I love the idea of owning a small place overlooking the ocean – perhaps a mobile home or a little flat. But when would I get to use it? Not often, I suspect, because I wouldn’t be able to take enough time off from work. That means the property would incur high overheads for little benefit. There are times when it makes sense to own a bit of paradise, however. As Magnus Heystek, a well-known personal finance commentator in South Africa, explains: acquiring bricks-and-mortar in Mauritius can facilitate residency elsewhere and, if you choose with care, your piece of heaven-on-earth can generate steady returns that are higher than you might expect to earn in South Africa. Heystek spoke to Alec Hogg, on BizNews Radio, about the benefits and risks of investing in property in Mauritius. – Jackie Cameron
South Africans looking to diversify investments geographically have been snapping up property in Mauritius.
As book author and independent money expert Magnus Heystek, founder of Brenthurst Wealth Management, notes: there are fantastic returns to be made, though there are risks, too, in acquiring a beach cottage in this low-tax haven.
“It’s a nice-to-have, but not always a great investment,” says Heystek, who has bought himself a slice of this island paradise.
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Speaking to Alec Hogg on BizNews Radio, Heystek said that global residential property is a very attractive investment.
“A lot of people like the fact they have some bricks and mortar in another part of the world. That’s a worldwide trend. South Africans have been buying for the last 15 years, ever since exchange controls were relaxed.”
The UK, New Zealand, Australia, Malta and Mauritius are among the top spots for South African global property investors.
Heystek said the first step to investing in property elsewhere is to ask yourself why you want to make the purchase.
“Ask the question why you want to invest. To diversify your investments or in order to get residency and, or a passport in another part of the world? Do you have surplus cash? Like to spend some time overseas? Perhaps in a country where you or your forefathers came from?”
Be wary of investing in property just to copy what you’ve heard at a braai, he warned.
Mauritius has become an attractive option for South Africans who want to emigrate or have the possibility to live elsewhere.
“You can get residency for $500,000 or lease a property to get residency. The US Golden Visa is $900,000 but Mauritius has become cheap to get residency or passport.”
In the end, people look at practicality and price when buying second properties, continued Heystek.
“South Africans have been going to Mauritius since it opened up to investors. The early guys who bought in Mauritius have done exceedingly well. There are some great developments in Mauritius and some not so great, so you must be careful where you buy. Also be careful about outrageous claims abut making a huge amount of money,” said the Johannesburg-based financial adviser.
In rand terms his own Mauritius property has been “fantastic”, but in dollar terms it has been “fair” – about 5-6% a year and that’s what you should be aiming for”, he said.Â
Heystek suggests having about 70% of assets offshore for long term capital or growth. “If you already have enough property in SA, say two or three, it makes sense to diversify,” added Heystek.
