Morocco: Overview

RENTAL YIELDS

Last Updated: Oct 07, 2009

Marrakech riads becoming expensive

Gross rental yields in Morocco are almost unchanged on previous years. Yields are generally rather acceptable. In Casablanca, yields range from 6.4% to 9.2% for apartments, but are much lower (as might be expected) for houses, at 4.6%.

In Marrakech, as in all previous years, we were unable to get enough data to offer numbers for yields on riads. However, apartments in Marrakech offer acceptable yields at between 6.2% and 7.6%.

The prices of Marrakech riads continue to mount. This year saw riads prices definitively breach the US$3,000 per square metre barrier. for all riad sizes, with the very smallest riad size category reaching US$4,000 per square metre.

Read Rental Yields  »

TAXES AND COSTS

Last Updated: Nov 28, 2008

Morroccan income tax rates
rise progressively to 25.2%.

Effective Tax Rate on Rental Income
Monthly Income	US$1,500	US$6,000	US$12,000
Tax Rate	12.9%	%	%
Click here to see a worked example
Source:			Disclaimer

Rental Income: Net rental income is obtained by taking 40% off the gross rental income. The tax rate rapidly progresses from 15% to 42%, so that the top rate of tax is actually 25.2% of gross income.

Capital Gains: Profits on the sale of property are taxable at 20% of any profit, but with a minimum tax of 3% of the sale price.

Inheritance: There are no inheritance taxes in Morocco.

Residents: Residents should pay income tax on worldwide income.

Read Taxes and Costs  »

BUYING GUIDE

Last Updated: Nov 15, 2007

Total transaction costs are moderate in Morocco

Round trip transactions costs, i.e. the total cost of buying and selling a property, are around 11.56% to 12.69%. The buyer pays most costs, but the seller pays half the real estate agent’s fees. Additional expenses are involved in buying non-titled property.

Buyers need to be very careful when considering purchasing property in Morocco. In the main, it is not advisable to purchase any land that is not titled (as "Muhafida"). There are at least 3 types of land titles, and most of them are very doubtful. There are also in Morocco many nice-seeming but dishonest advisors. Clear titles can be very difficult to find, at least at a fair price.

Read Buying Guide  »

LANDLORD AND TENANT

Last Updated: Jul 31, 2006

The law in Morocco is pro-landlord

Rent: The rent can be freely agreed between the parties. The landlord can also ask for a guarantor to be named, who is legally obliged to pay the landlord for any debts owed by the tenant.

Read Landlord and Tenant  »

ECONOMIC GROWTH

Last Updated: Oct 05, 2007

Reasonable economic growth

The Kingdom of Morocco is an intricate mesh of Arabic tradition and sensibilities with modernity. A former French protectorate, it has a population of 32 million and GDP per capita of US$1,777.

After very slow economic growth in the 1990s, the government began a series of structural reforms of the labour market and financial sectors, and the sale of mobile licenses, and Morocco’s economic growth has been reasonable since 2000.

Tourism is growing strongly, and optimism seems inevitable. Morocco’s very ambitious expansion plans (read about them here) have met an enthusiastic reception with European clients. Hotels are being built, airlines are rushing to connect Morocco to everywhere in Europe. With 179 flights per week into Marrakech, and flight times from Marid to Marrakech one hour, and from London 2 hours 30 minutes, this is no longer a remote destination. Costs are low, why not go?

True, employment remains overly dependent on agriculture, and while unemployment stands at 9.7%, this masks significantly higher urban unemployment (currently at about 15.5%).

Morocco also has a substantial garments industry encouraged by proximity to Europe. In June 2004, the United States and Morocco signed a bilateral Free Trade Agreement (FTA). The U.S.-Morocco FTA will immediately eliminate tariffs on 95% of bilateral trade in consumer and industrial products with all remaining tariffs to be eliminated within nine years In 2006 the Pan-European Cumulation System for rules of origin was extended to Morocco.

Some believe that the process of economic reform must be accelerated in order to reduce urban unemployment. The central government deficit is heavy. But Morocco has held inflation rates to industrial country levels over the past decade, though exporters complain that the dirham has become overvalued. The country maintains a current account surplus, and foreign exchange reserves are strong. In general, the kingdom seems on track to rapid growth.