The Integrated Resort Scheme was introduced by the Government of Mauritius in 2002. Its stated purpose was to attract foreign direct investment by allowing non-citizens to purchase residential property in Mauritius for the first time. The mechanism was straightforward: a foreign investor who bought a villa in an IRS development for a minimum price — now set at USD 375,000 — received freehold title to the property and, above the threshold, a residence permit for themselves, their spouse, and their dependants. The IRS was the first framework to open Mauritian property ownership to foreigners. It was followed by the Real Estate Scheme in 2007, the Property Development Scheme subsequently, the Smart City Scheme, and the Ground Plus Two apartment framework. Since 2015, no new IRS projects have been approved. The successor PDS and Smart City schemes now carry most new development. Together, from 2006 to 2023, real estate investment under these schemes attracted Rs 152 billion of foreign investment, representing 47 per cent of total FDI stock in that period. The investment came. Now examine what it bought, what it built, and what the Mauritian household that cannot afford a USD 375,000 villa on the north or west coast received in return.

The observable contradiction is this. Mauritius is a small island of approximately 1,865 square kilometres of land area. Its coastline is finite. The north and west coasts — the prime residential real estate zones — have been the target of 78 per cent of total scheme sales volume, concentrated in districts that are also among the areas of highest population density and highest historical fishing community presence. The schemes require development on land of at least 10 hectares per IRS project, meaning that each approved development removes a substantial parcel of prime coastal land from the pool available for other uses — public access, local housing, agricultural activity, artisanal fishing infrastructure.

The IMF analysis, cited in the Global Property Guide's 2026 Mauritius Residential Property Market Analysis, shows that residential prices rose by approximately 80 per cent between 2019 and 2024, far outpacing the roughly 20 per cent increase in nominal wages. The Bank of Mauritius, in its June 2025 Financial Stability Report, similarly flagged the widening gap between property prices and incomes. Real estate FDI reached MUR 24 billion in 2024 — 73 per cent of total FDI. Mauritian buyers account for only 9 per cent of cumulative scheme acquisitions, according to EDB data. The scheme was designed to attract foreign capital. It attracted foreign capital. The question the evidence raises is what the relationship is between the foreign capital it attracted and the property prices that Mauritian households cannot keep pace with.

The first constraint is legal architecture. The schemes create a dual property market in Mauritius — one for foreign buyers operating within the EDB-approved framework, and one for Mauritian citizens operating in the general market. These two markets are not separated by geography alone. They are separated by price, by legal structure, and by the investment thesis that drives them. A foreign buyer purchasing an IRS villa at USD 645,000 is making an investment decision based on residency rights, tax advantages, capital appreciation, and lifestyle appeal. A Mauritian household purchasing or renting accommodation is making a decision based on proximity to work, school catchments, and the ratio of monthly housing cost to monthly income. The foreign buyer market and the Mauritian resident market compete for the same finite land on different economic footings. The foreign buyer has more capital, more information, and an investment horizon measured in decades. The Mauritian household has a salary that has risen 20 per cent while the property it might aspire to own has risen 80 per cent.

The second constraint is regulatory design. The schemes were designed and are administered by the Economic Development Board, whose primary mandate is to promote foreign investment. The EDB's role is to maximise the attractiveness of Mauritius to foreign capital. It is not the role of the EDB to assess whether the aggregate effect of foreign property acquisition on Mauritian household housing affordability is consistent with the public interest. No institution in Mauritius has been assigned that assessment. The Bank of Mauritius flagged the widening gap between property prices and incomes in its Financial Stability Report. The IMF cited the same gap in its country analysis. Neither institution has the mandate to act on the finding. The finding was made. The gap continues to widen.

The third constraint is land finitude. Mauritius has 1,865 square kilometres of land area. Its prime coastal land — the north and west coast corridors that attract 78 per cent of scheme sales volume — is not a renewable resource. Each IRS or PDS development that places 10 hectares of coastal land into foreign freehold ownership removes that land permanently from the category of land that could be used for local housing, public beach access, artisanal fishing infrastructure, or agricultural activity. The land transferred under IRS transactions between 2002 and the cessation of new IRS approvals in 2015 is not recoverable. It was sold in freehold. It is owned. The coastal geometry of Mauritius has been permanently altered by the scheme's operation over thirteen years.

The IRS was a correction to a specific problem: insufficient foreign direct investment in the years following the 2001 global economic slowdown, in an economy whose primary FDI attraction, the offshore financial sector, was under pressure from OECD and FATF scrutiny. The scheme offered something no other investment vehicle could: freehold ownership of Mauritian residential property, combined with a residence permit that carried genuine lifestyle and tax value for European, South African, and high-net-worth Indian purchasers. It succeeded in its own terms. FDI flows increased. The construction sector boomed. Property values appreciated. The government collected stamp duties and land transfer taxes on each transaction.

The correction the scheme did not attempt was a mechanism for ensuring that its success in attracting foreign capital did not come at the cost of local housing affordability. No social housing obligation was attached to IRS or PDS approvals. No requirement existed that developers of IRS schemes also contribute to the local affordable housing stock. No mechanism was created to track the relationship between scheme sales and local property price inflation and intervene if the relationship proved damaging. The Finance Act 2025 finally raised the registration duty for foreign buyers from 5 per cent to 10 per cent with effect from July 2026 — a measure that increases the transaction cost for foreign buyers without addressing the underlying affordability gap for Mauritian households. The correction that the Finance Act made is fiscal. The structural problem it is correcting is distributional. The two are not the same problem and the correction does not address the problem it is applied to.

The peer-reviewed academic evidence on the relationship between foreign real estate investment and local property prices in Mauritius is the most specific evidence this article can present. Research published through the University of Reading documented the empirical relationship precisely: every increase of Rs 1,000 per toise in the price of local property occurred with an increase in the price of an IRS/RES villa in the same region of Rs 10.5 million, which was highly statistically significant. The price relationship between the foreign market and the local market is not neutral. Foreign scheme prices and local residential prices move together. The academic evidence establishes the statistical relationship. Its direction of causation — whether foreign investment drives local prices or whether both respond to the same underlying factors — requires careful interpretation. What the evidence does establish is that the two markets are not isolated from each other, and that the assumption on which the scheme was sold — that foreign investment in luxury coastal property would not affect local residential affordability — is not supported by the statistical relationship observed.

The EDB data point — Mauritian buyers represent 9 per cent of cumulative scheme acquisitions — is the most precise measure of who the scheme has primarily served. In a country where the scheme controls access to 183 approved residential developments, the overwhelming majority of that development has been sold to foreign purchasers. The Mauritian household is the residual purchaser in a market that was designed for, and has been captured by, international investment capital. This is not a failure of market design in the sense of an unexpected outcome. It is the expected outcome of a market designed to attract international capital, operating without a mechanism to ensure that the domestic population remains competitive purchasers in the market the scheme created.