Friday, December 12, 2008

Mauritian Real Estate critics, barren rocks and Lord Palmerston

Long ago, British Foreign Minister Lord Palmerston famously described Hong Kong as a “barren rock with hardly a house upon it” and, I believe, he also added that there was “no trade of any noticeable extent there.”

Well,well. We know how that story has played out since then. Hong Kong and places like Singapore and Dubai have shocked the world with their growth and vibrancy. They still do, despite the current turmoil.

Some prominent editorial writers and economists have recently referenced a series of commentaries wherein the sentiments of most were very sceptical on real estate as an investment in Mauritius. Some extreme comments were also made that there is no way to make any real, objective valuation of real estate prices here. It seems there is a rush to dismiss Mauritius as a barren beach, to paraphrase Lord Palmerston.

Well, well…..

To be fair, Mauritius is three times the physical size of Singapore and with one third of the population. So there is a relative surplus of some types of land one could say. And on the face of it, we do seem to be a long way from anywhere, whereas in Hong Kong you can drive to mainland China and Singapore now connects to Malaysia. Is that the end of the story?

Location, Location, Location

Mauritius is a beautiful island-state that is truly networked into the region and the world with a remarkable tourism industry, a series of tax treaties that have driven global investment flows, and being also firmly linked into trading blocs like COMESA and SADC. It has a diverse and dynamic population that has close affinity to Africa, India, Europe and Asia, and all their attendant languages, religions and customs. It is only a few hours flight from Cape Town, Johannesburg, India, Kenya, Madagascar and Reunion. And it keeps reinventing itself every decade or even half decade.

From our perspective, Mauritius is going to be a prime financial, economic, trade and cultural gateway between India and South Africa/ East Africa and it has already started. And just wait until the rest of SE Asia finds out how pleasant, professional and productive we are as a bridge into Africa. Ten years ago, ask yourself, was the current size of the tourism and financial services industry really expected? Of course this story will play out over time and it certainly does not mean that one can buy any piece of land anywhere on the island and make huge returns immediately. Far from it and we do believe the property market here needs better planning,and quality, and investors must pay more attention to cash yields to service debt rather than reply on quick price appreciation. Many smart developers and investors, however, are doing just that.

So to write off Mauritius real estate as an asset class would not make sense to us.

If you or your company are investing in real estate please do check out our web site http://www.afrasiabank.com/ and speak to our expert Corporate and Private Banking leaders, Ben Padayachy, Thierry Vallet and Rouben Chocalingum to see how we can help. You can contact them on 208 5500 or email at afrasia@afrasiabank.com.

…BREAKING NEWS

Our Private Banking team has just put the final touches together on a new global equities fund in case real estate is not right for you at this time. I will try and get our next blog update out very soon with some key details since this is a limited time special offer.

1 comment:

  1. Mauritius has got a great future. They might not have the physical resources in the same abundance as their African counterparts but tight forward thinking policies and the people themselves could be the difference.
    Property in Mauritius is an excellent investment. The tight regulations with ease of doing business is surely something to pick up on not to mention the warm and friendly people.

    ReplyDelete