Ashvin Seeboo, CEO of Trimety’s Real Estate Cluster, shares his opinion on the real estate market.
How do you see the real estate market evolving in this time of crisis?
Transactions had slowed down during the confinement but since the property market has quickly resumed its activities to catch up for the delay.
The crisis has particularly impacted a certain category of buyers, those who wanted to contract a property loan and who had little or no personal capital contribution were forced to leave the market. However the other categories of buyers are still active as relocations (for work, for a lifestyle change, for expatriation) continue to happen and there is still the need to house the seniors as well as people with limited mobility.
Real estate being a tangible asset, unlike the other investment securities, has kept its safe haven status and continues to attract numerous investors, even during this crisis period. According to a study by SeLoger, more than 75% of the investors certify that their investment capital has not changed due to the Covid-19 crisis and 6% even plan to review it upward.
Moreover, the budgetary measures taken by the government to revive the Mauritian economy have increased the attractiveness of the country as a real estate investment destination. Indeed, the new minimum investment threshold of $375,000 (previously $500,000) to obtain a permanent resident permit has reshaped the demand of foreign investors.
However, real estate promoters need to adapt to actual context. Cap Tamarin Smart & Happy Village has understood this and has made every effort to digitalise its real estate transactions. Indeed, we have invested in virtual tours for the O’Patio project in order to enable foreign buyers to visit the apartments, as if they were actually here. Plus we are also taking into consideration the new aspirations of buyers, following COVID-19, when designing our projects. I am confident that the property market will gradually return to “normal”, even if it will take a few months.
According to numerous studies, the COVID-19 crisis has influenced the buying behaviour of individuals in their home choice. The confinement period has amplified the need for freedom, space, nature and many came out of it with a stronger attachment to their residence. These days people want a home, not simply an accommodation.
A property with a balcony and/or with a garden, a space for isolation and/or for work has never been so dreamed of. Even though it is not always possible to find a property with a garden or a balcony, it is important to note that potential buyers have expressed their wish to have a park or green space next to their home. They also aspire to have more daily facilities nearby.
Numerous criterias should be considered when buying a real estate property: the actual and future needs, the location, the price… In the local context, one often has to decide between acquiring an off-plan property or a serviced plot of land. The purchase of a serviced plot of land comprises however several drawbacks.
Although in theory, the acquisition of a serviced plot of land provides great freedom in the conception and realisation of the project, in reality several residential estates have specific architectural guidelines, which limit the style, layout, choice of material, brick facade, windows,…
Finding a good and reliable builder doesn’t happen overnight, one must do thorough research, contact, compare,… All this without any guarantee of having made the right choice. Moreover, the administrative procedures (building permit applications, approval from the district councils,…) and the construction supervision is time-consuming and often tedious.
The total acquisition cost of a serviced plot of land and the construction of one’s house can seem at first glance less expensive than the cost of buying off-plan/already-built property, but such is not always the case. There are often some “hidden” costs, for example the upkeep of the serviced plot of land, while waiting for the construction to begin. Moreover, unlike an already built property, a serviced land doesn’t generate any revenue.
Moreover, the regional development objectives and policies can in the future render some serviced plots unsuitable for residential construction or depreciate their value. This happens mainly if the purchased plot of land is located in a region without a proper masterplan.
During this crisis time, with all the drawbacks of a serviced plot of land, it is more advisable to acquire a property under-construction or already built.