Off-Shore

Where in the world…?

Where would you rather be once global travel tentatively takes off? Amid Covid-19 restrictions, we look at options for offshore property investment

Pic Credit:  At Secret Bay on the Caribbean island of Dominica, investors can get shared ownership from $218,000

WORDS: DEBBIE HATHWAY :: PHOTOS: SUPPLIED

The longer the Covid-19 national lockdown restrctions persist, the more questions are raised about when and how we can travel again. In the meantime, we dream – or we investigate the best alternatives to life as we knew it. As global markets suffer, the property sector is likely to be one of the most resilient. It always is. Accommodation represents security and has a high tangible asset value, which makes for an attractive investment prospect.

Despite the current climate, demand for investment in property-linked second passport residency programmes has spiked in SA. Nadia Read Thaele, MD of Lio Global, which specialises in residence and citizenship by investment programmes, attributes this to the pandemic, the resulting global economic slump and the downgrading of SA to junk status by credit ratings agencies. “The rand has lost just over 20% of its value, which makes these programmes more expensive, but this is negated by significant capital growth and the fact that many investors are using funds already offshore,” Thaele says. “South Africans are looking at investing in residency or citizenship programmes linked to property.”

A villa at Hillcrest Residences in Cyprus

UNCHARTED WATERS

Mike Smuts, MD at the high-end UK residential property advisory Smuts & Taylor, says although sales were up 11% by March 23 compared with the same period last year (the best start to a year for the UK property market since 2016), the market is now basically treading water waiting for lockdown measures to be lifted. “We are in uncharted waters, with sellers unable to sell and buyers unable to buy,” he says. “But it does offer a unique opportunity for astute South African investors to increase their offshore investment.”

Even though figures show that most sales deals agreed on before the UK lockdown are holding, new sales have dropped owing to social distancing measures. “Yet the rental market is doing very well, with an increase in online search volumes supported by initiatives such as video walk-through viewing tours,” says Smuts. Sable Investment Migration MD Andrew Rissik says there has been an adjustment in the prices of some overvalued properties in its Portugal business in 2019 and the first quarter of 2020. “Covid-19 is now accelerating this process of adjustment. We are starting to see more flexible payment conditions on new development contracts,” he says. “As for the true effect of the pandemic on the offshore real estate markets, time will tell, but we are expecting a very slight overall change in favour of buyers.”

Manta Cove on the west coast of Mauritius

SECOND HOME

Meanwhile, Pam Golding International head Chris Immelman keeps going back to Portugal. “In my view it is still the best option for South Africans, be it for pure investment, EU residency or to retire. It is also one of the European countries that has handled the Covid-19 crisis very well,” he says. “For now, particularly in the good developments, prices are holding firm. We are receiving steady enquiries.” Mauritius has long been an attractive alternative, being closest to home soil. “If you’re one of those buyers on the fence about whether or not to move permanently to Mauritius, this may be the time to do it,” says Jonathan Tagg, project director at Pam Golding Properties (Mauritius). “The 2008-2009 crisis pushed more buyers to Mauritius. They suddenly wanted to make the change and spend their retirement years in a different environment.” Safety is another issue. The United Nations Office on Drugs and Crime (UNODC) ranks Mauritius as substantially safer than SA for retirees. “In fact, it’s about 20 times safer, being closely comparable to the UK,” says Mauritius Sotheby’s International Realty consultant Rob Hudson.

The Numbeo Cost of Living Index provides another perspective on living in Mauritius. “Mauritius consumer prices are higher than SA’s and almost on a par with Portugal’s,” says Hudson. “However, inflation rates have been lower in Mauritius over the past decade and stood at 2.2% in February/March 2020, compared with SA’s 5.2%. This suggests the cost-of-living differential between the two countries is closing.” According to Henley & Partners, the investment programmes most relevant in this Covid-19 environment are those in Saint Kitts and Nevis, Grenada, Saint Lucia, Antigua and Barbuda, and Montenegro. All processing can be done without a visit to the destination. When it comes to deciding whether or not to invest offshore, Rissik says, get advice and make offshore hedging part of your long-term strategy. “Then allow yourself time to try to get a good average rate of exchange when sending funds offshore,” he says. “Never react emotionally and send funds out just as the rand has one of its now regular blow-outs.”

Kimpton Kawana Bay in Grenada

MAURITIUS

Why: Mauritius is the happiest country in Africa (World Happiness Report 2020) and the 24th most peaceful in the world (Global Peace Index 2019).

How: A residential property investment for a minimum of $500,000 qualifies you for permanent residency for yourself, your spouse and children under the age of 24.

PORTUGAL

Why: Portugal is the third most peaceful country in the world behind Iceland and New Zealand (Global Peace Index 2019). Benefit from visa-free travel in the Schengen area, the right to live and work in Portugal, and EU residency.

How: Invest at least €500,000 in real estate.

GRENADA

Why: Enjoy visa-free travel to more than 140 countries, including the UK and the Schengen area. You also gain access to the USA E2 Treaty Investor Visa.

How: Invest $220,000 as a donation or $350,000 in a government-approved real estate project.

CYPRUS

Why: Low property prices plus high demand equals higher returns. Cyprus ranks 63rd on the list of the most peaceful countries in the world (Global Peace Index 2019).

How: You get residency when you buy property for more than €250,000. After seven years of residency in Greece, you will qualify for citizenship.

BLUE SKIES CALLING

A selection of offshore investment recommendations:

You can live in a luxurious beach estate on the west coast of Mauritius, where a four-bedroom apartment at 2Futures’ Manta Cove is priced from R36.5m. An investment here secures permanent residency and some of the best ocean and mountain views on the island. If you prefer the north coast, we offer a variety of projects including resort-style living in Grand Baie with prices starting from R4.5m. – Sandra Colas, real estate project consultant, 2Futures

In the north of Mauritius, we have luxurious apartments at Ki Resort, just two minutes from the Beach Club in Grand Baie. Built around a communal 700m2 pool in a spacious tropical landscape, this project offers an unrivalled lifestyle. Sanctuary Villas at Mont Choisy Golf & Beach Estate will appeal to those interested in estate living. It is located on a heritage property that features the only golf course in the north. – Jonathan Tagg, project director, Pam Golding Properties (Mauritius)

With the newer smart city legislation in Mauritius one can buy quality one-bedroom apartments starting from $100,000. This, together with the relaxation of the requirements to obtain Mauritian residency as a foreign retiree, has made investment in Mauritius a lot more affordable as well as accessible as a safe and secure option for South African retirees. – Rob Hudson, property consultant, Mauritius Sotheby’s International Realty

In the heart of Canary Wharf, London, Wardian is a new riverside development offering 624 private suites and apartments in two high-end residential towers. These units have state-of-the-art living spaces and outstanding views, and some include a private sky garden up to 37.2m2 in size. Prices start from £750,000. – Mike Smuts, MD, Smuts & Taylor

Grenadian citizens who are tax resident there are not subject to Grenadian tax on their worldwide income. They do not pay any wealth, gift, inheritance or capital gains tax either. At Kimpton Kawana Bay, overlooking Grand Anse Beach, the freehold condominiums comprising one-bedroom units and studios are priced from $220,000. Owners get two weeks’ free usage per year and their properties are put into the hotel rental pool for the remainder. – Chris Immelman, head, Pam Golding International

I believe the lowering of interest rates in SA will motivate foreign investment, especially in real estate, as more South Africans are now looking for safer environments for their families, their wealth and their businesses. Cyprus serves as a gateway to Europe with its citizenship and residency programmes. Considering the impact of Covid-19, the real estate sector is likely to adjust prices as needed. – Antonis Pisharas, overseas business development and sales executive, Aristo Developers

“Covid-19 is now accelerating the process of price adjustment. We are starting to see more flexible payment conditions on new development contracts” Andrew Rissik, MD, Sable Investment Migration

Nadia Read Thaele, MD, Lio Global

Mike Smuts, MD, Smuts & Taylor

Antonis Pisharas, sales executive, Aristo Developers

Andrew Rissik, MD, Sable Investment Migration

Rob Hudson, Mauritius Sotheby’s International Realty

Chris Immelman, head, Pam Golding International

Jonathan Tagg, project director, Pam Golding (Mauritius)

Sandra Colas, real estate project consultant, 2Futures

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