?It is not a mere slogan, democratisation is becoming a reality for us.? Salil Roy, planter and president of the Planters? Reform Association, heartily welcomes the decision to extend the IRS scheme to small landowners. ?We are many to have waited for this: in areas like Deux-Frères, where there is land under cane cultivation, this will foster the rebirth of economic activity.? The extended scheme applies to projects of less than 10 hectares. But will it fulfil the promised development?

To facilitate that, government will exempt all projects from the Morcellement Act and the Morcellement Tax, announced Rama Sithanen in his budget speech. Henry Loo, from LEAD Consulting Ltd, a property development advisor, salutes this broadening of estate market: ?It is a worthwhile opportunity to encourage Foreign Direct Investment. It can also benefit from the proximity of other major developments, from existing Integrated Resorts Schemes (IRS) to five-star hotels.? This could express itself through new restaurants, additional units to let and meet an expanding demand for tourist accommodation, accordingly with the authorities? goal to welcome two million visitors by 2015?

?There are numerous foreigners in the business world and real estate agents that are also looking for smaller and cheaper properties?, comments Sudesh Ghurburrun, director of the Division Investment Facilitation at the Board of Investment. He also makes it clear that one has to wait for the promulgation of the Finance Bill 2007 to understand fully the ins and outs of the new scheme.

But the broad issues are visible and raise already some questions: first, will small landowners be able to attain the required standing that will appeal to the targeted pool of clients? ?The developers will not be exempted from the normal procedures that accompany such developments. So their project will be submitted to local planning authorities. A regular Environmental Impact Assessment will have to be prepared and the project will have to comply with the conditions prior to obtaining a Land use and Building Permit?, explains Sudesh Gurburrun.

The fact that there will be no minimum selling price for the new residential units can also be positively interpreted. Agents like Denis Boussac, from Overseas Properties, based in the United Kingdom and Europe, rejoice: ?It is a relief since we have had difficulties to find IRS units approaching the minimum legal price of 500,000 USD. Until now, the less expensive unit we could offer to our clients was at 700,000 USD??

However the same measure is observed with reservations by other stakeholders in the real estate sector: ?The underlying principle in the price restriction and the tight regulation of IRS was in fact to limit its impact on the prices of the domestic market. It also preserved that market from being entirely ruled by high income customers?, notes a professional.

So while the new scheme will hopefully not be an occasion to resell, with a ?para-IRS label?, properties that could not qualify, local clients may not be winners. Even assuming that ugly constructions that marred property development in coastal regions may likewise be prevented.

For the moment, a bound that could restrain the damaging sequels of an excessive liberalization is timid: ?Purchase by foreigners of property on such developments will NOT per se entitle them to residence or occupational permits?, can be read in the Budget Speech 2007.

<B>Doubts about costs</B>

Then comes the risk factor that should not be overlooked in such developments. A lot of investment and prepayment is involved. Salil Roy has thought of that: ?We are also waiting for measures that will allow comprehensive loan schemes from banks and other institutions. We are conscious that we will have to rely on professionals to achieve quality property.?

The budget speech makes provision for the small landowner to ?group his land with other qualifying landowners for a project and to ?give the responsibility for development to a company in which small landowners will have an important equity stake?. In the same line of thought, Salil Roy considers the implementation of marketing cells to advertise the property abroad.

Yet the huge sums of money that had to be deployed for the setting of IRS projects and their promotion campaigns still raise other doubts about the viability of such business. Almost 5% of a classic IRS budget (where billions of rupees may be involved) is spent in those campaigns, which range from expensive adverts in international publications to preliminary marketing strategies paid to specialised communication agencies. Will the BOI intervene?

When this form of large-scale investment is dealt with by developers pre-selling property to a very demanding clientele on hundreds of hectares of land, it may look difficult but affordable. But since in both cases, small and big landowners may face the same fixed advertising costs, the question is: will the smaller developers be able to undertake a fruitful marketing for their properties?

But then, in a global liberalised world, nearby countries like Seychelles are already launching their own IRS with advantageous conditions like 5% return over investment. Do Mauritius and its landowners have any chance to think twice before engaging in the battle?