COVID-19: Is it the right time to invest in Mauritius? | Interview
The Coronavirus is all over the news, and each of us follows with the greatest attention, the many statistics and facts covered - in particular, concerning the consequences on the global economy and real estate investments. The question we all ask ourselves today: is it the right time to invest in Mauritius?
L’Express Property has interviewed Pierre-Yves Maria, the Marketing Manager of HORIZON Properties, specialised in the development and property management in Mauritius, about his point of view on the situation and the potential real estate opportunities generated in the coming months. His objective: to carry a certain “optimism” in these perturbed times.
Do you think this period can have a positive impact on the real estate market?
First of all, it would be totally irresponsible to minimize this COVID-19 crisis and its unprecedented consequences, particularly in terms of health and economics.
Then, I certainly don't have a crystal ball but I am focusing on finding some grounds for optimism. For example, the depreciation of the Mauritian rupee (MUR - Rs.) against other currencies such as the Euro or the Dollar can paradoxically constitute an opportunity for the real estate market: this "technically" benefits foreign investors, wishing to invest in Mauritius.
In addition, with this crisis which has a direct impact on the stock markets, investors - whose portfolios are traditionally composed of a certain share of stocks and bonds - could probably fall back on less risky “safe haven” assets, such as real estate. This hypothesis is reinforced by the fact that other players in the Mauritian economy, notably the banks, play the game of recovery by offering interest rates that are relatively low at present.
What do you think is the impact of the crisis for investors who favour short-term rental property?
A real estate investment must, in my opinion, regardless of the current situation, fall in a "long-term" approach. Investing in real estate with the ambition of making large profits in a few months may cause some disappointment. There are other types of investments more suited to these objectives; micro-trading on the stock markets for example, but with the risks that this entails.
The COVID-19 crisis directly affects the tourist market and automatically impacts the income generated at this time by short-term rental.
It is however obvious that Mauritius will retain all its international appeal: as soon as the restrictions are lifted, tourists will be able to gradually return at the end of the year. This trend should then be confirmed in order, we hope, to regain its "pre-crisis" pace in the second half of 2021. The yields associated with short-term leasing should then return to a relatively "attractive" level for investors. Patience must, therefore, remain the watchword.
What is your analysis on the balance between supply and demand, and the possible consequences on market prices?
It must be admitted that real estate prices in Mauritius have increased exponentially and decorrelated from the "real" demand in recent years. in all cases, I think we would have observed a drop in prices. In a more technical analysis, this is called a "correction" and it is a perfectly logical and healthy phenomenon of price consolidation: a market cannot actually grow indefinitely. This "correction" should be reinforced by the COVID-19 crisis. So we do expect lower prices in the short term. I have recently been able to exchange views with other market players, in particular partner real estate agencies; they share the same analysis and continue to observe significant interest from foreign investors in Mauritius as a destination. Almost no withdrawal from potential buyers should be noted at the moment: signatures are simply shifted and not cancelled. That in itself is a very positive signal for our market.
Finally, it is important to note that the real estate market in Mauritius remains on a long-term upward cycle and remains particularly favourable for investment.
What is your anticipation of the resumption of the real estate activity?
There will likely be moving in the short term, first at a local level with interesting opportunities to be seized and investors in the need to diversify their asset portfolio. We then hope for a recovery phase from the end of 2020: a period which will coincide with the possibility of travelling again and will allow foreign prospects to move again. Our industry is dependent on many other factors like the reopening of borders and flights.
A final word to sum up this "optimism" that you wish to share.
The result of any crisis are opportunities to reinvent oneself. This will also be the case for the real estate market in Mauritius: it is a question of remaining united between market players to maximize synergies and stand together.
Read more here about the Covid-19 perspectives from specialists of the real estate and investments in Mauritius.