Financial Preparation

• Determine your total investment budget (property + transaction costs + reserves)
• Establish a currency exchange strategy (KMF is not widely traded internationally)
• Research KMF/USD or KMF/CAD exchange trends and stability
• Set up international wire transfer capabilities with your home bank
• Plan for cash reserves as local financing options are extremely limited
• Evaluate tax implications in both Comoros and your home country
• Consider political risk insurance for larger investments

Market Research

• Identify target islands and cities based on investment goals
• Research neighborhood-specific trends and opportunities
• Connect with Comorian diaspora networks for insights
• Study infrastructure development plans and international aid projects
• Analyze tourism development zones and government priority areas
• Research tenant demographics (expatriates, returning diaspora, locals)
• Plan an extensive preliminary market visit (allow 1-2 weeks minimum)

Professional Network Development

• Connect with lawyers specializing in Comorian property law
• Identify reputable local real estate agents with international experience
• Research property management options (limited but growing)
• Establish contact with currency exchange specialists familiar with KMF
• Find an advisor familiar with cross-border tax implications
• Connect with other foreign investors with Comoros experience
• Consider diplomatic mission contacts for additional support

Expert Tip: The Comoros market is highly relationship-driven. Spending time on the ground building connections with local officials, business leaders, and community representatives is essential before committing to investment. Language barriers can be significant, so budget for professional translation services (French is the official language, with Comorian, Arabic, and limited English also spoken).

Recent Regulatory Change: The Comoros government has been working to streamline business registration processes as part of broader economic reforms. The National Agency for Investment Promotion (ANPI) now provides assistance to foreign investors, though processing times remain lengthy compared to more developed markets. Allow 4-8 weeks for company formation and initial approvals.

Banking Setup

• Local Bank Account Options:
  • Domestic Comorian banks: Basic services, limited international capabilities
  • International bank branches: Very limited presence with restricted services
  • Central Bank services: Primarily for institutional clients
• Typical Requirements:
  • Passport and identification
  • Proof of address (local and international)
  • Reference letters from home banks
  • Investment permission documentation
  • Business registration (for corporate accounts)
  • In-person application (typically required)
• Practical Approach: Many foreign investors maintain their primary banking relationships internationally and use local accounts only for necessary transactions. Your Comorian legal representative can often assist with initial banking arrangements.

Financing Options

Financing options in Comoros are extremely limited, with most foreign investors using cash purchases:

1. Local Bank Financing:
   • Availability: Severely limited for foreign investors
   • Typical Terms: 50-60% LTV when available
   • Interest Rates: 10-14% (significantly higher than Western markets)
   • Requirements: Extensive collateral, often including assets beyond the property
   • Documentation: Comprehensive business plans, significant financial history, local guarantors
2. Development Bank Support:
   • Limited financing for projects aligned with development priorities
   • Typically requires significant job creation component
   • Long application and approval processes
   • Often requires government partnership
3. Home Country Financing:
   • Equity release from existing properties
   • Personal lines of credit
   • International investor loans (specialty lenders)
   • Most practical option for most North American investors

Currency Management

The Comorian Franc (KMF) is pegged to the Euro, providing some stability, but presents unique challenges:

• Exchange Considerations:
  • Limited currency convertibility outside Comoros
  • Essential to plan currency exchanges in advance
  • Consider EUR as an intermediate currency (KMF is pegged to EUR)
  • Bring sufficient cash for initial transactions
• Currency Services:
  • International services have limited KMF capabilities
  • Local banks offer basic exchange services
  • Higher fees and less favorable rates than major currencies
• Income Repatriation:
  • Central Bank approval required for significant outflows
  • Documentation of investment source important for later repatriation
  • Plan for administrative delays in moving funds internationally

Given the limited banking infrastructure, cash remains important for many transactions in Comoros. Plan your currency needs carefully and maintain relationships with both local banks and international financial institutions to manage your investment effectively.

Property Search Resources

• Online Resources:
  • Limited online listings (primarily through specialized agencies)
  • Social media groups for expatriates and diaspora
  • Development project websites (for new constructions)
  • Government economic development portals
• Local Real Estate Agents:
  • Small number of formal agencies in major cities
  • Informal property facilitators (require verification)
  • International agencies with Comoros connections (limited)
  • Note: No formal licensing system for real estate agents
• Direct Networking:
  • Local business community connections
  • Diaspora networks
  • Religious and community organizations
  • Hotel and tourism industry contacts
• Government Resources:
  • Ministry of Land and Urban Planning
  • National Investment Promotion Agency
  • Municipal offices in larger towns
  • Tourism development authorities

Property Viewing Trip Planning

For overseas investors, an extended property viewing trip is essential:

1. Pre-Trip Research:
   • Identify regions and property types before arrival
   • Make initial contacts with local representatives
   • Arrange meetings with legal advisors
   • Plan for longer stay than typical viewing trips (2-3 weeks minimum)
2. Trip Logistics:
   • Limited international flights (prepare for complex routing)
   • Inter-island travel arrangements (ferries and small aircraft)
   • Accommodation in major towns only (limited options)
   • Translation services if you don’t speak French
3. During Viewings:
   • Document everything with photos and videos
   • Verify property boundaries (often poorly defined)
   • Meet neighbors and local officials
   • Check infrastructure reliability (water, electricity, internet)
   • Assess seasonal considerations (rainy season access, etc.)
4. Local Assistance is essential for:
   • Translation and cultural navigation
   • Transportation logistics
   • Introduction to relevant officials
   • Verification of property claims

Property Evaluation Criteria

Assess potential investments using these key criteria:

• Location Factors:
  • Proximity to major towns and infrastructure
  • Access to reliable utilities (critical consideration)
  • Transportation access (road conditions, port proximity)
  • Environmental risks (flooding, volcanic activity on Grande Comore)
  • Community stability and acceptance of foreign investment
• Property Condition:
  • Construction quality (often variable)
  • Materials used (imported materials indicate higher quality)
  • Water management systems (critical during rainy season)
  • Power backup capabilities (generators, solar)
  • Recent renovations or maintenance
• Legal Considerations:
  • Clear title documentation (verify thoroughly)
  • Property boundaries (formal survey recommended)
  • Zoning and land use permissions
  • Community or customary claims on the land
  • Previous dispute history
• Investment Potential:
  • Rental market for the specific area and property type
  • Tourism development proximity
  • Infrastructure improvement plans
  • Comparable sales (limited but important)
  • Potential for value-add improvements

Expert Tip: The informal nature of much of the Comoros property market means that many of the best opportunities are not publicly listed. Plan to spend significant time networking while in-country. Rushing the property search process almost always leads to suboptimal outcomes. Some investors make multiple trips over 6-12 months before finalizing a purchase.

Legal Due Diligence

• ✓
  Title Verification: Confirm legal ownership through official and community sources
• ✓
  Land Registry Check: Verify registration status (note: registry system is incomplete)
• ✓
  Municipal Approval: Verify local government recognition of ownership claims
• ✓
  Customary Rights: Investigate potential traditional or family claims
• ✓
  Boundary Verification: Physical survey and neighbor confirmation
• ✓
  Lease Review (if applicable): Analyze terms, duration, and transfer rights
• ✓
  Foreign Investment Approval: Confirm Ministry of Interior authorization
• ✓
  Historical Disputes: Research any past ownership conflicts

Physical Due Diligence

• ✓
  Structural Assessment: Evaluate building integrity with qualified inspector
• ✓
  Materials Evaluation: Assess quality of construction materials (local vs. imported)
• ✓
  Utilities Assessment: Test water, electricity, and sewage systems
• ✓
  Environmental Risks: Evaluate flooding, volcanic (on Grande Comore), and erosion risks
• ✓
  Access Verification: Confirm road access and right-of-way agreements
• ✓
  Seasonal Considerations: Assess property during both dry and rainy seasons if possible
• ✓
  Renovation Assessment: Obtain estimates for needed improvements

Financial Due Diligence

• ✓
  Market Valuation: Research local transaction prices (limited data available)
• ✓
  Rental Demand: Assess potential tenant pool and typical rental rates
• ✓
  Tax Implications: Calculate property tax, income tax, and transfer taxes
• ✓
  Operational Costs: Estimate maintenance, utilities, security, and management
• ✓
  Development Costs: For unimproved land, estimate infrastructure development
• ✓
  Exit Strategy: Evaluate realistic resale options and timelines

Expert Tip: Given the informal nature of much of the Comorian property market, a multi-layered verification process is essential. Beyond official documents, seek confirmation from community leaders, neighboring property owners, and local officials. The cost of thorough due diligence ($2,000-5,000) is significantly less than potential losses from legal disputes or undiscovered property issues.

Offer and Negotiation

1. Initial Expression of Interest: Often verbal through intermediaries
2. Negotiation: Price and terms discussion (often extended process)
3. Preliminary Agreement: Written confirmation of intent (not binding)
4. Foreign Investment Approval: Government authorization for the transaction

Unlike more developed markets, negotiations in Comoros are rarely straightforward. Price discussions often involve multiple parties and can extend over weeks or months. Cultural considerations are important, with direct price negotiation sometimes considered impolite. Working through a trusted local intermediary is typically the most effective approach.

Transaction Process

1. Engage Legal Representation: Hire a Comorian lawyer specialized in property transactions
2. Due Diligence Process:
   • Title verification with relevant authorities
   • Physical inspection and boundary verification
   • Confirmation of legal status and permissions
3. Foreign Investment Authorization:
   • Application to Ministry of Interior
   • Submission of required documentation
   • Payment of applicable fees
4. Contract Preparation:
   • Draft purchase agreement (in French)
   • Review and negotiation of terms
   • Finalization of agreement
5. Payment Process:
   • Initial deposit (typically 10-20%)
   • Funds transfer to notary or escrow (where available)
   • Final payment upon completion
6. Contract Execution:
   • Formal signing of agreement
   • Notarization (required for legal recognition)
   • Transfer of possession
7. Official Registration:
   • Registration with land registry (where applicable)
   • Payment of transfer taxes and fees
   • Issuance of ownership/leasehold documentation

The timeframe from initial offer to completion typically ranges from 3-9 months, significantly longer than in more developed markets. Administrative delays, verification processes, and government approvals contribute to this extended timeline. For foreign investors, the approval process alone can take 1-3 months.

Transaction Costs

Budget for these typical transaction expenses:

• Transfer Tax: 2-5% of purchase price
• Legal Fees: 3-6% (higher than developed markets due to complexity)
• Foreign Investment Authorization: 1-2% in official and informal fees
• Notary Fees: 1-3% of transaction value
• Registration Fees: 1-2% of property value
• Agent/Facilitator Fees: 3-7% (if applicable)
• Translation Costs: $200-500 for document translation
• Survey Costs: $300-1,000 for property boundary verification

Total transaction costs for foreign investors typically range from 10-20% of the purchase price, significantly higher than in North America or Europe. Informal payments to facilitate administrative processes are common, though officially discouraged. Working with reputable legal representation can help manage these expectations appropriately.

Expert Tip: Consider establishing a dedicated bank account with a major bank in Moroni to facilitate the property transaction. While cash is commonly used for smaller transactions, larger property purchases should utilize more secure and documented payment methods. Maintain detailed records of all payments, communications, and agreements throughout the process.

Administrative Tasks

• ✓
  Property Registration: Complete all registration requirements with local authorities
• ✓
  Utility Transfers: Establish accounts for electricity, water, and other services
• ✓
  Property Tax Registration: Register with tax authorities for annual property taxes
• ✓
  Insurance Arrangement: Secure property insurance (limited options available)
• ✓
  Foreign Investment Registration: Complete ongoing reporting requirements
• ✓
  Municipal Notifications: Inform local government of ownership change
• ✓
  Property Management Arrangements: Establish security and maintenance services

Regulatory Compliance

Property ownership in Comoros comes with various regulatory obligations:

• Annual Foreign Investment Reporting:
  • Update information with Ministry of Interior
  • Confirm continued compliance with investment conditions
  • Reporting any significant changes to property use
• Property Tax Compliance:
  • Annual property tax payments to local government
  • Rates vary by property type and location
  • Payment procedures often require in-person visits
• Rental Property Regulations:
  • Registration of tenant agreements with authorities
  • Compliance with basic safety requirements
  • Tax reporting on rental income
• Construction and Renovation Permissions:
  • Permits required for most significant modifications
  • Environmental compliance for larger changes
  • Inspection requirements vary by municipality

Non-compliance with these regulations can result in fines, difficulty with future transactions, or in extreme cases, challenges to property rights. Having a local representative to manage ongoing compliance is highly recommended for absentee owners.

Record Keeping

Maintain comprehensive records for tax and legal purposes:

• Property Documents:
  • Purchase agreement and transfer documents
  • Registration certificates and tax receipts
  • Boundary surveys and property maps
  • Government approvals and permits
  • Photos documenting property condition
• Financial Records:
  • All purchase-related expenses with receipts
  • Property tax payments and assessments
  • Maintenance and improvement expenses
  • Insurance policies and payments
  • Rental income and tenant deposits
  • Currency exchange documentation
• Ongoing Compliance:
  • Annual tax filings and payment confirmations
  • Foreign investment reporting documentation
  • Correspondence with government authorities
  • Utility payments and account information
• Tenant Information (for rentals):
  • Rental agreements and extensions
  • Tenant identification and contact information
  • Deposit records and condition reports
  • Maintenance requests and resolutions

Keep duplicate records in both your home country and Comoros. Digital record-keeping with secure backups is strongly recommended, particularly for foreign investors managing properties from abroad.

Expert Tip: Consider appointing a legally authorized local representative with power of attorney to handle administrative matters in your absence. This representative should be someone with experience in property management and good connections with relevant government departments. Formal legal authorization through a notarized power of attorney document is essential.

Comoros Tax Obligations

• Property Transfer Tax:
  • One-time payment of 2-5% of property value at purchase
  • Payable to the treasury department within 30 days of transaction
  • Typically shared between buyer and seller, but often falls more heavily on buyer
  • Additional municipal fees may apply in some areas
• Annual Property Tax:
  • Varies by location and property type
  • Typically 0.2-1% of assessed property value
  • Different rates may apply to improved vs. unimproved land
  • Payment procedures vary by municipality
• Rental Income Tax:
  • Residential rental income taxed at 20%
  • Commercial property rentals taxed at 30%
  • Limited deductions available for expenses
  • Quarterly or annual filing requirements
• Capital Gains Tax:
  • Applicable on property sales at progressive rates
  • Rates vary based on holding period and property type
  • Some exemptions for long-term holdings
  • Payable within 60 days of transaction completion

Home Country Tax Obligations

Comoros has limited tax treaties with other countries, which can make international tax planning more complex. Consultation with tax professionals in both Comoros and your home country is strongly recommended to optimize tax positions and ensure compliance.

Tax Planning Strategies

• Entity Structure: Evaluate whether personal ownership, Comorian company, or other structures optimize tax position
• Expense Documentation: Maintain meticulous records of all allowable expenses
• Capital Improvements: Document all capital expenditures which may reduce future capital gains tax
• Timing of Disposals: Consider tax year timing for property sales in both jurisdictions
• Property Use Classification: Understand how different property uses impact tax treatment
• Rental Income Planning: Structure rental arrangements to optimize tax position
• Currency Management: Plan currency exchanges to minimize tax impacts from exchange rate fluctuations

The Comorian tax system is still developing, with changes occurring regularly. Staying informed about changes to tax laws and maintaining relationships with knowledgeable tax professionals is essential for ongoing compliance and optimization.

Expert Tip: While Comoros offers a relatively low property tax environment compared to many countries, compliance procedures can be complex and often require in-person visits to tax offices. Consider engaging a local tax representative who can handle these processes on your behalf, particularly if you are not frequently in the country. This representative should have specific experience with property tax matters for foreign investors.

Selecting a Property Manager

Evaluate potential property managers using these criteria:

• Experience with Foreign Owners:
  • Track record managing properties for overseas investors
  • Experience with international communication
  • Understanding of foreign owner concerns
• Local Market Knowledge:
  • Familiarity with your specific island/area
  • Established relationships with service providers
  • Understanding of local rental markets
• Services Offered:
  • Comprehensive service package vs. à la carte options
  • Emergency response capabilities
  • Financial reporting systems
• Communication Capabilities:
  • Language abilities (French, English)
  • Technological capabilities for remote communication
  • Reporting frequency and thoroughness
• Legal Compliance Knowledge:
  • Understanding of foreign ownership regulations
  • Tax reporting capabilities
  • Property law expertise

Management Agreement Essentials

Ensure your property management contract includes these key elements:

• Detailed Service Description: Specific responsibilities and frequency
• Fee Structure: Base fees, additional service costs, expense handling
• Performance Metrics: Occupancy targets, maintenance standards
• Reporting Requirements: Financial statements, property condition updates
• Maintenance Authorization: Spending limits requiring owner approval
• Term and Termination: Contract duration and cancellation provisions
• Emergency Procedures: Response protocols for various scenarios
• Tenant Guidelines: Selection criteria and management approach
• Insurance Requirements: Coverage expectations for both parties
• Dispute Resolution: Process for addressing disagreements

The property management industry in Comoros is still developing, with few formal professional standards. Personal recommendations and thorough vetting are essential before entrusting your property to a manager. Consider starting with a shorter contract term (6-12 months) to evaluate performance before committing to a longer arrangement.

Expert Tip: Consider a hybrid management approach for properties in Comoros. Many successful foreign investors combine a local caretaker for day-to-day oversight with a more professional management service for tenant placement, legal compliance, and financial management. This approach can provide both on-the-ground presence and professional expertise at a more reasonable cost than full-service management alone.

Exit Options

Sale Process

When selling your Comorian property:

1. Pre-Sale Preparation:
   • Update and organize all legal documentation
   • Address any maintenance issues or improvements
   • Create marketing materials (multilingual if possible)
   • Determine realistic pricing based on market conditions
2. Marketing Strategy:
   • Local channels (agents, networks, signage)
   • Diaspora marketing (community networks, specialized media)
   • International marketing (specialized platforms, agencies)
   • Digital presentation (photos, videos, virtual tours)
3. Sale Negotiations:
   • Prepare for extended negotiation process
   • Understand cultural aspects of price discussions
   • Consider creative financing or payment structures
   • Be prepared for lower initial offers
4. Transaction Process:
   • Legal representation for sale documentation
   • Government approvals for foreign buyer sales
   • Tax clearance certificates
   • Secure payment arrangements
   • Property transfer documentation
5. Post-Sale Requirements:
   • Tax reporting in Comoros and home country
   • Cancellation of ongoing service contracts
   • Currency repatriation arrangements
   • Notification to regulatory authorities

The sales process in Comoros typically takes significantly longer than in more developed markets. Plan for 6-24 months from listing to completed sale, with commercial properties and higher-value properties often taking longer to sell than residential properties.

Market Exit Timing Considerations

Several factors should influence your exit timing decision:

• Infrastructure Development: Major improvements in roads, utilities, or ports can significantly increase property values and create selling opportunities
• Tourism Growth: Increases in visitor numbers and tourism infrastructure can create stronger demand for certain property types
• Political Stability: Periods of stable governance typically offer better selling conditions than times of transition or uncertainty
• Exchange Rate Movements: For foreign investors, favorable currency exchange rates can significantly impact realized returns
• Development Progress: Completion of nearby projects or area improvements can create better selling conditions
• Seasonal Factors: Higher visitor seasons (June-September) often bring more potential international buyers
• Economic Conditions: Both local Comorian economic trends and global economic factors affecting buyer availability
• Personal Timeline: Tax considerations in your home country and personal financial needs

For foreign investors, a successful exit strategy often begins with the initial purchase. Properties with clear title, proper documentation, and strong appeal to both local and international markets offer the greatest flexibility when it comes time to sell. Consider creating and maintaining a “sale readiness file” throughout your ownership period to streamline the eventual sales process.

Expert Tip: In a market with limited liquidity like Comoros, consider a phased exit strategy if you have multiple properties or a larger holding. Testing the market with one property can provide valuable insights into current conditions, buyer preferences, and realistic pricing before bringing additional properties to market. Additionally, be prepared to offer creative terms that might make your property more attractive, such as seller financing (with appropriate security) or rent-to-own arrangements for qualified buyers.