Mozambique’s real estate market is opening up to SA investors
Boasting 2500km of coastline, the once war-ravaged Mozambique is becoming popular among SA leisure property investors looking for an unspoilt alternative to Clifton, Plett or Ballito.
In fact, Citi Private Bank and UK property group Knight Frank’s recently released Wealth Report 2011 ranks the Mozambican capital of Maputo as the world’s top up-and-coming location for business, fun and romance.
Wealthy globe-trotters are apparently starting to discover the city’s Portuguese heritage, seafood restaurants, locally brewed beer and nightclubs along the city’s main beach road, the Avenida Marginal.
While the Polana Serena Hotel, built in the heart of Maputo in 1922, remains a favourite among well-heeled tourists, a number of equally luxurious hotels have mushroomed in the city in recent years.
The report reads: “Maputo tops our 2011 global city hot list, as it ticks all the right boxes for beach-loving, risk-hungry investors. Mozambique is one of the fastest-growing economies in Africa and Maputo is close to the best beaches on the Indian Ocean.”
While South Africans have for many years enjoyed the sun and surf offering of their north-eastern neighbour, they have not been allowed to own real estate in Mozambique until recently. That changed in 2007 when the Mozambican government introduced new legislation to allow foreign investors to buy into multiple- unit resort developments.
A number of leisure property investment opportunities have since been brought to the market in and around Maputo as well as in sought-after coastal areas like Inhambane, Ponta do Oura, Vilanculos, Pemba, Bilene and Benguerra Island.
These leisure resorts are typically priced in US dollars, ranging from roughly $100000 (R800000) for a one- bedroom apartment to $800000 (R6,4m ) for a luxury, five- bedroom villa. In top-end developments such as The Villas At Benguerra, adjacent to the five-star Benguerra Lodge on exclusive Benguerra Island, prices of beachfront villas start at a cool $1,5m (R12m).
Developers allowed to enter the country are not only building fancy resorts. They are also making a contribution to improving roads and other infrastructure, which should further boost the country’s attractiveness as a tourism and real-estate investment destination over the next few years.
SA banks are also getting in on the act. Absa Home Loans managing executive Sifiso Shongwe says the bank, in association with Barclays Bank in Mozambique, is looking at ways to create a mortgage product to enable SA citizens to buy residential property in Mozambique. However, the legal complexities of owning property in Mozambique are a challenge, says Shongwe.
He refers to the fact that land tenure is obtained through usage rights and not traditional ownership. All land in Mozambique is state-owned, so both locals and foreigners merely buy the right to use the land, initially for a period of 50 years, renewable every 50 years.
Leisure property buyers, however, can obtain ownership of the structure. Speaking at a Mozambique investment seminar recently in Johannesburg, Mozambique tourism minister Fernando Sumbana explained that while land cannot be transferred from one buyer to another, the same doesn’t apply to buildings and improvements. Ownership of bricks and mortar is obtained through a title deed known as a public national deed.
Sumbana said investors are thus able to resell property without restriction and make a return on investment. Mozambique’s property ownership laws are similar to the share block schemes sometimes used by leisure property developers in SA.
Another incentive for investors is the fact that Mozambique’s legal framework is being developed quite extensively. For instance, a double tax treaty was recently adopted to prevent SA investors paying double taxation when earning an income or selling an asset.
But Sumbana cautioned property investors to buy only from fully licensed developers with all the necessary government approvals in place. These involve a thorough screening process to ensure only projects by reputable developers with the right skills and resources are given the green light.
Ettiene Erasmus, managing director of Mozambique Property Development & Investments, says it took his company about three years to obtain the regulatory approvals to begin development of the Bazaruto Island View Estate. It is located 12km north of Vilanculos and overlooks the National Marine Park surrounding the Bazaruto Archipelago.
The resort comprises 146 units ranging in price from about R720000 for a stand-alone, one-bedroom villa to R4,85m for a luxury four-bedroom residence. The estate has development rights to build a plastic surgery medical and recovery facility, a luxury hotel and a small-craft marina. Leisure facilities will include a dive centre, motorised and nonmotorised water sports, mashie golf course, restaurant, bar and convenience store.
Erasmus says SA buyers have already snapped up about 75% of the units since the resort’s launch early this year. Construction on the first phase of Bazaruto Island View Estate is due to start in January 2012.