Real Estate: The Mauritian dream of home ownership

Housing is part of the fundamental rights and needs of human beings. Being a small island of 2,000 square kilometres with around 1.3 million of inhabitants, housing has been a major concern for Mauritius. DCDM Research and the MCB have conducted an in-depth survey on the topography of residential property in Mauritius.

According to the report, Mauritius has one of the highest rates of ownership in the world and it continues to grow. In 2011, 89% of residents owned their house as compared to 76% in 1990. Mauritius is left behind by only a few countries like Singapore (91 %), China (90 %) and Croatia (96%). In 2011, only 8% of households were tenants compared with 15% in 1990. This is probably because the cost of renting a home is significantly higher than the cost of buying a home. This difference in cost is increasing every year.

Moreover, as highlighted by the research, before owning their homes, 81% of Mauritians lived with their parents while 13% rented a property. Out of every ten Mauritians, seven have owned their homes for more than ten years. While 56% of homeowners who responded to the survey said they bought or built their homes, 44% claimed they had inherited their residence. A good half of them emphasize that they have become owners because they have always had the ambition to own their own residence. About one third chose to own a home following a change in family situation, while 16% wanted to have a property to hand over to their children.

Being an owner not easy 

Becoming an owner is not always easy. One out of three Mauritians admits to having made compromises by paying more than expected or by reducing the area of the initially planned dwelling. It is also common for Mauritians to make sacrifices in order to be able to own their homes: 52.2% of current owners have had to reduce their spending, while 17.7% admit to having to take a second job. About 15% of owners have a second property in the form of land or house. 42% have inherited it, and 22% believe that owning a second property is a good investment.

Housing loans

Half of homeowners had recourse to a housing loan. The reimbursement conditions, the reputation of the bank and the flexibility of the terms and conditions are all criteria that influence which service provider home buyers will choose. An analysis of mortgage loans at MCB reveals that seven out of ten borrowings were jointly subscribed, mainly by couples. The majority of these households earns less than Rs 60,000 monthly and deducts a maximum of 30% to repay their loans. It should be noted that 40% of those who chose an MCB "Housing Loan" are manual workers and employees in the service sector.

Half of Generation Y wants a house

Generation Y – regrouping people between the ages of 18 and 35 – currently constitutes 27% of the population, that is approximately 338,000 people. Up to now, 7 out of every 10 persons forming part of this generation live with their parents or are tenants. According to them, the main obstacles to acquiring a property are access to quality projects at a fair price and financing.

However, half of those aged 18 to 35, want to buy a property in the next two to five years. Acquiring land or housing is their top priority, far ahead of buying a car and travelling. While three-quarters of Generation Y believe it is not easy to own a home, 95% of them say it is an excellent investment. 

Renting is more of a necessity 

As per the report, 68% of tenants say they pay a monthly rent below Rs 5,000. The rental market seems dynamic, with half of the people claiming to rent their current homes for less than five years. Approximately 55% of the tenants state that they are tenants out of necessity and another half are compelled to rent. Above that, 38.7% chose rental as a means of gaining independence.

The Mauritian's dream house 

When questioned about their dream house, nine out of ten respondents would opt for a gated community, eight out of ten would choose a rural environment. Note that only 20% of them believe that the dream home should be extravagant to better reflect their success. Additionally, the Generation Y dreams of beautiful houses in a secure rural housing estate. In fact, nine out of ten Generation Y members would choose a house instead of an apartment.

A sector for the future

Even if Mauritius is a nation of owners, real estate will remain at the centre of the concerns over the next few years. Four out of ten Mauritians plan to invest in real estate in the near future. This desire is higher among those with a monthly income greater than Rs 60,000. The priorities of Mauritians over the next three to four years are divided between buying real estate (27.5%), travelling (21.7%) and purchasing a car (16.9%).

Gerard Uckoor: “Foreigners have the upper hand”

The president of Small Contractors Association, Mr Gerard Uckoor, argues that there are two types of thinking when it comes to housing in Mauritius. “The younger generation or newly married couples prefer a house with a small garden rather than renting or buying an apartment. These people need space for their personal growth. However, this is not the case with older couples or retired persons. Most of the retired people nowadays would prefer flats because they want to live in a secured area far from the hustle bustle. They are not in need for much space and have fixed schedule. For these people, flats are more suitable,” he says.

In the near future, he adds, there will be more foreigners owning property in Mauritius than locals. “There is no doubt that with the depreciation of our currency, foreigners have the upper hand and they see Mauritius as an ideal place for property investment. They can easily buy properties as compared to the locals. Mauritians have a lower purchasing power and need to borrow in order to buy a house. Access to finance is not as easy as we think. The debt of the construction sector amounts to Rs 86 billion.”

“A basic house for a couple can cost a minimum of Rs 1.8 million. For a fully furnished house, the cost can reach Rs 2.4 million depending on the level of comfort and luxury.” Commenting on the future of the real estate sector, he says that the current situation is gloomy and builders are waiting for a boom.    

Arvind Nilmadhub: “The local market is being left out”

Economist Arvind Nilmadhub says that measures need to be taken in order to create opportunities for the construction sector in the near future. “The report highlights that only a small percentage of the younger generation are willing to invest in real estate. One of the main reasons is financial constraints. The average person has a limited budget to buy a house, the median figure being at Rs 3.5 million. But unfortunately, there is no market for such projects. All contractors are willing to work on big projects like ERS and villas that only foreigners are able to purchase.” For him, the current situation can only be changed if speculation on the price of land is eliminated from the system. “There can be a boom in the sector if the focus is shifted from big projects to small and medium scale projects. The local market is being left out. There is need for the Ministry of Housing to come with clear rules whereby the price of land in each region is clearly defined. Many times, land prices in certain regions is over-valued by owners. There is no guide to help people know the real value of the land. Besides, contractors must come with proposals for small budget houses for the local market.”