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Feb 20, 2015

Morocco is now a buyers' market


Morocco’s property market continues slow, with property prices rising only a little. Construction activity is depressed.

“Morocco continues to be a buyers’ market, and, on that basis, buyers are beginning to materialize thick and fast, especially under the €1.5m mark.” says Alicia Pasley-Tyler of Aylesford International.

During the year to end-Q3 2014, the nationwide real estate price index (REPI) rose by 1%, according to Bank Al-Maghrib, Morocco’s central bank. On a quarterly basis, the REPI increased 1.4% in Q3 2014 (the REPI includes residential property, commercial property, and urban land).

  • Residential property prices remained almost unchanged in Q3 2014 for the second consecutive quarter. Quarter-on-quarter, residential property prices dropped 0.2% in Q3 2014.
  • Urban land prices increased 3.4% y-o-y in Q3 2014, after a drop of 8.4% in the previous period. Land prices rose by 4.3% q-o-q over the same period.

In Casablanca, Morocco’s economic capital, the average property price stood at US$1,873 per square metre (sq. m.) in 2014, with a large apartment in a high-end neighbourhood like Gauthier selling for around US$2,172 per sq. m..

The volume of real estate transactions increased 9.3% year-on-year to Q3 2014 from a year earlier, with residential property transactions increasing 11.8%, and land transactions 1.1%.

Morocco price index

During the latest quarter (Q3 2014), the number of real estate transactions fell 15.1% q-o-q, after rising by 18.4% the previous quarter, according to Bank Al-Maghrib.

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

Construction activity remains depressed. Construction sector value added fell 0.3% y-o-y in Q3 2014, after a slight increase of 0.2% the previous quarter, according to Bank Al-Maghrib. Likewise, cement sales, an indicator of the current situation in the construction sector, also continued to drop by 8.7% in Q3 2014 from a year ago.

The Moroccan economy expanded by 3% in 2014, after real GDP growth rates of 4.4% in 2013, 2.7% in 2012, 5% in 2011 and 3.6% in 2010, according to the International Monetary Fund (IMF). In the fourth quarter of 2014, the economy grew by 2.7%, after growth of 1% the previous quarter, according to the Finance Ministry.

Morocco´s riads

Morocco interest rate

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

Gross rental yields in Morocco remain attractive based on Global Property Guide’s report dated October 2013.

In Marrakech, apartments had rental yields of 5.5% - 7.1%, down from an average yield of 7.7% in 2012 and 7.3% in 2011.

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

Interest rates falling

Morocco loans interest rate

In the third quarter of 2014, the average interest rate for real estate loans in Morocco stood at 5.94%, the lowest level since Q3 2009, according to the Bank Al-Maghrib.  In December 2014, the Bank Al-Maghrib cut its key rate by 25 basis points to 2.5%, the lowest rate since 2000.

Mortgage market now slowing

Morocco real estate loans

In 2014, the total value of housing loans outstanding rose by 6.2% from a year earlier, to MAD170.1 billion (US$17.83 billion).

In contrast, the total value of property loans outstanding increased by just 2.7% y-o-y to about MAD 236.8 billion (US$24.83 billion) in 2014, a sharp slowdown from annual increases of 4.8% in 2013, 6.1% in 2012, and 10.2% in 2011. From 2002 to 2010, the value of property loans soared by an average of 23.4% per year.

The outstanding property loans to developers dropped 5.6% y-o-y to MAD 64.74 billion (US$6.79 billion) over the same period. As a result the size of the mortgage market fell to about 25.7% of GDP in 2014, slightly down from 26.4% of GDP in 2013, 26.6% of GDP in 2012 and 25.8% of GDP in 2011, based on figures from the Bank Al-Maghrib.

Housing deficit

Morocco outstanding loans

Morocco has a housing deficit of about 650,000 units, according to the Oxford Business Group. In addition, housing demand was estimated to be increasing by 150,000 units every year.

In an effort to abate the situation, the government has implemented numerous housing projects over the past decade, such as social housing initiatives and the mobilization of thousands of hectares of available land. Moreover, the Ministry of Habitat and Urban Planning has also provided incentives for real estate developers to invest in social housing projects. Developers have committed to build about 900,ooo units by 2020.

In January 2014, the middle-class housing plan was launched. The country’s middle class, which makes up more than half of Morocco’s population, has suffered from a lack of affordable property for years.

From 2014 to 2016, about 20,000 housing units are expected to be constructed, according to Housing Minister Nabil Benabdallah. Smaller cities will be the first to benefit from the construction of affordable housing.

Constitutional reforms

Morocco gdp inflation

Under King Mohamed VI, Morocco did not experience any 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 the King’s series of social, democratic and economic reforms aimed at improving the lives of Moroccans and strengthen the Kingdom’s institutions. Some of his notable programs include 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 was estimated to have expanded by 3% in 2014, after real GDP growth rates of 4.4% in 2013 and 2.7% in 2012, according to the International Monetary Fund (IMF).

Better GDP growth of around 4.7% is forecast in 2015, as agricultural output picks up.

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 9.2% in 2013. In Q3 2014, Morocco’s overall unemployment rate dropped to 9.6% from 10.2% in the previous period.

Inflation management has greatly improved, with inflation averaging 1.66% during 1999 – 2013, based on figures from the IMF. In December 2014, the annual inflation rate was 0.3%, 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 successfully 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 govt lending

Morocco’s budget deficit fell to about 5% of GDP in 2014, 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.

Huge tourism expansion is on track

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 2020. In 2013, the total number of tourist arrivals exceeded the 10 million mark. The total tourism revenues amounted to MAD57.55 billion (US$6 billion) in 2013, the latest figures released by the Ministry of Economy and Finance. In 2014, tourist arrivals were estimated to have increased slightly to 10.5 million people. In 2015, the country expects to welcome more than 11 million tourists.

France accounted for about 33.5% of the total number of tourists in Morocco, followed by Spain, Arab countries, Germany, Italy and the United States.

Morocco’s hotel capacity continues to expand, 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.

Plan Azur continues

Under the Vision 2020, Plan Azur will continue, focusing on 6 new seaside resorts, namely: Mazagan Beach Resort, Mediterrania Saidia, Mogador Essaouira, Plage Blanche, Port Lixus, and Taghazout-Argana.

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 will be 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. Agadirâ´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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