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.

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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.

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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.

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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.

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ECONOMIC GROWTH

Last Updated: Oct 05, 2007

Sustained 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$2,830 in 2008.

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 economy has been doing quite well. King Mohammed VI, who succeeded in 1999, is a dynamic monarch who has brought substantial reform to Morocco, and some national reconciliation following the torture which marked the early years of his father’s rule.

Although GDP growth continued to be erratic, the economy never contracted under his term. Economic growth was particularly strong in 2001 (7.6%), 2003 (6.3%) and 2006 (7.8%). The last time the economy contracted was in 1997 (-2.2%).

The sustained economic growth let to drop in unemployment from 11.4% in 2003 to 9.6% in 2008. In urban areas, the drop in the unemployment rate is more pronounced, from 19.3% to 14.7% within the same period. In Q2 2009, unemployment dropped to its lowest level of 8% before rising to 9.8% in Q3.

Inflation was managed to an average of 1.38% within the period of 1999 – 2005, down from 6.2% from 1990 to 1995.

Good harvests led to higher farm incomes and domestic consumption in 2008 and 2009. The economy grew by 5.6% in 2008, and is believed to have grown by 5% in 2009. In 2010, GDP growth is expected to slow to 3.5%.

Public works spending and state investment are projected to grow by 20% in 2010. Projects funded by this increase in spending include the expansion of Jorf Lasfar power station, wind farms in Tangier and Tarfaya, and other power-generation plants.

The spending increase will lead to a budget deficit, after surpluses in 2007 and 2008. The budget deficit is expected to be around 2.7% in 2009, rising further to 4% in 2010.
The government is forecasting inflation of around 2.8% in 2009 and 2010, down from 3.9% in 2008.