A piece of paradise

A new wave of large-scale developments in Mauritius and the Seychelles are attracting the attention of investors worldwide. Elspeth Hoare finds out what the two countries have to offer.

Recent legislation in Mauritius and the Seychelles has opened up the African island nations to a wave of property development in the luxury hotel and resort sector.

Already known for their outstanding natural beauty, both economies are trading on the sector to attract unprecedented numbers of visitors. And, for investors looking to buy a slice of paradise, the purchase of a freehold property comes with the added advantage of island residency.

Mauritius, only 40 miles long and 30 miles wide, enjoyed a prosperous history, enabled by sugar production promoted under French rule from 1715 to 1810, during which time it was known as the Île de France. (France still remains Mauritius' biggest trading partner.)

It's also, to this date the only known habitat of the fabled extinct bird the Dodo. The climate is tropical with warm dry winters from May to November and hot wet humid summers.

Coral reefs stretch along the North and East coasts and it's easy to appreciate what Mark Twain said when describing its allure, "you get the idea that Mauritius was made first and then heaven and that heaven was copied after Mauritius."

Mauritius' economy rests on three pillars; sugar cane, textiles and tourism. Following the example of Dubai, the Mauritian government is looking to expand the latter and position the country as a major holiday destination, profiting from the receipts.

By 2012 the government aims to attract two million tourists a year. In 2007 there were 900,000.

The foundations look solid; its economy grew by 5.3% in 2007 (a point of contrast - the IMF recently predicted only 1.5% growth for the UK in 2008), it ranked 18th out of 157 countries in the 2008 Index of Economic Freedom published by the Wall Street Journal (the highest ranking Middle Eastern country was Bahrain at number 19 followed by Kuwait at 39 and Oman at 42) and it is one of only three African nations (the others being Seychelles and Libya) to have a "high" Human Development rating from the UN.

The Mauritian development strategy rests on FDI, in particular from South Africa and India. It is home to over 400 global financial services and has over 9,000 offshore entities.

Currently it has over US$1bn invested in its banking centre, which considering the island's size, is a substantial amount. It is also technologically-advanced, (the Seychelles has a way to catch up) and set to become the first nation ever to have coast-to-coast wireless access.

But perhaps, its 'pièce de résistance' is the plan to become a duty-free island, attracting tourists worldwide including developers and investors who will plough money into shopping malls, offices, gaming resorts, hotels, marinas (to accommodate the growing number of high net worth individuals taking up residency), and also hospitals as Mauritius aims to capture its share of medical tourism.

For speculators looking in, Mauritius provides an affordable diversification and a relatively safe one with an annual average economic growth between 5-6%, English as the official language, a well-educated population and US$2.5bn already committed in development.

The Integrated Resort Scheme (IRS), launched in 2002, opened its property market for the first time to international investors. It allows foreign individuals or companies to buy freehold homes in dedicated resort-type residential developments.

In doing so, owners and their families qualify as Mauritian residents free to spend as much time on the island as they wish.

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