real estateB U S I N E S S R E V I E W

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We build and manage homes, offices, and shopping malls, leading the real estate market with an integrated offer. We are passionate about creating sustainable neighbourhoods that are enabling and open to all. We have built a reputable brand on the real estate market which comforts us in our ability to differentiate our offer in a market that is becoming increasingly competitive.

This year, segment revenue went up by 18%, from Rs 2.2 billion to Rs 2.6 billion, thanks to the improved performance of the retail segment and increased land sales.

Segment profit reached Rs 1.2 billion in 2018, at par with that of last year. The key contributor to profit remains the retail market thanks to better lease renewal rates and a 10% increase in footfall. Fair value gains of Rs 1.1 billion have been recorded:• The retail and office property portfolio has been valued by

international and independent commercial property valuer Jones Lang Lasalle (JLL), resulting into Rs 545 million of fair value gains

• The land assets classified as investment properties have been valued by independent valuers, resulting into Rs 545 million of fair value gains

Moka. Moka is a smart city which we are currently developing across 1,600 arpents right at the heart of the island. It is fast growing into a place of choice to live, work and play. It aims to position Mauritius as an international platform for business and investment.

We are confident that our infrastructure works and land sales program will enable us to generate significant cash and grow our yielding assets portfolio. We have taken numerous initiatives to control the quality of the city’s development and to optimise its long-term value. At the end of 2017, Moka obtained its Smart City Certificate for the first phase of its development that stretches over some 500 arpents. Since, it has started infrastructure works for the development of Les Promenades d’Helvétia, a residential outfit targeting high-end buyers.

In parallel, Moka is taking numerous other initiatives geared at, • integrating the city with its existing neighbourhoods,

spearheaded by Kolektif Moka’mwad, a citizens’ platform it has kick-started;

• giving shape to its commitment to sustainable development, having initiated the process leading to its LEED-ND certification; and at

• creating a vibrant city culture in the region through activities such as the Moka Art Festival, Moka Trail and the Moka Plant Festival.

We build, sell, rent and manage homes, offices, shopping malls

Rs 2.6 bn(2017: Rs 2.2 bn)

turnover

Rs 1.2 bn(2017*: Rs 1.2 bn)

profit after tax

31

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Offices. Our portfolio of office properties comprises 20,000 m2 of prime space which is nearly fully let out. This year, office space rental generated Rs 126 million in terms of revenue, compared to Rs 110 million in 2017. The office market is currently on a growth trend, especially in the centre part of the island, where demand for plots of land and built offices in our various business parks is on the increase. More than 25 plots have been reserved in our business parks this year. Given the current trend, we are increasing our offer as follows:• At Vivea Business Park

- The Pod, a new 4,800 m2 building, which is fully rented out in view of its opening in October 2018, and

- A building of some 1,000 m2 acquired from Commercial Investment Property Fund Limited (“CIPF”).

We have obtained the ISO 50001 certification for ENL House, the first office building to obtain this recognition in Mauritius. This reflects our commitment to reduce the carbon footprint of our developments and to develop our expertise in the field of energy efficiency management.• At Telfair, Moka City’s central business district, the construction

of a 4,700 m2 building to house PwC’s headquarters in Mauritius is expected to be completed by October 2018. Construction works on an additional building of some 1,500 m2 adjacent to PwC’s have started and should end in June 2019.

In July 2018, we set up an office fund to which we transferred the ownership of our portfolio of office properties. This initiative should enable us to improve our capacity to further develop our portfolio. We expect to maintain our development pace in the coming years on the back of strong demand and Moka City’s goodwill. New office buildings are planned at Telfair, Bagatelle and Vivéa business parks.

Local residential. The market continues to be driven by a strong demand for plots of land and our built-up units in the Moka region have been well received. This year, we took the following developments to the market:

• Land parcelling - After the successful launch of the second phase of Rive

Sud at Courchamps, a residential land development comprising 40 plots which were sold out shortly after being launched, the next phase, Les versants de Courchamps, comprising 55 plots will be proposed to the market in September 2018.

- The 44 plots residential land development at Les Promenades d’Helvétia is sold out and infrastructure works are expected to be completed by September 2018.

- We are currently busy finalising the next phases of development at Helvétia and Courchamps.

- Les Vergers de Gros Bois. Capitalising on the success of existing residential phases of Les Vergers de Gros Bois, we have decided to come forward with a more ambitious and comprehensive plan to develop our land bank in the South, with new phases expected to be launched in the financial year 2019.

• Built-up units - Les Promenades d’Helvétia, our very first built-up

residential project of 86 apartments and duplexes under the Smart City Scheme, was launched in April 2017 and is already sold out. Despite some delays in obtaining the required permits, implementation of the project has already begun and construction is expected to be completed by March 2020. The marketing of the next phases is about to be launched.

Residential resort. Heritage Villas Valriche has been operating in an increasingly competitive environment whereby many projects hit the market under the Property Development Scheme. Further, non-Mauritians are now allowed to purchase residences in Smart Cities and ground +2 apartments. As a result, our Unique Selling Point (USP) in the residential resort market is under intense pressure. In this context, we have reviewed our business plan and enriched our product offering with new architectural concepts that should enable the development to achieve its sales targets.

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Retail. ENL’s retail portfolio is now valued at Rs 12 billion, including its latest addition, So’flo, which opened in November 2017. This portfolio is owned through Ascencia and managed through Enatt.

Ascencia delivered strong financial and operational performances, with net operational income growing by 14% to reach Rs 843 million. These performances were driven by an increase in gross rental income coupled with higher exhibition and advertising revenues. Furthermore, the 10% increase in footfall and higher trading densities across Ascencia’s portfolio ultimately improved its tenants’ performances, keeping the ratio of gross rental to tenant turnover healthy at 7.9% in 2018 compared to 7.5% last year. The refinancing of Ascencia’s debt, the sale of non-core assets and cost containment measures taken during the year have also contributed to release additional cash flow, allowing the company to fund future projects and to improve its dividend pay-out.

Going forward, Ascencia has plans to increase its portfolio and consolidate its position in Mauritius. Currently under construction, the Beau Vallon Mall is expected to be fully operational by the end of 2019, with a Gross Lettable Area (GLA) of 10,000m2. Bagatelle Mall will be extended by another 10,000 m2 by the end of year 2019.

In a bid to be more eco-friendly and self-sufficient, Ascencia has undertaken to switch to solar energy powered electricity during day time in all its malls. After the successful installation and operation of a solar farm on the rooftop of Phoenix Mall, Ascencia is continuing its partnership with sister company EnVolt to equip Bagatelle Mall as well as its other commercial centres.

Outlook

Our ambition is to maintain leadership of the real estate market in Mauritius in an increasingly competitive environment by continuing to upgrade our product and services offerings. The coming year will see us pursuing our strategic business objective which is to convert ENL’s existing land bank into sustainable yielding assets.

Reta

ilOffices

11,992

10,698

10,082

1,375

1,2321,127

2018

20162017

Assets under management (Rs'm)

Reta

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1,284

1,096

1,044

126

11094

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20162017

Income from assets under management (Rs'm)

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