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Is Mauritian real estate a safe haven ?
The views of Guy Ah Hang , Manager MCB Private Banking
The Mauritius Commercial Bank ( MCB ) is the oldest and first bank in the country .
A safe haven is an investment that does not lose value in times of crisis , and may even grow in value during that period .
One thing we are totally convinced of , particularly in the current international economic crisis , it is that the approach to any investment must be even more judicious than before . We are moving from “ Smart Investing ” to the era of “ Ultra-Smart Investing ”. Although the objective of every investment is to grow capital , there is an inherent level of risk .
Generally , when financial markets plunge , investors tend to fall back on to tangible assets , such as real estate . In Mauritius , this asset class benefits from the support of the authorities who act as facilitators by offering incentives to investors . Added to this is the non-volatile nature of this type of investment . Indeed , real estate is not positively correlated to financial cycles , which makes it a reliable asset that brings stability to investors .
In a low-interest-rate environment where low-risk investments no longer pay off anymore , it is better to think in terms of wealth strategy rather than product . While it may be worthwhile to invest in safe havens , this is ultimately from a diversification perspective rather than in response to the uncertainty posed by the global economic context . Diversifying one ’ s assets is certainly the best way to get through crises with poise . Real estate investment , in support of such a strategy , helps to reduce portfolio volatility over time – all the more so as it is generally an asset class with high return that can be used to increase wealth .
Finally , it is also worth underlining that such an investment can be a safeguard against inflation . Tangible assets ( and this includes real estate ) are generally expected to maintain or increase their value with respect to the rate of inflation reported in an economy , as the value of these assets and their rental lease usually increase over time .
Working with a professional advisor is highly recommended for establishing long-term wealth , generating a guaranteed regular income or to supplement retirement while carefully considering how to make the most effective use of real estate as part of an overall strategy .
WHY INVEST IN MAURITIUS
Guy Ah Hang , Manager MCB Private Banking International
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