Laval Savrimootoo: « Speculation is rife in the real estate sector »

The real estate sector is in the news. Firstly, this sector receives the largest chunk of FDI into Mauritius. Then there are the Smart Cities and Property Development Scheme projects. And now the government is legislating to allow non-citizens to acquire an apartment in Mauritius. News on Sunday speaks to Laval Savrimootoo, president of the Estate Agents Association. 

“ In the past, parents used to buy land as an investment for their children. Today’s parents can’t do the same. Many young couples resort to bank loans in order to buy a property but with the high prices around, many of them do not see their loan application approved. "

Is the real estate sector doing good?

The real estate sector has not totally recovered from the sluggish growth encountered by the construction sector.  In the past, there used to be lots of local buyers for immovable properties, but today clients are rare. Earlier, we could see many couples buying their homes or a plot of land. But today, the price of land has gone up and out of reach of many families. In the past, parents used to buy land as an investment for their children. Today’s parents can’t do the same. Many young couples resort to bank loans in order to buy a property but with the high prices around, many of them do not see their loan application approved. Even members of the Mauritian Diaspora are not buying properties as they used to. 

But estate agents must be rejoicing at the number of Smart Cities and PDS projects…

Not necessarily. The situation is not always that rosy. We are indeed hearing a lot about Smart Cities but they are not for tomorrow. And the target market is not the same as our traditional customers. People must be able to afford buying in Smart Cities. Small promoters cannot engage in such projects. In the past, small promoters conducted many morcellement projects, thus creating opportunities for estate agents, but today small entrepreneurs cannot embark on morcellement projects, as land is too costly and projects are not viable, given the high costs of infrastructure. Large developers of morcellements can afford to do so because they don’t have to buy land. 

What constraints do Estate Agents face in the industry?

Speculation is rife in the real estate sector, and this is driving prices high. If in the past common people could afford to buy a small plot of land, today even middle income professionals can’t afford to do so. With many projects in the past few years mushrooming around the island, landowners have a tendency to increase their prices such that each one quotes a price higher than his neighbour. I believe the government must come forward with some sort of a ‘price fixing mechanism’ to contain land prices and keep them under check. Another issue faced by Estate Agents concerns the Trade Fee that was increased at the beginning of the year. Following protests by Estate Agents and subsequent consultations with the authorities, the fee was brought down in the towns but not in rural areas. This must be remedied. 

“ Foreigners buying apartments should be welcomed as this does not affect land use. The move could boost the construction sector and create more jobs and opportunities for entrepreneurs. "

How do you see the government’s decision to allow foreigners to buy apartments?

It’s a good decision. This measure will help boost sales for apartments, given that we have many such projects, and there will be an inflow of foreign direct investment into the country. Foreigners buying apartments should be welcomed as this does not affect land use. The move could boost the construction sector and create more jobs and opportunities for entrepreneurs. However, I hope that local estate agents will have a great role to play and that the market is not dominated by foreign estate agents.