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May 22, 2016

Morocco’s property market remains weak

by Lalaine C. Delmendo

Morocco’s property market continues to slow, with property prices rising only a little. Also, property transactions remain depressed.

During 2015, the nationwide residential real estate price index (REPI) rose by 0.9% from the previous year, according to Bank Al-Maghrib, Morocco’s central bank. On a quarterly basis, residential property prices increased 0.7% in Q4 2015. The REPI was developed in 2010 by the Bank Al-Maghrib, in cooperation with the Land Registry Office. The REPI contains detailed information on all formal property transactions in Morocco.

By property type:

  • House prices increased 1.1% y-o-y in 2015
  • Apartment prices rose by 0.8% y-o-y in 2015
  • Villa prices increased 1% y-o-y in 2015

In Q4 2015, urban land prices declined slightly by 0.4% from the previous quarter but increased 1.7% from the same period last year, according to Bank Al-Maghrib.
There were also wide variations in local property price movements.

  • In Rabat, Morocco’s capital city and political hub, property prices rose by 3.2% y-o-y in Q4 2015. In a quarterly basis, property prices increased 3.8% in Q4 2015.
  • In Casablanca, Morocco’s biggest city and the economic capital, the average property price dropped slightly by 0.4% y-o-y in Q4 2015 but rose strongly by 5.8% from the previous quarter.
  • In Marrakesh, home to mosques, palaces, and gardens, property prices dropped 2.5% in Q4 2015 from a year earlier and by 0.9% from the previous quarter.
  • In Fez, Morocco’s second largest city, property prices rose by 2.9% in Q4 2015 from a year earlier and by 1.9% from the previous quarter.
  • In Tangier, the country’s most important port city on the Strait of Gibraltar, property prices increased 1.5% y-o-y in Q4 2015 but dropped slightly by 0.1% q-o-q over the same period.

Real Estate Price Index (REPI), Q4 2015

Annual change (%)
Quarterly change (%)
Moroccan City Apartment House Villa Total Apartment House Villa Total
Agadir -1.1 4.7 6.7 1.7 1.2 -0.1 10.8 2.3
Casablanca -0.2 1.7 -8.0 -0.4 7.7 4.1 -7.3 5.8
El Jadida 0.4 6.8 -18.4 0.3 -2.2 15.7 0.0 -0.1
Fez -0.9 32.1 -8.1 2.9 -0.7 39.6 -33.9 1.9
Kenitra 2.0 9.8 -12.8 3.8 1.3 -9.4 7.0 -1.1
Marrakech 0.5 4.6 -5.3 -2.5 -1.1 4.5 -15.1 -0.9
Meknes -2.4 2.2 -27.0 0.7 6.1 -2.0 -11.8 -2.4
Oujda 1.6 -4.9 0.0 2.5 -1.7 -0.5 0.0 0.8
Rabat 2.2 -11.1 9.0 3.2 1.2 3.3 20.9 3.8
Tangier 0.2 4.0 0.0 1.5 -1.7 3.5 0.0 -0.1
Source: Bank Al-Maghrib

Demand remains depressed. The number of registered residential property transactions dropped 7.1% in 2015 from a year ago, according to Bank Al-Maghrib. By property type, the number of apartments sold fell by 6.9% y-o-y in 2015. Over the same period, house sales fell by 7.6% while villa sales plunged by 12.8%. Urban land transactions also dropped 2.8% y-o-y in 2015.

Morocco price index

Of the total real estate transactions, apartments represented about 59% of total sales, houses 4.9%, villas 1.2% and urban land 27.2%. 

The Moroccan economy expanded by 4.7% in 2015, after GDP growth rates of 2.4% in 2014, 4.4% in 2013, 2.7% in 2012, 5% in 2011 and 3.6% in 2010, according to the International Monetary Fund (IMF). Economic growth is expected to slow to 2.3% this year and to accelerate again to 4.1% in 2017.

The domestically-oriented property market surged as a result of rapid GDP growth during the previous decade. Notable high-GDP growth years were 2001 (7.6%), 2003 (6.3%), 2006 (7.8%), 2008 (5.6%) and 2011 (5%). However, growth has slowed in recent years, mainly due to the debt crisis in the European Union, Morocco’s major tourism and trading partner.

Morocco’s riads

The Moroccan foreign-oriented real estate boom predates the mass market, and concentrates on the ‘authentic’ Morocco – and above all on giving Westerners a stylish life in exotic, traditional surroundings.

At its core has been the craze for buying riads. Riads are traditionally-shaped Moroccan houses, with grand salons giving onto a central tiled courtyard, often with a garden at the center.

However the housing market slowdown was also reflected in riad prices. Based on the Global Property Guide research, riad prices in Marrakech have fallen to around US$2,000 per sq. m., as compared to the US$3,000 or sometimes up to US$4,000 per sq. m. in mid-2009. Riads now cost between US$200,000 to US$1 million, depending on the size. A 500 sq m. riad, which might then have sold for the equivalent of US$1.5 million, would now fetch US$1 million.

Previously, the majority of riad buyers were French. However, other foreigners such as Belgians, Britons, Italians, Americans, and a few Australians have joined the market.

Attractive rental yields

Morocoo bank policy rate

Gross rental yields in Morocco remain attractive based on Global Property Guide’s report.

In Marrakech, apartments had rental yields of between 5.5% and 7.1%.

In Casablanca, rental yields of apartments range from 5.4% to 7.2%, and about 4.8% for houses. Small apartments (70 sq. m.) in Casablanca can give gross rental yields of 9%.

Interest rates are falling

Morocco housing loans interest rates

In the fourth quarter of 2015, the average interest rate for real estate loans in Morocco stood at 5.76%, down from 6.05% in the same period last year, according to the Bank Al-Maghrib. Interest rates for real estate loans in the country averaged 6.2% from 2010 to 2013.

In March 2016, the Bank Al-Maghrib cut its key rate by 25 basis points to 2.25%, the lowest rate since 2000.

Mortgage market shrinking gradually

Morocco’s mortgage market expanded rapidly from just 6.9% in 2001 to 25.3% in 2011, mainly due to a surge in Morocco´s GDP growth rate during 2002-2008, which caused housing demand to rise rapidly. From 2002 to 2010, the value of property loans soared by an average of 23.4% per year.

Morocco real estate loans

However in 2015, the size of the mortgage market contracted to 24% of GDP, down from 25.6% in both 2013 and 2014, and from 26% in 2012, based on figures from the Bank Al-Maghrib.

In February 2016, the total value of property loans outstanding increased slightly by 0.9% to MAD240.81 billion (US$25.08 billion) compared to the same period last year, according to Bank Al-Maghrib. That´s composed of two elements -  housing loans outstanding (75% by value of total property loans), which rose by 5.7% y-o-y to MAD181.17 billion (US$18.87 billion) in February 2016; and property loans to developers outstanding (25% of all property loans), which fell 10.9% y-o-y to MAD57.35 billion (US$5.97 billion).

Morocco has the most advanced and diverse mortgage market in the region, according to the Center for Affordable Housing Finance in Africa (CAHF). There are a wide range of sources for mortgage lending, including private commercial banks, public banks, consumer credit companies, and microfinance companies. The typical term period is 20 years, and the loan-to-value ratio can reach 100% of the property´s appraised value.

Shortage of affordable housing

Morocco had a housing deficit of about 650,000 units in 2014, according to the Oxford Business Group. Housing demand was increasing by 150,000 units every year, while annual housing production is only around 100,000 units.

Despite a significant reduction in poverty in recent years, about 20% of the country’s population (or 6.4 million Moroccans) struggle to afford decent housing. Low-income households account for around 75% of the total households without access to adequate housing. In contrast, the high-end market is well-supplied with around 820,000 units either vacant or used as vacation or secondary homes.

Morocco outstanding loans

To deal with the situation, the government has implemented numerous housing projects over the past decade, including social housing initiatives and the mobilization of thousands of hectares of available land. The Ministry of Habitat and Urban Planning has also provided incentives for real estate developers to invest in social housing projects, with developers committing to build about 900,ooo units by 2020. Moreover, the sale of social housing (with areas between 50 sq. m. and 80 sq. m.) is exempt from VAT. The government provides two types of affordable housing units: middle-income housing and social housing.

Also in 2013, the government passed the Finance Law, which sets the price of middle-income housing at MAD6,000 (US$625) per square metre (sq. m.) for units ranging from 80 sq. m to 120 sq. m., according to the Center for Affordable Housing Finance in Africa (CAHF). Middle-income housing is open to Moroccans with a monthly net income of MAD20,000 (US$2,083) or less. To meet the increasing demand, the area for social housing was subsequently reduced to less than 80 sq. m., from 100 sq. m. The price of a social housing unit was capped at MAD250,000 (US$26,039).

Lending for middle- and low-income families is accessible through partnerships between the government and banks:

  • The Fogarim mortgage guarantee fund, introduced in 2004, guarantees 70% of a mortgage loan made to a household with an informal income, for purchase of a housing unit worth less than MAD250,000 (US$26,039), and guarantees about 1,200 new beneficiaries every month.
  • Another guarantee program, FOGALOGE, guarantees loans made to middle-class independent workers, moderate income civil servants, and non-resident Moroccans purchasing or building houses up to about MAD1 million (US$100,000) in value.

Constitutional reforms

Morocco gdp inflation

Morocco has not experienced a single period of economic contraction during the entire period since 1997, when GDP fell 2.2%.  Morocco had notably strong growth in 2001 (7.6%), 2003 (6.3%), 2006 (7.8%), 2008 (5.6%) and 2011 (5%).

This can be attributed to King Mohammed VI´s social, democratic and economic reforms aimed at improving the lives of Moroccans and strengthen the Kingdom’s institutions. Some of his notable programs have included poverty reduction, improvement of foreign relations and strengthening the parliament.

However, economic growth has slowed in recent years, mainly due to the debt crisis in the European Union, Morocco’s major tourism and trading partner. The Moroccan economy expanded by just 2.4% in 2014, after GDP growth of 4.4% in 2013 and 2.7% in 2012, according to the International Monetary Fund (IMF). However the economy grew strongly last year, with GDP growth of 4.7%.

Economic growth is expected to slow to 2.3% this year and to accelerate again to 4.1% in 2017, according to the IMF.

Unemployment remains high, causing complaints by Morocco’s Arab Spring protesters. However, Morocco’s sustained economic growth throughout the years has led to a substantial unemployment decline, from 15.4% in 1997 to 8.9% in 2011. In 2015, Morocco’s unemployment stood at 9.8% from 9.9% in 2014 and 9.2% in 2013, and 9% in 2012, according to the IMF.

Despite positive achievements under King Mohammed VI, corruption remains very prevalent, reaching the palace itself. Royal involvement in business is a major topic in Morocco, unsurprisingly as the King is the Kingdom´s leading businessman and banker, and the royal family has one of the world´s largest fortunes.  Decisions on big investments in the Kingdom are taken by only three people: the King, his secretary Mounir Majidi, and the monarch´s close friend, adviser and former classmate Fouad Ali Himma. Corruption originating in the royal palace especially affects the housing sector, as Wikileaks documents released in 2010 showed.

Inflation management has greatly improved, with inflation averaging 1.6% during 1999 – 2014, based on figures from the IMF. In 2015, the annual inflation rate was 1.6%. In March 2016, inflation rose to 1.8%, from 0.9% in February 2016 and 0.3% in January 2016, according to the Finance Ministry.

Like other Middle Eastern countries, Morocco has experienced social and political unrest. But unlike other countries, Morocco’s political achievements, as well as the authorities’ responsiveness, have reduced the scale of the unrest. King Mohammed VI introduced a series of constitutional reforms aiming to improve democracy in the country:

  • A number of new civil rights including social equality for women, and constitutional guarantees of freedom of expression, etc.;
  • Additional powers to the office of the prime minister, replacing the king as head of government and president of the council of government, as well as the authority to appoint government officials and to dissolve the parliament. The King is also obliged to appoint the prime minister from the winning party in the parliamentary elections;
  • The parliament now has the power to grant amnesty;
  • Independence of the judiciary system from executive and legislative branches;
  • The King, however, remains commander-in-chief, holding complete control over the armed forces. He is also the chair of the Council of Ministers and the Supreme Security Council, and the highest religious authority in the country;
  • Berber was made an official language in Morocco, alongside Arabic;
  • The Arab-Hassani Language and Morocco’s other linguistic components are preserved as part of the national heritage.

Budget deficit falling gradually

Morocco government net lending borrowing

Morocco’s budget deficit fell to about 4.3% of GDP in 2015, down from around 5% of GDP in 2014 and its lowest level since before the Arab uprisings that toppled other leaders in the region.

To dampen popular protests, the King went on a spending spree in 2011, raising public sector wages and pensions, as well as subsidies.  Expenditures increased to 29.9% of GDP, from 27.4% in 2010, according to the African Development Bank.  The budget deficit widened to 6.7% of GDP in 2011, from 4.4% in 2010 – a dramatic contrast to the surpluses in 2007 (0.6% of GDP) and 2008 (0.4% of GDP). The budget deficit rose further to 7.4% of GDP in 2012 before falling to 5.5% of GDP in 2013.

To counter the effects of EU’s slowdown and oil price swings to their economy, the Moroccan government sought help from the IMF, and was granted a loan worth US$6.2 billion. In exchange, the government will reform the pension system, as well as directing the costly universal subsidies to those most in need.

Tourism suffers amidst regional unrest and terrorist attacks

Morocco tourism

Tourism is Morocco’s 2nd largest economic sector, accounting for around 8% of GDP and employing some 500,000 people.

The government’s tourist development plan, Vision 2010, achieved 9.3 million visitors in 2010, just below its target of 10 million tourists. Vision 2020 aims to double tourist arrivals to 20 million by 2022. In 2013, it was the first time that the total number of tourist arrivals exceeded the 10 million mark. Then in 2014, tourist arrivals increased by about 2.3% y-o-y to 10.28 million people, according to the latest figures released by the Ministry of Economy and Finance. France accounted for about one-third of the total number of tourists in Morocco, followed by Spain, Arab countries, Germany, Italy and the United States.

Morocco’s hotel capacity also expanded, with the total number of beds increasing by 4.7% y-o-y to 207,572 in 2013. The occupancy rate also increased to 43% in 2013 from 40% a year earlier.

Morocco’s “open skies” agreement with the European Union in 2006 has boosted air travel growth, with passenger numbers doubling in six years to 15.5 million in 2010, from 7.7 million in 2004.  Lower ticket prices and more domestic routes are being introduced by Royal Air Maroc. Meanwhile, a Casablanca – Tangier high speed rail project started in 2011 is expected to be operational by 2015.

However in 2015, Morocco welcomed only an estimated 10.02 million tourists, lower than the target of more than 11 million, mainly due to the unrest in the region.

“Since mid-2014 with the appearance of Isis and then with the two attacks in Tunisia, and with the Charlie Hebdo attack in France [in January], we have seen a dwindling of the number of tourists,” said Tourism Minister Lahcen Haddad.

“It is not highly significant in the overall picture, but very important for the French market, where we had a drop starting in mid-2014 — and it is still happening,” added Haddad.

Plan Azur continues

Under the Vision 2020, Plan Azur will continue, focusing on 6 seaside resorts, namely: Mazagan Beach Resort (in El Jadida province), Mediterrania Saidia (in Berkane province), Mogador (in Essaouira province), White Beach (in Guelmim province), Port Lixus (in Larache province), and Taghazout-Argana (in Agadir province). To ensure balanced regional development, Plan Azur Extension will add three more resorts including Chbika, Ouarzazate Lake City, and Dakhla.

The work on the Mediterrania Saidia resort and Mazagan Beach Resort was completed in 2009, according to a Vision 2010 review from the Ministry of Economy and Finance’s Financial Forecasts and Studies division (Division des Etudes et des Prévisions Financières, DEPF). Mogador Essaouira resort opened in late 2011, while Port Lixus opened in 2012.

Aside from re-launching Plan Azur, other programs were also launched under the Vision 2020. This includes: a sustainable development plan (ecotourism), a cultural heritage programme, more developed leisure and health activities, and business tourism.

Source: 7th International Tourist Conference handbook, Fes 2007

The attraction centres of Morocco

The cultural and physical attractions of Morocco centre on its traditional cities as Marrakech, Fes, Meknes, Casablanca, and Essaouira and on its one coastal resort, Agadir.


Marrakech was built in 1070 A.D.. It is famous for its palaces, open markets, and gardens. It is an extraordinarily exotic city, with its drama heightened by a location at the foot of the Atlas Mountains.

Marrakech has a complete tourism zone, Aguedal. A public transport system carries tourists from the district into the city centre for its souks and traditional markets selling copperware, wool merchandise, and carpets and kaftans. There are no less than 27 5-star hotels in Marrakech.

Marrakech is also considered as the country’s best and largest golf destination, with more than 10 different golf courses designed by famous names like Robert Trent Jones, Kyle Philips, Jack Nicklaus and Colin Montgomerie, among others. In fact, the International Association of Golf Tour Operators (IAGTO) has recently named Marrakech as the 2015 Golf Destination of the Year for Africa & Gulf States.


For over 400 years, Fes was the capital of Morocco. Founded in 789 A.D, it is the world´s oldest medieval city, and the largest. Considered Morocco´s intellectual and religious capital, it is a UNESCO world heritage site.

It was at the peak in the 14th century, and saw a fresh burst of glory in the 17th century. Narrow streets prevent the entry of cars into much of the city.


Here the French built a city in a French idiom, heavily influenced by the architecture of the Arab-Andalusian Empire. The city centre has a modernist grandeur, with plenty of space and light. Casabablanca is large, modern, and agreeable, with five golf courses less that an hour away.


Meknes was recognized as a World Heritage Site in 1996. Its physical location, on a plateau, made it Morocco´s trade crossroads. Its magnificent architecture was built by the 17th century Ruler, Sultan Moulay Ismail. Over 55 years he built palaces, mosques, gardens, and lakes. At his death the unfinished buildings including the royal palace - the Versailles of Morocco - which fills most of the old city.


Agadir is Morocco’s main seaside destination. Beautiful beaches, luxurious hotels, an ultra-modern airport are all combined with a moderate climate. Agadir’s beach is spectacular. 10 kilometres in length, it is clean and wide. Agadir enjoys a continuous breeze from the Atlantic, so that the temperature is pleasant all day.

A major earthquake completely destroyed the city in 1960. It was rebuilt from scratch. Agadir today is a modern city.


Tangier has a louche reputation dating from the 1920s, when it was an outpost for British paederasts. Then in the 1950s, beats, dropouts and writers like Burroughs and Bowles, Ginsberg and Kerouac, Leary and Eldridge Cleaver came to Tangier. It is a messy, rather ugly city. Now its coastline is being covered with resorts and new developments.


Essaouira is popular with independent travelers. This is partly because of its long beach, and partly because of its laid-back atmosphere. The town has long been magnet for Moroccan poets and creative talent. In the Place de Lâ Indpendence, which is the main square in the centre of Essaouira, there are dozens of caf s and restaurants. It is a pleasant place to eat, drink, and watch the world go by.


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