Built on a dead coral reef near to the capital Victoria, Eden Island has proved to be a game changer in the Seychelles’ property market, accounting for some 40% of FDI in the country in 2014. Director of Sales and Marketing, Peter Smith, explains how the high-end project perfectly complements the Seychelles’ government’s blue economy strategy and expands on how the strong value of the dollar has led to a diversification of the market.
The Seychelles has been championing the merits of the blue economy on the global stage since 2007, and the government formally adopted the concept into its national development strategy in 2015. How does a large-scale property development such as Eden Island fit into the blue economy concept?
The blue economy concept actually came along after Eden Island, but they are linked. Going back to the late 1990s when El Niño killed a lot of the coral in the Indian Ocean, the Seychelles’ government identified some land creation opportunities on the east coast of Mahé. Rather than developing the existing beautiful granitic islands, they adopted a program of land reclamation on the east coast, totaling some 375 square hectares of land.
Eden Island is 56 hectares of that. As a result of this policy, the development that has happened in the Seychelles has been on reclaimed land. In an environmental sense we were ahead of the game.
There was also a need to create another sub-economy within the wider Seychelles economy, which is very reliant on tourism and tuna fishing and processing.
Property development and property selling on the scale of Eden Island was not something that was common in Seychelles or readily available to foreigners.
So Eden Island was created as an opportunity for people to invest in Seychelles. Eden Island was certainly created with environmental issues in mind. We are 10 years into the project now and the estate is well established.
We are self-sufficient with water thanks to the reverse osmosis plant that we have. There’s also a high degree of technology applied within the Eden Bleu hotel itself.
The idea is to make the hotel a completely non-paperless environment and have the highest technology available for people who go there on business.
Two years ago your chairman Craig Heeger was quoted as saying: “The President said that if it were not for Eden Island, he would not have been able to embark on the extraordinary economic, political and social reforms that have transformed the Seychelles in the last 10 years.” Can I invite you to expand on the importance of the Eden Island development to the wider economy and prosperity of Seychelles?
We are a key element of the Seychelles’ economy. We work very closely with the consultants that were brought over by the Seychelles government and the IMF, to assist them in developing a model that illustrated the impact of Eden Island on the Seychellois economy. We do a quarterly economic impact assessment that is verified by the Central Bank.
Up until the end of last year, we were contributing about 40% of the FDI in Seychelles, and about 3.5% of its GDP. We’ve created just under 1,000 jobs. In the context of Seychelles, that is huge as there are only 80,000 people living here.
We have taken Eden Island out into the world. As much as we’ve marketed Eden Island, we’ve also marketed the Seychelles as well. With the marketing budget we’ve had at our disposal, we’ve been able to promote Seychelles and Eden Island extensively internationally. If you go to Europe or around Africa, you’ll find Eden Island present in all sorts of places.
This has stimulated extensive investment from foreigners into Seychelles. For the first time, the government has created the opportunity for foreigners to buy property on a freehold title in Seychelles. That’s attracted people from all over the world. We have made sales to 42 different nationalities. The traditional markets of England, France, South Africa, and Italy have really grabbed the opportunity because previously they were only able to buy property on a leasehold title before.
We have sold 500 homes so far. This is a project that has generated close to $600 million and will generate more as we finalize the commercial aspect. Instead of people coming here and paying their hotel bills on a Visa card or MasterCard in cyberspace, the people physically come here, live in their homes, and employ someone to look after their garden, they employ a domestic servant, they employ an au pair for their children.
They go into the village and buy their fish from the fisherman. The multiplier effect of people owning property on Eden Island and then renting out their property is huge on the economy.
Although Eden Island stands out in Seychelles, when it comes to attracting high-end international clients you face competition all over the world. What are the USPs of Eden Island properties?
Seychelles is a fantastic, less commercialized destination. It has some of the most beautiful beaches in the world. It’s hurricane and cyclone free. It has great sailing, and incredible diving and snorkeling. You can go to the beach, even on Eden Island, in the morning, and be there for a few hours and not see anybody else. The beaches are generally very private. So, from a quality of lifestyle point of view, it’s unsurpassed, in my view. It’s four degrees south of the equator. It’s just four and a half hours flight away from Dubai and from Abu Dhabi, which are the major hubs in the world today.
It’s very accessible to everybody for a holiday; that is one of its biggest selling points. From an African point of view, the time zone also makes sense. From a South African perspective, which is a big market for us, Seychelles is only two hours ahead. The big unique selling point for me is Seychelles as a country. You arrive on Eden Island, and you have access to 115 islands to explore, unlike a place like Mauritius, where you have one island essentially.
You can sail between the islands of the Seychelles very safely. You can travel those waters very easily, even as a fairly inexperienced sailor.
Another important factor is that that property owners are seeing growth in the value of their homes. For example, when we launched the project in 2006/2007, a one-bedroom apartment costing $240,000 is now selling for $500,000.
The other unique selling point to mention is that there has been nothing else in Seychelles within the same bracket, other than a few high-end villa developments, so we’ve had very little competition.
The strong dollar has the potential to impact on your traditional property markets, such as South Africa and Europe. Have you experienced a shift in terms of the nationalities interested in your properties?
The strong dollar is a negative. When we started the project in 2006/2007, about 60% of the sales came from South Africa and that wasn’t by accident. We are South Africans, so we marketed our project in South Africa. The other 40% essentially came from France and from the UK.
As I’ve said, we’ve sold to 42 different nationalities. The depreciation of some of the currencies in those key markets has had a huge impact on the project. In South Africa, for example the rand was trading at just under six to the dollar in 2006/2007. It’s now trading at around 15 to the dollar. It’s not just the purchase price of the units that this negatively affects. It means that the cost of living here also becomes expensive here in purchasing power terms.
Absolutely the strong dollar has impacted our sales. That’s why for the last two months I’ve been doing marketing in the UAE extensively. The dirham is essentially pegged to the dollar and the purchasing power of people in the Emirates remains strong. We’ve had a lot of interest from the UAE, not just from Emiratis but from expats as well.
We have also been impacted by the falling value of the euro against the dollar. The euro was worth around $1.35 around four years ago, and now it’s almost at parity.
Eden Island definitely has potential for people who have their savings in dollars.
That obviously includes Americans themselves. We know that presently you do not have any American property owners, although you have had buyers from Canada. But there is now an open skies agreement between Seychelles and the USA and the connectivity you enjoy with Abu Dhabi, Dubai and Qatar means that the whole world is essentially within reach. Do you see potential in attracting American property investors here?
Yes, I do. There is already a small niche in American tourists coming here on bone-fishing packages. This is essentially fly-fishing at sea and Seychelles is one of the best places in the world for this.
We have also had Americans here as part of the United Nations Indian Ocean anti-piracy forces. They sometimes stay in the hotel on Eden Island.
When the Eden Bleu Hotel was opened in 2014, it was said that the name of the hotel stemmed from the ‘blue economy’. To what extent is the brand image of the hotel linked to the concept of blue economy and blue tourism?
The conference center we have at the hotel is pretty state of the art for a small island nation in the middle of the Indian Ocean.
We have taken that product into Europe and into Africa and we are selling to the MICE market, attracting major conferences from overseas and corporates, to a degree.
Other than that, it’s used mainly for governmental and state conferences. There are no other real conference centers of any consequence in Seychelles, other than the state-owned conference centre. I think Kempinski has a small one. The Savoy has a small one. Ours is really much bigger than anything else.
We think it’s very hard for one 87-room hotel to be a market-maker and sell conferences internationally. But the Eden Bleu marketing team goes to all these MICE exhibitions held around Europe. They’ve recently been to some of these big tourism shows, including Berlin, to promote what Eden Island and the hotel offer.
The world of corporate conferences is a little bit different to what it was when I was in the corporate world about 15 years ago. There’s not a lot of money being thrown around for conferences these days.
Can you expand on your expectations for the property market and the hotel in 2016/2017?
I’m not directly involved with the hotel management. Having said that, I know that the occupancy level the day before yesterday was 100%. They’ve had some great occupancy rates, usually around 80%, which is almost unprecedented in the Seychelles, to be honest with you.
The prospects for the hotel are good. They’ve got a great marketing plan and a strong team of people. They presented their marketing strategy to us recently.
As far as Eden Island goes, I think sales are going to be tougher to close this year.
The sales levels are not what they were last year in terms of the number of units being sold every month because the world is not an easy place for sales right now. People are not traveling like they were before. People in Europe are constrained by the economic restrictions in various countries. It’s really difficult to get money out of countries such as France and Italy right now.
As we mentioned earlier, the strong dollar is impacting on us because we sell in dollars. We went through a phase in 2008, when we started to sell in euros but it came back to bite us. You can have a long lead time between selling a property and actually delivering it to the buyer because it’s brand new. We can’t play the currency market. We’ve sold in dollars since day one and that’s what we are going to continue to do. It’s been great for us actually.
The challenge for 2016 is to sell the last 69 units on Eden Island. We really are at the tail end of the project. I anticipate us being able to sell two a month, but my target is four to five units a month to get this project finished. The UAE and India are two markets that we are targeting heavily to sell the remaining units. We’ll also keep plugging away our traditional markets, whilst the USA presents an interesting possibility for new sales.
On the positive side, the project is 80% complete. We’ve built 450 homes out of 560. We’ll have built 500 probably by the end of April/May this year. It’s a lot easier to sell something that is complete and ready for occupation rather than a construction site.
You are a South African national who has been based in Seychelles for a significant period of time. What are your personal thoughts on the Seychelles and Eden Island as a place to live?
I’m just over 60 years old, for what it’s worth. I worked in banking for 18 years. I was quite a senior banker in South Africa. I looked after the property finance of one of the bigger groups and I’m naturally a conservative person, being a banker.
This opportunity at Eden Island was presented to me in 2005. I was asked to go out and look for the finance for the project. Personally, I was very skeptical. I wondered if anyone would want to buy a property on a piece of dead coral in the Indian Ocean, in a country with a somewhat questionable history.
Nevertheless, we managed to put together a finance project for Eden Island with Barclays that financed the infrastructure and the building of the bridge. We then took the project into the market. My mind changed completely when I saw the huge and positive response we had. We sold 100 units in the first eight months of the launch. Through time, I got more and more engrossed in the project.
I ended up going from a conservative banker to actually buying my own property on Eden Island. I have a home on Eden Island, as does the chairman and the CEO of Eden Island. That, to a certain degree, shows belief in the project. My children are 26 and 22 and they’ve been going to Eden Island from the ages of 12 and 16,
They absolutely love it. Despite the fact that they are in their early 20s, they still go. My son loves fly-fishing. My daughter’s met so many friends there. She went to school there for a while. It really has become my second home and it has become the second home of so many people that have bought there. It really is the most wonderful environment to live in. One feels safe. The people are friendly. The weather is always good. It’s so accessible to so many countries including South Africa, in my case. I feel very comfortable there. We’ve made so many friends. It’s been quite a journey. You can talk to homeowners and you hear many positive stories.