which is the longest and most important celebration in the Chinese calendar. The Chinese year 4707 begins on Jan. 26, 2009

Chinese months are reckoned by the lunar calendar, with each month beginning on the darkest day. New Year festivities traditionally start on the first day of the month and continue until the fifteenth, when the moon is brightest. The Chinese Spring Festival, not only belongs to the Chinese but also to all Mauritian because the Chinese community is part of the multi-culture society,

Chinese New Year’s Day (January/February) is celebrated each year on a different date, because of the adjustment of lunar days to solar days. According to Chinese customs, no scissors or knives are used on the day of the festival. Red, symbol of happiness, is the dominant colour.

Food is offered to ensure abundance during the year, and the traditional wax cake is shared with relatives and friends. Firecrackers are set off to drive away evil spirits.

The Spring Festival ends up with the Dragon Feast a few days later. Chinese dancers and musicians take to the roads and perform the traditional Lion dance.

Year Ahead:
The OX year is a conservative year, one of traditions and values. This is not a year to be outrageous. A slow but steady year.

This OX year will bring stability and growth where patience and diligence pays off.

This is a year of Harvest - when we reap what we have sown. Take care of business this year, do not let things slide. So, lets’ toil hard to get the best and waited results.. So ,GODD LUCK AND BON COURAGE!!!!!!

 

EVENTS

ATTENDED EVENTS

    * WORLD FUTURE ENERGY SUMMIT 2009
      Abu Dhabi National Exhibition Centre.
      19-21 January 2009 in Abu Dhabi
    * INVESTMENT PROMOTION  CONFERENCE
      Participation of Mr Iqbal Mallam-Hasham,
      22 January 2009 in Abu Dhabi
      Managing Director
      State Investment Corporation of Mauritius

  UPCOMING  EVENTS

    * NASSCOM Leadership Summit
      Mumbai, India
      11- 13 February 2009
      Theme: Mauritius as a Global Disaster Recovery /Business Continuity Centre

Commonwealth Business Council (CBC) Africa  Outsourcing Summit
London U.K
2- 3 March 2009
Theme: Green Data Centre in Mauritius

Copyright 2009. Board of Investment