Comparisons between new luxury villas and Mauritius IRS

MUCH has been said about the hundreds of luxury villas going up on the slopes of our granitic islands, which have now spread to the Amirantes.

They are to be sold to wealthy foreigners and when unoccupied will be put on a rental pool and occupied by other visitors. The mechanics of how this will operate has never been clearly spelt out, beyond Government claiming a 15% sales tax and granting residency status to the owners.

The concept is also being applied to man-made islands, such as Eden and Aurore, where there will in fact be little besides villas and apartments for sale.

Since the sugar industry was threatened in Mauritius, the Integrated Resort Scheme (IRS) came into being. About a dozen sugar estates with beach frontage are being sub-divided up for building up-market homes for those who can afford to pay.

Like in Seychelles, ownership of an IRS also carries with it residency status, which is transferable if the property is sold to someone else.

But the big difference is that in Mauritius, returns from the promoter/ developer is around 25%, compared to just 15% in Seychelles. And when taking into account the fact that the land was already flat and did not involve costly reclamation, the benefits are even higher. Government revenues are collected from taxes on acquisition of land by the IRS company, conversion of agricultural land, project development and sale of IRS residences.

There are also taxes on profits realised by the IRS company, rental of residential property and resale of IRS residences.

Recently a social contribution of $ 6,000 per villa to benefit the community of the locality was introduced.

In too many island states, there is however the tendency to imitate Dubai. The Indian Ocean islands do not share the same realities. The government of Dubai had wanted to turn it into a commercial hub of the Middle-East. It has promoted the construction of giant commercial complexes and luxury accommodation in order to continue generating wealth when its oil reserves run out.

But the Indian Ocean islands have rare beauty to protect, which is not found in the desert Middle-East.

Care must be taken to ensure that islanders are “an l'aise “with this type of development.

The opening of the international airport in 1972 opened our islands to tourism. But this was done slowly, in a soothing way. The hospitable Seychellois welcomed the tourists and some even thought of starting their own small guest-houses to derive a livelihood.

Even the larger hotels were welcoming to locals, whom they saw as an opportunity for additional patronage, besides adding a touch of Creole culture to their establishments.

Will the pharanoiac structures mushrooming all over our islands now spell an end to our way of life. Time will tell.

March 14, 2008
Copyright 2007: Seychelles Weekly, Victoria, Mahe, Seychelles