Fine & Country 'Hotspot' exhibition attracts local buyers

Fine & Country in conjunction with ABSA bank recently hosted a highly successful international property exhibition at the V&A Waterfront in Cape Town.

The exhibition took place on the last day of Fine & Country’s four day convention which began on the 27th of October and showcased an array of local and international Fine & Country properties. A number of international Fine & Country speakers, prominent local business leaders and licensees attended the event.

Linda Erasmus, CEO of Fine & Country SA remarked that the combination of quality properties, international estate agents, developers, tax consultants and interested investors made for lively discourse. Malta and Mauritius in particular attracted much interest from local buyers.

Says Erasmus: “Malta and Mauritius attract South African buyers for different reasons. Mauritius is within easy reach and caters to clients looking to invest in exotic island getaways. Malta appeals to those seeking to bolster their European property portfolio or simply escape to sun-soaked, culturally rich Mediterranean climes.”

Malta’s Fine & Country office was represented by MD Geoffrey Ciantar who was accompanied by a number of the island’s prominent property developers as well as tax consultant Kevin Catania. According to Ciantar, the number of South Africans buying property in Malta has increased significantly over the past 18 months.

“Malta has a number of factors working in its favour,” explains Ciantar. “It is essentially a gateway between Africa and Europe; it enjoys a pleasant, warm climate, is culturally rich and politically stable. The crime rate is exceptionally low and world class business, leisure and medical facilities are plentiful. English is widely spoken and buying property in the capacity of an overseas buyer is easy and simple.

“Further driving the popularity of the island’s property market is the fact that development land is in short supply. Malta only measures 316km’s and the island’s authorities have embargoed development in some areas. Thus, land availability is coming under pressure which is driving up the value of existing properties. The advent of low-cost airline flights to Malta is also galvanising the island’s property market.

“Given these factors, it is estimated that the island’s property market could appreciate by as much as 12% year-on-year. Needless to say this makes Malta particularly appealing from an investment point of view.”

Malta’s financial and tax benefits also appeal to buyers. For instance, Malta’s mortgage facilities fund up to 80% of a property’s purchase price and overseas buyers aren’t charged annual property rates and local council taxes.

Additionally, sellers who can satisfy Malta’s Inland Revenue Services that the house has been the “only” or “main” residence for the past three years aren’t obliged to pay Capital Gains Tax.

“Obviously certain expenses and stipulations do apply though,” notes Ciantar. “That said, Malta is investor friendly and it is well worth meeting the few prerequisites that are in place to secure a residence at this magnificent Mediterranean outpost.”

As for Mauritius, Raju Jaddoo, CEO of Fine & Country Mauritius explains that the island’s close proximity to South Africa has catalysed a strong bond between the two countries. This bond has proven mutually beneficial in that South Africans have realised significant returns on property bought while the island’s economy has received a shot in the arm.

A near perfect climate, financially sound economy, powder white beaches, friendly people, cosmopolitan shopping and glorious scenery are other attributes which have made Mauritius an appealing outpost for South Africans.

Akin to Malta, a number of financial and tax benefits further bolster Mauritius’ appeal. Investors aren’t bound by minimum selling price restrictions, they can elect tax residency and are free to repatriate funds or revenue arising from the sale or rental of property.

Foreign property owners can also engage in economic activity on the island and Wealth Tax, Inheritance Tax and Capital Gains Tax don’t apply. However, stamp duties and rental duties are charged.

Mauritius has capitalised on its popularity through the introduction of several property investment schemes. These include the Integrated Resort Scheme (IRS) the Real Estate Scheme (RES) and Invest Hotel Scheme (IHS).

Under the IRS, luxury Mauritian villas and other residential properties can be sold freehold to foreigners at a minimum price of US$500 000. The primary advantage of purchasing property under this banner is that buyers receive permanent residency status.

To date, seven IRS projects have been launched and 400 villas sold. A number of additional IRS projects have been approved by the Mauritian Board of Investment. Taking into account these proposed developments, it is estimated that IRS villas will number approximately 3000 within the next ten years.

Says Jaddoo: “Given the relatively low IRS inventory, a significant degree of capital appreciation can be expected making this an extremely attractive investment segment. Re-sales over the past few years of existing IRS villas have proved this with gains yielding in excess of 50 % on original purchase prices.”

Unlike the IRS, Mauritius’s RES does not stipulate minimum purchase prices which, while more budget friendly, does not confer permanent residency.

The IHS is the latest scheme to be introduced by Mauritius and allows investors to purchase rooms or villas forming part of a hotel on a long-term lease basis for partial beneficial use only.

IHS investors are allowed a maximum of 45 days of free enjoyment of the property, following which the property is then leased back to the hotel operator for the remainder of the year.

Jaddoo and Nicholas de Chalain, one of Mauritius’ top developers launched IHS development ‘Long Beach’ at the Hotspot exhibition.

Situated on the east coast of Mauritius, this development is a product of veteran resort developers Sun Resorts. The resort is due to open in April 2011 and will offer 255 rooms, 90 of which will be made available on an IHS basis. Long Beach prices start at €199 000.

Remarks Jaddoo: “The beauty of this product is that it eliminates the ongoing maintenance and inconvenience associated with full ownership of an offshore property. Moreover, the returns on these units are expected to be particularly favourable.”

The ‘Hotspot’ exhibition went on late into the evening and was touted by many as the pièce de résistance of the Fine & Country convention.