Mauritius is a small island country of only 2 000 km2 in the Indian Ocean, with a population of about 1.26 million people, or 360 800 households.
The Mauritian economy is well run, with sound political and economic management practices. The government has demonstrated firm commitment to promoting industrialisation and entrepreneurship, in an effort to boost sustainable economic growth and enhance the competitiveness of the economy. The Mo Ibrahim Foundation again ranked Mauritius first in Africa in terms of governance in the 2016 Ibrahim Index of African Governance.
- Access to Finance
- Housing Affordability
- Housing Supply
- Property Markets
- Housing Policy and Regulations
- Housing Sector Opportunities
Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2017 edition, which has up-to-date profiles for 54 African countries.Download yearbook
Officially the Republic of Mauritius (French: République de Maurice), Mauritius is a small island country of only 2 000 km2 in the Indian Ocean, with a population of about 1.26 million people, or 360 800 households. It is located about 2,000 kilometres (1,200 mi) off the southeast coast of the African continent, and includes the islands of Mauritius and Rodrigues, 560 kilometres (350 mi) east of Mauritius, and the outer islands (Agaléga, St. Brandon and two disputed territories). The islands of Mauritius and Rodrigues form part of the Mascarene Islands, along with nearby Réunion. Republic of Mauritius comprises 9 Districts, 1 Autonomous Region, and 2 Dependencies. The country is 2,040 km2 (790 sq mi) and its capital and largest city is Port Louis.
The Mauritian economy is well run, with sound political and economic management practices.
The government has demonstrated firm commitment to promoting industrialisation and entrepreneurship, in an effort to boost sustainable economic growth and enhance the competitiveness of the economy. The Mo Ibrahim Foundation again ranked Mauritius first in Africa in terms of governance in the 2016 Ibrahim Index of African Governance.
The Mauritian economy grew by 3.6 percent in 2016 compared to 3.4 percent in 2015, following a slight pick-up in private investment but was offset by weak external demand. While Mauritian economy has diversified since independence in 1968, Mauritius is still dependent on sugar and textile for foreign income and its main market remains Europe. Due to its openness and dependency on a few sectors, Mauritius remains exposed to external shocks. However, adequate political and economic policies has ensured the economic growth albeit sluggish.
Mauritius’ fiscal deficit was recorded at 3.4 percent of gross domestic product (GDP), by close of the fiscal year 2015/16, as the government rolled out a number of new social programmes but reduced capital spending. In July 2016, the Bank of Mauritius cut the key policy rate by 40 basis points to 4.0 percent, in the light of a benign inflation environment and subdued domestic and external demand.
The World Bank ranked Mauritius first in Sub-Saharan Africa in terms of ease of doing business. Mauritius is one of the most successful economies in Africa and has the highest GDP per capita. The country’s success is a result of trade-led development supported by exports of textiles, sugar and tourism. In recent years, Mauritius attracted foreign direct investment due to its skilled labour force and good infrastructure. Mauritius is ranked high in terms of economic competitiveness, a friendly investment climate, good governance and a free economy. The Gross Domestic Product (PPP) was estimated at US$22.025 billion in 2014, and GDP (PPP) per capita was over US$16,820, one of the highest in Africa.
While the government appears to be moving away from economic policies based on redistribution and state intervention, towards an emphasis on private sector led economic growth, the government will remain deeply involved in efforts to diversify the country’s “four pillar economy” (based on sugar, textiles, tourism and financial services). Efforts are being made to diversify the financial services sector and develop new sectors such as the ocean economy. Yet the Government provides support to the existing manufacturing. The luxury real estate sector, supported by a beneficial tax regime and government-backed programmes, will also become an increasingly important part of the economy as authorities seek to establish the island as a business centre linking Africa with the Middle East and Asia.
During the delivery of its 2015/16 national budget, the Government of Mauritius announced the set-up of the “Smart City Scheme” to provide an enabling framework and a package of attractive fiscal and non-fiscal incentives to investors for the development of smart cities across the island. The smart-city concept focuses on providing investors, nationals and foreigners, with options for living in sustainable, convenient and enjoyable urban surroundings. These new cities will be built around the “work-live-play” lifestyle in a vibrant environment with technology and innovation at their core.
Access to Finance
Mauritius boosts a vibrant financial services sector; its share to the gross domestic product remains about 12 percent. Basic financial sector infrastructures, such as payment, securities trading and settlement systems, are modern and efficient, and access to financial services is high, with more than one bank account per capita. The Financial Services Commission supervises the non-bank financial institutions including the stock exchange and insurance companies.
Mauritius has relatively active capital markets. The institutional and technical infrastructure of the SEM is highly developed, but the market is characterized by low volume and poor liquidity as is typical of small economies. The fixed income market is relatively well developed. The Bank of Mauritius regularly issues a diversity of government securities and the country has a sovereign debt rating of Baa1 by Moody’s.
As at end-June 2016, 23 banks were licensed to carry out banking business in Mauritius, of which eight were subsidiaries of foreign-owned banks and four were branches of international banks. Two banks were involved in private banking business and one bank conducted Islamic banking exclusively. Twelve banks offer housing related finance. Moreover, there is a network of 221 branches, 10 counters, 1 mobile van and 461 Automated Teller Machines (ATMs). There are also six foreign exchange dealers, six money changers and eight non-bank deposit taking institutions, all supervised by the Bank of Mauritius. All banks remain comfortably liquid, well-capitalized and profitable, with non-performing loans representing 7.1 percent of total loans as of 2016. Banks appear to be strong.
All of the banks have licenses to carry out banking business locally and internationally. The Mauritius Commercial Bank (MCB) and the State Bank of Mauritius (SBM) are among the largest banks in the East African region. The banking system is highly concentrated, with four of the major banks accounting for 57 percent of the whole banking system’s assets.
The country’s commercial banks are well capitalised, well regulated, liquid and profitable. The capital adequacy ratio (17.5 percent in June 2016) comfortably exceeds the regulatory minimum of 10 percent and the overall quality of assets is good. However, the profitability of banks deteriorated slightly in 2016 and the asset quality worsened. The ratio of non-performing loans (NPLs) increased from 5 percent in June 2015 to 7.1 percent in 2016. Exposure of banks to large borrowers, measured as a percentage of banks’ capital base, has fallen to 197.7 percent as at end-June 2016, compared to 224.3 percent as at end-June 2015.
Deposits, which represent banks’ main funding source dropped from 73.5 percent in June 2015 to 73.2 percent in June 2016. The advances-to-deposits ratio, which indicates the extent to which funds mobilised by way of deposits have been utilised to finance lending activities, decreased from 78.2 percent as at end-June 2015 to 74.0 percent as at end-June 2016.
Some 15 banks offer mortgage finance, and the use of mortgage finance is generally high by African standards, although it has declined recently. According to the Mauritius Housing Census, just over 12 percent of houses were mortgaged in 2011, versus 16 percent in 2000. Mauritius has a relatively large pension industry, and 51.4 percent of the labour force are contributors. The national pension fund is also involved in the housing sector and, for example, lends money to the Mauritius Housing Company (MHC).
A key mortgage lender targeting low and middle-income earners is the MHC, the former Mauritius Housing Corporation, a parastatal body set up in 1963. The MHC was incorporated as a public company in 1989 to address the housing finance requirements of the population, with a special attention to the low income households. In 2015, the MHC held a 10 percent market share. The MHC offers a diverse range of products. In 1982, MHC introduced a special savings scheme, which has been a major source of contributions. This scheme encouraged Mauritians to save with the MHC so as to be later eligible for a housing loan.
There are constraints to the growth of the Mauritian mortgage market. Affordability constraints as well as informal incomes undermine access to mortgages, and lenders feel that the cost and time of foreclosing on a property increases risk. The Borrowers’ Protection Act of 2007 aims to ensure responsible borrowing and lending, and provides for a Commissioner to examine and have a say in cases of foreclosure. This has resulted in a worsening of the country’s insolvency resolving capacity (from 36th in 2015 to 39th in 2016 in the World Bank ranking). While there are no private credit bureaus, over half of the population (56.3 percent) are included in the public credit registry.
The FinScope Mauritius study carried out in 2014 revealed a high level of financial inclusion, with only ten percent of adults (above 18) classified as financially excluded (that is they do not use any formal or informal financial product or service). Eighty-five percent of the adult population is banked, 49 percent use non-bank products and services and 26 percent use informal mechanisms to manage their finances. Financial inclusion rates are hampered by income regularity as most financial products are pegged on consistent income. Fifteen percent of adults who show signs of over-indebtedness have credit.
According to the Bank of Mauritius, credit extended by banks to households continued to decelerate and reflected the sharp decline in consumption credit and some stabilisation in credit extended for housing purposes. Given the background of high credit growth in a low interest rate environment, the Bank remains concerned over the level of household indebtedness.
Against a backdrop of low interest rates, household indebtedness, measured as the ratio of household debt to disposable income, dropped to 50 percent in 2015-16 from 54.4 percent in 2014-15. Corporate indebtedness (measured as the ratio of corporate debt to GDP) also declined from 54.5 percent in 2014-15 to 53.8 percent in 2015-16.
In 2012, the average monthly household gross income, comprising income from employment, property, transfers and other sources before compulsory deductions and taxes, amounted to Rs 30 489 (US$829.52) (56.6 percent higher than the figure of Rs20,896 (US$694.45) in 2006/07).
According to Statistics Mauritius, in 2012, the majority of households (92.7 percent) owned their dwellings or were supplied free by parents or relatives, 6.4 percent rented their dwellings (compared to 8.4 percent in 2006/07) and less than one percent were supplied free by the employer. Household ownership was higher in rural regions; 10.5 percent of households in urban regions lived in rented dwellings compared to 3.5 percent for their counterparts in rural regions.
Some 45 percent of the households are indebted, of which more than half have a debt on housing. At the 2012 HBS, 45.3 percent of the households reported having made at least one debt repayment during the month compared to 46.5 percent in 2006/07 Household Budget Survey. Housing remained the largest component of debt repayment.
Although Mauritius is a middle-income country, a segment of the population is unable to afford their housing. In 2016, Mauritius had an unemployment rate of 7.3 percent, or over 42 000 people. As such, Mauritius has a relatively comprehensive social security system that includes a range of government subsidies for housing. The government uses state owned companies such as the Mauritius Housing Company (MHC) to improve affordability for housing. Another government driven scheme to increase affordability is offered through the National Housing Development Company (NHDC). This parastatal body was set up in 1991 to serve low income Mauritians. It offers both fully developed units and site-and-service options at subsidised rates.
The NHDC sells concrete housing units of 50 meters square to families earning less than Rs20 000 (US$544.14). There is a government subsidy of 75 percent the price of the unit for families earning less than Rs10 000 (US$272.07), 50 percent for families earning between Rs10 000 (US$272.07) and Rs15 000 (US$408.11) and 20 percent for those earning between Rs15 001 (US$408.13) and Rs 20 000 (US$544.14). Housing units are built on leased land and the annual rental varies based on the income of the family from Rs1 (US$0.03) to Rs3 000 (US$81.62).
The NHDC site-and-service scheme provides applicants a portion of state land through a lease. Qualifying income criteria require a monthly income of between Rs10 000 (US$272.07) and Rs25 000 (US$680.18). This means that while the products cover the majority of the population, a small minority of the working population, the lowest paid, still cannot afford to meet their housing needs. Due to the incidences of squatting, the government’s National Empowerment Foundation (NEF) is now looking after this category of the population.
There are 19 442 owners of ex-CHA houses across the island. In order to empower these families to take full responsibility of their assets, Government introduced the “Right to Buy” policy in 2007 to enable the sale of State Land on which stood the CHA houses, against payment of a nominal amount of Rs2 000 (US$54.41). In 2012, it was found that a number of vulnerable families, particularly lone mothers, could not benefit from this policy due to financial difficulties. Such vulnerable lessees of ex-CHA Housing Estates are assessed on a case to case basis and if found eligible, they are granted the land free of charge through a waiving of the purchase price and registration fees.
Government also encourages self-help construction of housing units by very low to low income families who already own a plot of land and are having difficulties to construct a concrete housing unit. These families are financially assisted through a grant scheme either for the casting of roof slabs to complete their construction or for the purchase of building materials to start their construction.
The cost of building a single storey house, as measured by the Construction Price Index has not changed since in 2016. However, since 2009, the index has risen by 14 points. The cheapest newly built house by a formal developer costs around US$32 000 excluding the land, and is 120m2 with three bedrooms, a living and dining room, kitchen, toilet/washroom and small veranda. Minimum plot size is 250m2 in urban areas. A bag of 50 Kgs of cement costs US$6.60 (incl. VAT).
The 2011 Housing and Population Census reports that there are 356 900 housing units in Mauritius and Rodrigues. According to the Housing and Population Census of 2011, 99.4 percent of households have access to electricity and 94.2 percent have access to water inside their home. Most housing stock in Mauritius is of good quality. 91 percent of the dwellings are durable with only 4.8 percent of the population living in iron/tin walled houses. The Census also found that 90.5 percent of residential dwellings were used as a principle residence, 1.7 percent as secondary dwellings and 7.8 percent were vacant. Semi-detached houses and blocks of flats went up to 16.6 percent of total stock, from 11.5 percent in 2000.
The housing stock increased more in rural than in urban regions. 77.7 percent of the housing units were non-mortgaged while 12.3 percent where mortgaged in 2011. 88.9 percent owned their dwelling while eight percent rented and 3.1 percent had free accommodation. The average monthly rent for housing was Rs4 400 (US$153.41) in 2011 representing an increase of 91% since 2000. As the Consumer Price Index, the rental price since 2012 has increased marginally by 3.8 points.
The household size has decreased from 3.92 in 2000 to 3.56 in 2011. Moreover, the number of persons per room has also decreased from 0.91 to 0.79.
Successive government budget proposals have ensured that all citizens have a house providing decent living conditions. The strategy focuses on social and low-income housing as well as facilities for middle income families.
- The Housing Empowerment Scheme targets middle-income families earning up to Rs50 000 (US$1 360) a month. Under the scheme, banks require five percent minimum downpayments and provide loans up to 95 percent of the cost of a residential unit. The loans also carry a moratorium period of two years on capital repayment. To make this possible, Government is guaranteeing 20 percent of the loan amount. In addition, to reduce the cost of acquiring a housing unit, Government reimburses VAT up to an amount of Rs300 000 (US$8 162) on the construction of any house or purchase of an apartment costing less than Rs2.5 million (US$68 018). For its part, the Mauritius Housing Company provides, free of charge, at least 12 types of architectural plans for each house of an area of 1 000 and 1 200ft2. The interest rate is 2.5 percent above the repo rate, presently at 4.40 percent.
To this effect, the Mauritius Housing Company and the Mauritius Bankers’ Association signed a Memorandum of Understanding outlining agreed conditions between the Government and the commercial banks. Twelve banks are involved in this project.
- In the national budget 2017-18, the Government announced projects to finance Rs 1.8 billion (US$49 million) for the year and Rs 5 billion (US$136 million) for the next three years towards construction of social and low income housing.
- In line with the new approach of the National Home Ownership Programme, the Social Housing Fund has been revamped into a National Habitat Fund. The Minister of Housing and Lands brought legislative amendments to give to those families who have a housing unit on leased land belonging to the State, the option to buy the land at a nominal price not exceeding Rs2 000 (US$54.41) per plot..
- As regards middle income families, the current bank limit of loan funding (up to Rs5 million (US$136 036)) of up to 90 percent of the residential property has been removed. Moreover, the eligibility criteria for social housing schemes of the National Empowerment Foundation and the NHDC have been increased so as to be realigned with the new poverty threshold on an adult basis of the Social Register of Mauritius.
These programmes complement the extensive investment that the public and private sectors have made in housing development. From 2011, the NEF has constructed more than 300 core housing units of 32m2 each. It is projected to build 700 additional such units within the next two years. Furthermore, by 2012, the NHDC had built more than 12 000 units, and a further 10 000 units were in the pipeline. An innovative subsidy scheme offered by government through the NHDC promotes self-build approaches. Households with a monthly income of between Rs10 000 (US$272.07) and Rs25 000 (US$680.18) and who have neither received a grant previously nor already own a property are entitled to apply for land that is periodically made available. The land is made available on a lease arrangement and the beneficiary is required to pay the fee. The construction of a housing unit on the land must begin within six months following the signing of the lease agreement, and be completed within 18 months. Beneficiaries can apply to the MHC to finance the construction and can access architectural services from the MHC for Rs2 (US$0.05) per ft2.
Throughout the NHDC, the government also grants up to Rs75 000 (US$2 040.54) for casting a roof slab of up to 210m² to first time homeowners earning up to Rs10 000 (US$272.07) a month. The government also grants up to Rs65 000 (US$1 768) to households earning not more than Rs10 000 (US$272) a month to buy building materials. The grant applies to a maximum area of 100m². For a house of 50m², the grant is Rs40 000 (US$1 088) on a pro-rata basis. Although the NHDC programmes target low income earners, the requirement of a minimum financial contribution means that some households are still unable to participate.
Furthermore, there is also an incentive for developers to develop residential units. Requirements are that the land for development must be non-agricultural and have access to main infrastructure lines and amenities. In addition, developers should provide all basic infrastructure and 25 percent of the development must be for low income households, for which the sale price is determined by the government. A Social Housing Development Fund was also established, capitalised with Rs1.5 billion (about US$40.8 million) to encourage the creation of not-for-profit Housing Development Trusts. A Marshall Plan against poverty was also announced in the Budget 2015. Under this project, as part of their social responsibility will have to take under their wings pockets of poverty situated in the region where the companies are located. Thus the private sector will also assist in poverty alleviation.
The government expects the real estate sector to be a primary growth driver. The market segment is closely tied to the economic fortunes of Europe and the US because of the deliberate efforts by government to encourage greater foreign ownership. The Permanent Residence Scheme, the Integrated Resort Scheme and the Scheme to Attract Professionals for Emerging Sectors all encourage foreign investment and settlement.
According to the World Bank’s 2017 Doing Business Report, it takes 14 days and four procedures on average to register property (which ranks Mauritius as best on the continent and 98th globally with a slight improvement in the score). The registration process costs on average 10.6 percent of the value of the property.
Housing Policy and Regulations
The planning and management of housing and land in Mauritius is the responsibility of the Ministry of Housing and Lands which has set up a fairly comprehensive array of support and initiatives to address housing needs. Subsidy programmes target both new build construction and self-help housing, and government has made an explicit effort to deal with those with no affordability at all. Spatial data for land use management and planning is facilitated by the Land Administration Valuation and Information Management System.
Prior to 2006, social housing was solely the responsibility of government. But as demand kept growing and the government could only build around 900 units a year (with a waiting list of 25 000 housing units in 2015), the private sector was called to participate through various Public Private Partnership (PPP) projects. An interesting aspect of the Finance Act of 2009 requires companies, as part of their corporate social responsibility, to pay two percent of their book profit after tax into a Corporate Social Responsibility Fund. This Fund can be used on approved projects, amongst which social or subsidised housing is a high priority.
Housing Sector Opportunities
Mauritius has been emerging as an international financial centre since the early 1990s, and is the easiest place to do business in Africa. It is a favoured country for structuring cross-border investments into Asia and Africa, and particularly into India and China. This reputation as an offshore financial hub should see it continue to become an important player in international financial flows. The country also has preferential access to markets in the Africa region (such as the African Union, SADC, the Common Market for Eastern and Southern Africa (COMESA) and the Indian Ocean Rim Association for Regional Co-operation (IOR-ARC), pointing to its strategic location.
According to the African Executive (2014) in order for Mauritius to become a high income country, it needs to start attracting foreign skilled labour. If labour flows are similar to those experienced by Dubai, Hong Kong and Singapore at a similar stage, over the next decade Mauritius should be ready and willing to accommodate some 5 000 to 20 000 foreigners annually, with a total of 100 000 to 200 000 for the period. In the short run such an influx could be accommodated in the various real estate projects. However, going forward, this offers a greater opportunity in middle to higher end housing finance, as foreign investment and wealth increase in Mauritius.