Brenthurst Wealth director Magnus Heystek said a R5.2 million property investment in Mauritius in 2014 is now worth between R17 million and R19 million.
Heystek decision to invest in Mauritius goes back to when he stood on a beach on the island many years ago and promised himself that he would own a property on the island.
In the early 2000s, the Mauritian government allowed limited ownership and residency to foreigners as part of a new scheme.
The first property development as part of the scheme was the Tamarina Golf Estates. Early investors enjoyed exceptional returns, with prices rising from $700,000 to over $2 million today.
Heystek bought an apartment in the West Island Marina in Black River in 2014, which cost him R5.2 million.
Thanks to the rand’s weakening and the property’s value growing to $1.1 million, his investment is worth between R17 million and R19 million today.
Heystek said that many investors in South African properties, whether residential or commercial, have lost money over the past seven years.
“The listed property sector – measuring the values of our large listed property-owning funds – is down approximately 60% from its peak in 2017,” he said.
“Residential prices are also down by about 25% in real terms when price trends are measured against inflation.”
He said this example is one of the reasons why he believes in investing in assets that are linked to the USD.
Mauritius as an investment destination
Many prominent companies select Mauritius as their headquarters, while many other South African companies have a presence in the Indian Ocean island nation. Thousands of South Africans have also moved there.
It raises the question of what makes Mauritius, with only 1.3 million people and best known for island holidays, such a popular business destination.
Heystek said Mauritius’ business-friendly policies, stable political environment, and low tax rates make it attractive for South African businesses to set up shop on the island.
The business-friendly environment results from the Mauritian government’s drive to grow the services sector of the economy.
The country implemented a prudent development plan backed by political stability, solid institutional frameworks, and low levels of corruption.
There was a strong focus on growing the services sector, including banking, financial services, trust companies, and offshoring headquarters.
The development plans worked exceptionally well. Mauritius’ economic growth rate far outpaced its peers in Southern Africa, and its GDP per capita increased from $2,500 in 1990 to $11,000 in 2019.
“From 2005 to 2020, the Mauritian economy grew twice the rate of South Africa, and income per capita was double that of SA,” said Hyestek.
The government slashed taxes to a maximum of 15% for individuals and companies. In some instances, taxes as low as 3% are possible.
There are also no capital gains taxes, no dividend taxes, no donation duties and no exchange controls in Mauritius.
“Mauritius is the economic nirvana any businessman dreams of,” said Heystek.