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Antish Seebarrun (Director of Red Square Properties) : The drop in demand for buying is surging rentals

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Antish Seebarrun (Director of Red Square Properties) : The drop in demand for buying is surging rentals | business-magazine.mu

The luxury real estate market came to an abrupt halt with the Covid-19 crisis. What do you think are the challenges facing the real estate sector in the short term?

We already offer a range of luxury properties at different budgets. However, in the short term, it would be wise to review prices to attract potential investors. Mauritius is now a Covid-19 free destination; this must be the headline of our marketing strategy. On the other hand, the question to what extent will we be able to maintain Mauritius Covid-19 free? will be a big challenge. It will depend on the impact of this unprecedented pandemic on the world. We are aware that South Africa and Europe are our main investors. Unfortunately, they are hit hard, which will cost our luxury market.

Luxury real estate projects will be severely impacted by the looming economic crisis. What about the mid-range market?

The middle class income will certainly be impacted, mainly due to unemployment, job security and economic uncertainties. Those who deem to be safer within their employment, will have to think strategically and consider taking the full advantage of the various measures announced by the government in the Budget 2020-21. While the demand in buying is dropping, we have observed an increase in rentals. Landlords who were previously focusing on seasonal renting, are now considering long-term ones. From this, we will observe a significant decrease in the renting prices due to the increase of these properties on the market.

Should we expect a significant drop in property prices this year? Why?

There will definitely be some good deals coming. Property owners in financial difficulties will most certainly sell at a lower price to recoup some of their investment. Simultaneously, promoters with ongoing projects will have room to manoeuvre on prices, as they will benefit from various measures announced in the 2020-21 Budget by the government.

What do you think of the budgetary measures announced recently? How do you think they will allow the real estate sector to take off again?

Emphasis was placed on the rapid restart of the construction industry, combined with a series of incentives for the lower and middle class. The same goes for developers, who will benefit from attractive incentives to stimulate the industry. There was a serious lack of quality and affordable projects for the middle class. With the luxury market taking a hit, there will be opportunities for them to thrive. However, a negative aspect of this new budget is Section A.2, Property Tax, paragraph b), Exemption from Property Tax for a Developer Undertaking the Construction of Housing Projects for Mauritians, paragraph (i, ii, iii) where the announced plans will end on December 31 of this year. These programs should have been much longer because project planning takes time, especially in these difficult times.

What are the recovery scenarios for 2021?

With an expected contraction of 11% of the economy, 2021 does not look great. We will be depending a lot on the global economy, with the obvious depreciation of our rupee. And with the appreciation of the American dollar, it will cost us dearly. Obviously, the cost of imported materials will be higher. If you look at a construction site, most of the finishing materials are imported. Why not start producing our finishing materials locally? It will also help to create jobs in new fields, also to increase our export. The remaining six months of this year must be used wisely to build a better and more prosperous 2021.

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