SOUTH AFRICANS and Europeans are rediscovering once war-ravaged Mozambique as a holiday hot spot on the back of a rapidly growing economy and a significantly improved road and tourism infrastructure. The renaissance has been led in part by new legislation introduced by Mozambique's government in 2007, allowing foreigners to buy into multiple ownership property developments.
Developers have been quick to get in on the act. Over the past three years a number of upmarket leisure resorts have mushroomed in popular coastal areas such as Inhambane, Pemba, Vilanculos, Bilene, Ponta do Ouro and Benguerra Island. Prices of holiday villas in those resorts typically range between US$200 000 (R1,54m) and $800 000 (R6,16m), while a luxury beachfront home in a top-end development can set you back up to $2,5m (R19,25m).
Demand for leisure property investments has taken off to such an extent that South African-based real estate agencies - such as Pam Golding Properties and RE/MAX - have recently opened their first offices in the Mozambican capital of Maputo. Banks are also keen to cash in on Mozambique's burgeoning real estate market. Absa Bank, in association with Barclays Bank in Mozambique, is currently creating a dedicated mortgage product to make it easier for South Africans to buy property there.
Currently, overseas buyers have limited access to mortgage finance in Mozambique and still need to put down hefty cash deposits - typically 60% - when buying leisure property. Although foreigners aren't entitled to own land outright in Mozambique, property can be leased for a period of 50 years, renewable for another 50 years.
Overseas investors also have the right to develop land. The holder of such a land title may transfer the infrastructure, buildings and improvements to buyers offshore. Therefore, the sale of leisure property in Mozambique constitutes the transfer of usage rights, similar to the share block ownership schemes used in some leisure property developments in SA.
Adrian Frey, director of Pam Golding Properties Mozambique and a Swiss-qualified lawyer, says the major draw card for South African investors is the value proposition. He says property may well be priced in US dollars but holiday homes are still reasonably affordable in rand terms. As such, buying a holiday home in an upmarket resort on Mozambique's coastline or its offshore islands is becoming an increasingly attractive alternative to owning property in Plettenberg Bay, Clifton or Mauritius. Frey says the rand's current strength also makes it a good time to invest in dollar-based assets.
Moreover, Mozambique's legal framework is being developed quite extensively to offer attractive incentives to South African investors, such as the recently adopted double tax treaty. Frey says a Dutch prince and SA's Human Settlements Minister Tokyo Sexwale are among a number of well-heeled dignitaries who have recently bought luxury holiday homes in Mozambique.
Investment opportunities currently marketed by Pam Golding Properties include Kubali Beach Estate, in the Chidenguele area, a three-hour drive from Maputo. At this resort two-bedroom units of 170sq m set back from the beachfront are selling off plan for R1,43m. The same units on the beachfront cost R1,78m. Three bedroom, 198sq m villas range in price between R1,644m and R1,999m.
At Praia do Paraiso, a resort just outside the town of Vilanculos in southern Mozambique, villas are selling off plan from R1m for a two-bedroom apartment to R3,7m for a five-bedroom beachfront house. On Benguerra Island, adjacent to Benguerra Lodge in the Bazaruto Archipelago National Park, luxury units at The Villas at Benguerra (two, three or four bedrooms sized between 400sq m and 900sq m) start at $1,5m (R11,55m).