Between 1993 and 2017, Reunion experienced annual economic growth of 5%: a boom that should logically generate interest among investors.

What should you pay attention to before investing in Reunion?

With a dynamic economy, tourism appeal and its demographic growth, the island of Reunion has many assets for investments. It is one of the French regions that attracts the most investor candidates. So, you want to get started? Good idea. But first, discover what to pay attention to before investing in Reunion, in short everything you need to know to succeed with your investment.

Business sectors on Reunion Island

The first element you must pay attention to before considering investing in Reunion, is indeed the business sectors.

Far from the time when agriculture (notably with sugar cane) was the heart of the economy, new sectors, drivers of the Reunion economy (constituting for example 35.5% of the island's wealth in 2011 according to INSEE) can be explored today by investors. The most important are:

Real Estate

Since 2013, construction activity on the island has experienced a certain slowdown, yet demand continues to remain important (7680 in 2018 for example) both for commercial premises and tourists (more than 430,000/year).

The demand for rental housing in Reunion remains growing, with the population facing a shortage of 3-bedroom and 4-bedroom units. Also, the question of housing for future Reunion students and young professionals arises. Properties in Reunion therefore attract a growing number of buyers, and the time has never been more favorable to invest in real estate.

In the study on housing prospects in Reunion by 2035, carried out by INSEE and DEAL, a need for 169,000 additional housing units by 2035 on the island emerges. 

Tourism

With approximately 430,000 tourists each year, Réunion tourism is both a creator of business opportunities, jobs and revenue sources for local and foreign businesses. The assets are numerous: turquoise blue sea, a magnificent lagoon, preserved cirques offering hikes with breathtaking views, a colorful volcano, endless beaches…

Thanks to the National Park of the Highlands since 2007, the signature of a destination charter between the State, the Region and the Department, as well as the emergence of low-cost flight offerings, many levers have been activated to consolidate Réunion tourism.

The digital economy

Labeled French Tech since 2016, Réunion's digital ecosystem is still emerging but already very attractive. It has invested in several incubators such as the Technopole of Réunion in Saint-Denis and the Transfo, in Saint-Pierre de la Réunion, to strengthen itself over the last five years.
Technology companies in Réunion are now positioning themselves as e-health experts, and their link with Africa, a market closer to the island, are being strengthened.

There are other new sectors such as renewable energies (due to the island's openness to nature) which are developing rapidly and in which investors find interest in getting involved.

Whatever the sector, surround yourself with professionals who know the market to be able to validate and ensure a stable, profitable and sustainable investment.

Tax policy

On this paradisiacal island the tax arrangements deserve attention. The investor thus has for example: 

The Pinel Overseas scheme. It perfectly meets the expectations of an investor. Even more favorable than the ordinary scheme, it allows the investor to obtain for example up to 32% tax reduction, provided you purchase a new property or off-plan property that will be offered for rental.

The Girardin Scheme. Still in real estate, it allows the taxpayer to invest in their primary residence while benefiting from a tax reduction, under certain conditions. They must for example be a first-time buyer and carry out a purchase or construction project for a new property.

Beyond tax schemes, if you buy an old property, there are also renovation aids in Réunion : let us mention, among others, MaPrimeRenov, CEE, or the eco-loan. It can be a good operation if the price of the property you are buying is low enough to offset the cost of the work. With the financial aid previously mentioned, you can achieve an interesting capital gain on your investment.

Cities and locations

Another element to which you must pay attention before investing in Réunion, is the location of the investment. It is an important criterion.

Cities to prioritize

It is wise to prefer beach resort cities attractive such as Saint-Gilles, L'Ermitage and La Saline by the sea (bordering the lagoon) and dynamic communes such as Saint-Denis and Saint-Pierre (in city center or residential suburbs), Saint-Paul, and nearby highlands.

Moreover, it is important to anticipate the development of certain cities or the road network (new coastal road, etc.). We can take as an example La Possession and its « city center ». This ambitious project is interesting for investments related to the Duflot Overseas Law.

Cities and neighborhoods to avoid

However, you must avoid cities in the Northwest, Saint-Louis, Le Tampon, etc. Some neighborhoods should also be avoided: urban neighborhoods facing multiple difficulties and whose economic situation is deteriorating (Satec, Le Chaudron, Sud, Grande Fontaine, etc.), poor neighborhoods with a predominantly rural character (Cambuston, Creuse, Langevin, Ravine, Tan-rouge, La Chaloupe, Vincendo, Sans-Souci, etc.).

Vulnerable neighborhoods near city centers are not very advisable for investment purposes (Les Jacques Bel Air, Petite Ile, Le Bas De la Rivière, Saint Laurent, La Confiance, Saint Clotilde, La Source, etc.). Although the poverty and employment rates are average there, only people are numerous in these neighborhoods. Activity is not growing considerably there.  

So many things to know before investing in Réunion.