For many years, UK property has been a market very much ripe for investment. Not only has it demonstrated incredible resilience when compared to other markets around the world, but it has also offered consistent short and long-term returns to investors, who could expect to sit back and watch the money roll in, secure in the knowledge that their investments were relatively free of risk.
This, however, is not necessarily the case now. While the UK’s buy-to-let market, for example, was once seen as a lucrative investment opportunity by high-net-worth individuals from all around the world, it is now characterised by a number of significant drawbacks.
For one, BTL investors in 2024 face a considerably higher tax bill than they did prior to April 2020, given they must now declare the income used to pay their mortgage on their tax return. This means that the profits received are much smaller, and the incentive to invest is greatly diminished as a result.
Furthermore, UK landlords must also contend with additional stamp duty costs, not to mention the drop in capital that they’ll suffer in the event that property prices fall – which they have over the last 12 months. With all of these factors combined, it’s small wonder that so many investors are deciding to sell up, and setting their sights on other markets.
Mauritius is the place to be
As the UK continues to become a less appealing destination for investors, one market that’s attracting plenty of attention is Mauritius. Surrounded by the crystal blue waters of the Indian Ocean, the small East African country has long enjoyed its reputation for adventure, as well as for its idyllic, palm-fringed, golden beaches.
Now, however, it's not just tourists who are flocking to Mauritius from all around the world. Indeed, foreign direct investment inflows to the island nation rose by 27% to reach 23.1 billion rupees [$503 million] in the nine months through to September 2023, according to the Bank of Mauritius, with real estate activities accounting for 69% of total foreign investments.
Considering the raft of incentives open to foreign investors, it’s easy to see why so many are being drawn to Mauritius’ property market. To begin with, there’s no taxation whatsoever on dividends and capital gains, nor are there social charges and property taxes either.
This is made all the more appealing by the fact that foreign investors can access these tax advantages irrespective of the value of their purchase; a measure enshrined in law by a framework called the Property Development Scheme.
This, however, is contingent on the intervention of a recognised and experienced property developer whose project must have received full accreditation, and be respectful of the local environment.
While overseas investors aren’t required to become permanent residents in order to enjoy these tax benefits, this is an option that’s available to them, thanks to the island’s straightforward residential permit scheme. Eligible to those who invest $375,000 or more, this initiative grants HNWIs the right to live, work, and retire in Mauritius, thereby allowing them, their spouse, and any dependent children under the age of 24 to enjoy the country’s high-quality of life, as well as its safe and secure society.
Despite all the fantastic incentives associated with investing in Mauritian property, it should be noted that, as with all investments, doing so isn’t completely risk-free. This is especially true when purchasing off plan, given the potential for construction delays, changes in market conditions, and the danger of working with a disreputable and financially unstable developer.
These risks, however, are largely mitigated by a contract known as Vente en État Futur d’Achèvement [VEFA], which prescribes that all real estate developers in Mauritius selling projects off plan to non-citizens must offer a financial guarantee of completion. As such, off-plan investors can be assured of a much greater level of protection than they would when investing in other countries – such as the UK – where measures like VEFA are not in place.
Discover the benefits
Therefore, investors who’ve become disillusioned by the UK’s struggling property market should consider what they stand to gain by investing in Mauritius’ instead. While the island is an undeniably beautiful and highly sought-after location in its own right, there are plenty of reasons besides why purchasing property there makes so much sense.
With the market experiencing growth at such an exponential rate, Mauritius is quite clearly the place for shrewd investors to be in 2024, and is set for even brighter days ahead.
The Economic Development Board (EDB) Mauritius is returning to London this spring, to host the second edition of the Property and Investment Forum, following the success of its 2023 event.
To find out more or to book your tickets, click here
