Foreign property buyers in Seychelles mainly come from South Africa, Italy, France, Russia and the UK. Seychelles culture is largely French-influenced, and the population is highly racially mixed. Tourism employs 30% of the labour force, and powers the economy. Independent from Britain in 1976, Seychelles became a one-party state (1979-1991) under president France Albert René, who continued to dominate politics after 5-yearly elections were introduced till 2004, when he stepped down in favour of president James Michel.
Property is expensive. Dwelling prices in Mahe, the capital, start at SCR2.34 million (US$160,000) (end-2010), according to Jean-Paul Maurel, director at Premium Realty, and a furnished two-bedroom house sells for about SCR9.35 million (US$640,000). Land prices in the capital vary from SCR731 (US$50) per square meter (sq. m.) for a land with no view to USCR21,921 (S$1,500) per sq. m. for prime beachfront properties.
In Praslin, the Seychelles’ largest island, property prices are about 20% higher than in the capital because most properties are located on or near the beach.
Recently, a few high-end residential developments have been constructed. These include the following:
- Eden Islands, a marina development on a reclaimed land linked to Mahe by a bridge. It comprises about 450 luxury two- and three-bedroom apartments, mansions and villas. Property prices start at about SCR4,384,230 (US$300,000).
- Four Seasons Private Residences Seychelles, an exclusive residential development located at the Petite Anse Bay on Mahe’s southwest coast. Four- to six-bedroom villas are priced for about SCR102.3 million (US$7 million).
Most foreign buyers pay cash. Foreigners can secure residency in Seychelles for a fee of SCR50,000 (US$3,421). There are no property taxes or capital gains taxes in Seychelles but a foreign homebuyer should expect to pay a processing fee of 1.5%, a sanction duty of 11%, and a stamp duty of 5%.
Purchasing requires Government Sanction from the Cabinet Ministers of the Ministry of Land Use and Habitat. The property must be used only for residential benefit of the buyer and his family. A minimum of SCR1 million (US$68,427) must be brought into the Seychelles, and converted to Seychelles rupees (SCR) to be used for the transaction.
The Immovable Property (Transfer Restriction) Act prohibits the lease of immovable property owned by a non-Seychellois.
Analysis of Seychelles Residential Property Market »
But the rents which properties will produce are also low. A 150 sq. m. property costing US$180,000 might typically rent for around US$700 per month. This is equivalent to a yield of 4.7%. Larger properties produce lower yields, as is typical in most places.
Capital Gains: There is no capital gains tax
Inheritance: There is no inheritance tax in Seychelles.
Residents: Only locally-sourced income is taxed in Seychelles. Business income is taxed at progressive rates, from 0% to 33%.
Buyers should note that there are unresolved issues relating to government land confiscations in the 1970s and 1980s. The owners were never compensated, and if the East European and Ugandan cases are followed, this could become an issue in future.
Seychelles growth has been very low over the past decade, despite its many advantages. Over the past ten years per capita GDP has actually declined by around 5%. Tourism, which employs 30% of the labor force and accounts for more than 70% of export earnings, has only seen around a 10% growth in visitor nights from 1993 to 2005.
The Seychelles problems are due to state control of the economy, an overvalued currency, high regulatory and tax costs, and the difficulty of repatriating profits.
From 1993 to 2008, there were persistent foreign currency shortages, reflecting the current account deficit and the currency peg (effectively to the US$). Increasingly strict controls have been introduced, which obstruct businesses, and prevent profit repatriation.
Then in November 2008, a balance of payments forced the Seychelles to abandon its fixed exchange rate regime and move to a floating exchange rate. The overvaluation of the Seychelles rupee – estimated at between 11% to 33% against the US dollar - combined with a very active black market, had made the cost of living in Seychelles very high.
After overshooting in the first quarter of 2009, the rupee briefly stabilized against major traded currencies, but has since depreciated to US$1 = SCR14.6 (January 2012), according to the Central Bank of Seychelles (CBS), improving the competitiveness of the country’s tourism sector.
Seychelles’ economy expanded by around 5% in 2011, from annual GDP growth rates of 6.2% in 2010, 0.7% in 2009 and -1.25% in 2008. In 2012, the economy is projected to grow by 4%.
The country’s unemployment rate was 4.1% in 2011, down from 4.6% in 2010 and 5.1% in 2009. In 2012, overall unemployment is expected to fall to 3.7%, according to the IMF. Consumer prices rose by 5.1% in November 2011, according to the National Bureau of Statistics (NBS). In 2010, the overall inflation rate was -2.3%, up from the dramatic inflation during the post-depreciation years of 31.8% in 2009, and 37% in 2008.
As of November 2011, there were about 176,478 tourist arrivals in Seychelles, up 11% to 174,529 in 2010. Europe accounted for about 75% of visitor arrivals.
Politics was dominated by France Albert René and the Seychelles People's United Party (SPUP), which seized power in 1987 in a coup against the popularly-elected pro-business party.
The results of socialist-style policies included high levels of government expenditures, an array of state trade and monopolies, and an abundance of concessions and exemptions.
Press freedom is severely restricted, and the government’s tentacles spread everywhere.
On the positive side, the government successfully made the Seychelles a tax haven through well-drafted legislation (seelowtaxnet.com). In addition, the government created a successful International Trade Zone, making the Seychelles an Indian Ocean trading entrepot (Mahe has the deepest port in the Indian ocean).
Opposition parties were legalized in 1991, but René won the elections held in 1992.
Parliamentary elections in 2002 saw another victory for René's party, but there was a mood of change in the air, and the opposition Seychelles National Party increased its representation from one to 11 seats. In 2003 the Government introduced a Macroeconomic Reform Programme (MERP), slashing Government spending, increasing taxes, and restoring a budget surplus.
The René era finally came to an end in April 2004, when the president resigned and was succeeded by former vice-president James Michel (who is nevertheless a member of Rene’s party and a close associate). The Government is now said to be moving more rapidly toward reform.
In the presidential elections held last May 2011, James Michel was reelected as president of Seychelles.