Mall developers eye Mauritius

MAURITIUS IS SET to become the next port of call for shopping centre developers and retailers looking to expand their footprint beyond the over-shopped South African market. A number of players in SA are apparently now looking to partner with Mauritian landowners to cash in on the relatively untapped buying power of the island's close to 1,3m residents and 1m/year international tourist arrivals.

Pretoria-based developer Atterbury Property has already clinched a major coup by signing a multi-million rand deal with Mauritian sugar barons, the Espitalier-Noël family, to build the Indian Ocean island's first regional shopping centre. The 40 000sq m Mall of Mauritius will form part of a mixed-use development on a 102ha tract of land at Bagatelle, alongside the major motorway 4km outside the capital, Port Louis.

Most of SA's large national retailers that don't yet have a presence in Mauritius are looking to take up space in the new mall. They include PickPay, the Edcon group, Truworths, Mr Price and Woolworths.

Atterbury CEO Louis van der Watt says although Mauritius is one of the most stable and well-developed economies in Africa, expansion opportunities for SA retailers have to date been limited, with existing shopping facilities few and far between. "Though Mauritius is a prominent offshore financial hub and world-class holiday destination, it has only a couple of strip malls, with none sized bigger than 20 000sq m.''

The location of the mall - within walking distance of the University of Mauritius and close to Moka, one of the island's most affluent residential suburbs - is a key attraction for a development of this scale, says Van der Watt. Around 530 000 people (42% of the island's total population) live within a 10km radius of the site. Van der Watt says in SA developers will typically justify a regional mall when 40 000 households live within a 10km radius.

The current cost of capital of around 8,5% in Mauritius, compared to 12% in SA, means SA property investors have the potential to earn better returns in Mauritius over the next few years than at home, which has limited scope for more shopping centres.

Van der Watt says it also makes sense from a rand hedge perspective, as the Mauritian rupee has strengthened considerably against the rand over the past 15 years. "Mauritius is a great place to diversify your SA property portfolio as it is the only SADC country where you're effectively getting first world exposure for your rand."

Gilbert Espitalier-Noël, MD of the ENL Group, Atterbury's joint venture partner for the Mall of Mauritius and one of the country's largest business conglomerates, says the development is a win-win opportunity for both players. "Property development is a new game in Mauritius. So while locals are able to provide the land, SA developers bring invaluable skills and knowledge to the table."

Espitalier-Noël says it also helps that Mauritian banks are keen to provide development finance for property deals, as they don't have the same liquidity problems as those faced by banks in other parts of the world.

Atterbury isn't the first SA property player ENL is partnering. It's also involved in the Villas Valriche integrated resort development at Bel Ombre, with SA developer Secondlifestyle Group, and the newly launched La Balise Marina residential scheme at Black River. SA-based Hayes, Matkovich & Associates is handling the marketing and sales for both developments.

The Bagatelle development has a five-year pipeline worth around R1,5bn and includes a 20 000sq m motor city, a hotel, 30 000sq m of offices and a 15ha luxury residential estate. The 40 000sq mall is expected to open in September 2011.