Morocco’s housing market is still weak, amidst slowing economic growth. Property prices are falling gradually. Transactions remain depressed. And, the mortgage market is continuously shrinking.
During 2022, the nationwide residential real estate price index (REPI) fell slightly by 0.1%, following a y-o-y decline of 7.5% in 2021 and an annual increase of 1.23%, based on figures released by Morocco’s central bank, Bank Al-Maghrib. However, when adjusted for inflation, residential property prices actually declined by a bigger 7.5% last year.
Morocco’s house price annual change
Quarter-on-quarter, the REPI dropped by 0.8% (-1.7% inflation-adjusted) in Q4 2022.
By property type:
- Apartments: prices fell by 0.3% (-7.7% inflation-adjusted) during 2022. On a quarterly basis, apartment prices were down by 0.7% (-1.6% inflation-adjusted) in Q4 2022.
- Houses: prices increased slightly by 0.5% in 2022 from a year earlier but declined by 6.9% in real terms. Quarter-on-quarter, house prices fell by 1.5% (-2.4% inflation-adjusted) in Q4 2022.
- Villas: prices rose by a meager 0.3% y-o-y in 2022 but actually dropped by 7.1% when adjusted for inflation. In Q4 2022, villa prices declined by 2.2% (-3.2% inflation-adjusted) q-o-q.
- Urban land: prices rose by 1.2% y-o-y in 2022 but declined by 6.3% in real terms. Quarter-on-quarter, urban land prices fell slightly by 0.7% (-1.6% inflation-adjusted) in Q4 2022.
During 2022, almost all of Morocco’s major cities registered lackluster performance:
- In Casablanca, residential property prices rose by a minuscule 0.2% y-o-y but declined by 7.2% when adjusted for inflation.
- In Marrakesh, residential property prices were unchanged during 2022 but fell by 7.4% in real terms.
- In Fes, nominal prices fell by 1.3% in 2022 from a year earlier but dropped by a bigger 8.7% in real terms.
- In Meknes, prices increased slightly by 0.6% but fell by 6.6% when adjusted for inflation.
- In Oujda, residential property prices rose slightly by 0.9% but actually dropped by 6.6% when adjusted for inflation.
- In Tangier, residential property prices fell by 0.3% and 7.7% in nominal and real figures, respectively.
- In Kenitra, prices also dropped by 0.1% and 7.5% in nominal and real figures, respectively.
- In Agadir, nominal prices rose by 1.4% y-o-y in 2022 but declined by 6.1% in inflation-adjusted figures.
- In El Jadida, both the nominal and real residential property prices plunged by 4.6% and 11.7%, respectively.
- In Rabat, nominal prices increased slightly by 0.8% but dropped 6.7% in real terms.
Demand has been depressed with the total number of residential transactions falling by 3.5% in Q4 2022 from a year earlier, according to Bank Al-Maghrib. On a quarterly basis, transactions declined by 5.5%.
“The drop in real estate-related transactions reflects slowing demand, which is largely attributed to the economic hardships the country is facing while trying to recover in the post-pandemic era,” said an article published by Morroco World News.
After contracting by 7.2% in 2020 due to the Covid-19 pandemic, the Moroccan economy bounced back immediately in 2021, registering a real GDP growth rate of 7.9%. However, the country’s economic growth slowed sharply again last year, registering a real GDP growth rate of just 1.1%. The International Monetary Fund (IMF) expects the economy to expand by a modest 3% this year and by another 3.1% in 2024.
In the previous decade, Morocco’s property market surged, on the back of high-GDP growth during the years 2001 (GDP growth of 7.3%), 2003 (6%), 2006 (7.6%), 2008 (5.9%) and 2011 (5.2%).
Demand is falling
This period of house price falls may continue in the medium term because demand remains weak. Residential transactions fell by 3.5% y-o-y in Q4 2022, according to Bank Al-Maghrib. Quarter-on-quarter, residential sales transactions dropped 5.5%.
By property type:
- Apartment sales fell by 4.2% y-o-y in Q4 2022. During the latest quarter, the number of apartments sold dropped 5.3%.
- House sales fell slightly by 0.2% in Q4 2022 from a year ago. But house sales transactions saw a bigger quarterly decline of 9.8% over the same period.
- Villa sales, in contrast, soared by 27.5% y-o-y in Q4 2022. However, on a quarterly basis, sales fell by 2.9% in Q4 2022.
Likewise, urban land transactions fell by 5.1% in Q4 2022 from a year earlier and declined slightly by 1.3% when compared to the previous quarter.
|RESIDENTIAL TRANSACTIONS, Q4 2022|
|Property type||Annual change (%)||Quarterly change (%)|
|Source: Bank Al-Maghrib|
There are no restrictions on foreigners owning land in Morocco, except for areas designated for agricultural purposes. The Dirham, Morocco’s currency, is relatively stable.
Attractive rental yields
Despite the weak housing market, gross rental yields in Morocco are good, according to a Global Property Guide research conducted in December 2022. Yields in Marrakesh are a little higher than in Casablanca, reflecting the fact that rents are not dissimilar but the prices of properties are lower in Marrakesh.
- In Casablanca, gross rental yields range between 4.77% and 8.21%, with a city average of 6.35%.
- In Marrakesh, one can earn higher rental yields of around 7.29% to 9.18%, with an average of 8.42%.
- In Agadir, yields range from 7.3% to 8.78%, with an average of 7.7%.
- In Tangier, rental yields fall between 7.72% and 13.2%, with a city average of 10.08%.
- In Rabat, you can expect rental yields of around 5.68% to 6%, with an average of 5.82%.
- In Temara, gross rental yields are moderate, ranging between 4.43% and 5.58%, with an average of 5.01%.
However, round trip transaction costs – i.e., the total costs of buying and then re-selling a property – are significant in Morocco, at 12.50% to 17%, mainly due to registration fees and stamp duties.
Interest rates rising, amidst surging inflation
In March 2023, the Bank Al-Maghrib raised its policy rate by another 50 basis points to 3.0%, in an effort to prevent the surge of inflation. The move was the third consecutive rate hike implemented by the central bank since September 2022.
“[T]he Board decided to raise the policy rate by 50 basis points to 3 percent in order to prevent the outbreak of self-sustaining inflationary spirals and to strengthen the anchoring of inflation expectations so as to favor its return to levels in line with the price stability objective,” said Bank Al-Maghrib. “The Board will continue to closely monitor economic developments and inflationary pressures, both at the domestic and international levels.”
As such, nationwide inflation eased to 8.2% in March 2023, down from a record high of 10.1% in the prior month, as prices of food and non-alcoholic beverages increased at a slower pace, according to Haut Commissariat au Plan. In February 2023, the Moroccan government suspended the export of certain products, including tomatoes, to supply the local market.
Overall inflation averaged just 1.0% from 2011 to 2021, before accelerating to 6.6% in 2022, the highest level recorded since 1992. Inflation is expected to remain elevated this year, at about 5.5%, on average.
As a result, the average interest rate for real estate loans in Morocco stood at 4.84% in the fourth quarter of 2022, slightly higher than the 4.69% in Q3, 4.65% in Q2, and 4.6% in Q1, according to the Bank Al-Maghrib.
The average interest rate has not shifted dramatically during the past decade but has declined slightly, from an annual average of 6.11% in 2012 to 4.7% last year. Overall, the interest rate for real estate loans averaged 5.41% in the past decade.
The mortgage market shrinking gradually
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.
Morocco’s mortgage market expanded rapidly to 24% of GDP in 2012, from just 6.4% of GDP in 2001, due to the surge in Morocco’s GDP growth, particularly from 2002 to 2008, causing housing demand to rise rapidly. Since then GDP growth has been somewhat slower, and in 2022 the size of the mortgage market has actually contracted to 21.7% of GDP.
Partnerships between the government and banks make lending accessible to middle- and low-income families, through the establishment of mortgage guarantee funds such as FOGARIM and FOGALOGE (discussed below).
In March 2023, the total value of property loans in Morocco rose by 2% y-o-y to MAD 300.2 billion (US$30 billion), according to the figures released by Bank Al-Maghrib. Over the same period:
- Housing loans outstanding increased by 2.6% y-o-y to MAD 240.6 billion (US$24.1 billion).
- Property loans to developers fell by 7.5% y-o-y to MAD 51.6 billion (US$5.2 billion).
Shortage of affordable housing
Despite a significant reduction in poverty in recent years, about 20% of the country’s population (or 6.4 million Moroccans) struggles to afford decent housing. In contrast, the high-end market is well-supplied. Morocco is a highly unequal country, and around 820,000 units are either vacant or used as vacation or secondary homes.
The government has implemented numerous housing projects over the past decade, mobilizing thousands of hectares of land, and giving developers incentives to invest in social housing projects. Social housing sales are VAT exempt (for areas between 50 sq. m. and 80 sq. m.), and prices are capped at MAD250,000 (US$25,021). Middle-income housing costs are capped at MAD6,000 (US$600) per square meter (sq. m.) for units ranging from 80 sq. m to 120 sq. m. To date, about 376,000 housing units have been delivered under the social housing program, according to the 2022 Morocco Housing Finance Yearbook published by CAHF.
Other housing programs included the Cities Without Slums and viable housing at MAD140,000 (US$14,012).
Lending for middle- and low-income families is accessible through partnerships between the government and banks:
- The FOGARIM mortgage guarantee fund guarantees 70% of a mortgage loan made to a household with an informal income, to buy a housing unit worth less than MAD250,000 (US$25,021), helping about 1,200 new beneficiaries every month.
- Another guarantee program, FOGALOGE, guarantees loans to middle-class independent workers, moderate-income civil servants, and non-resident Moroccans purchasing or building houses up to about MAD1 million (US$100,086) in value.
Morocco’s housing deficit has fallen from 1.2 million in 2002 to 400,000 units. However, due to rising prices of building materials caused by the Covid-19 pandemic and the Russia-Ukraine war, many construction projects were delayed, which slowed the response to the housing deficit.
Government: significant reforms, but significant corruption too.
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.
It has certainly helped that Morocco has not experienced a single period of economic contraction during the entire period from 1997 to 2019, causing unemployment to decline from 15.4% in 1997 to 9.3% in 2019.
After contracting by 7.2% in 2020 due to the Covid-19 pandemic, the Moroccan economy bounced back immediately in 2021, registering a real GDP growth rate of 7.9%. The economy grew further in 2022 but at a much slower pace of just 1.1%. The International Monetary Fund (IMF) expects the economy to expand by a modest 3% this year and by another 3.1% in 2024.
The country’s relative stability can partly be attributed to King Mohammed VI’s economic and constitutional reforms:
- New civil rights including social equality for women, and constitutional guarantees of freedom of expression;
- Berber made an official language, alongside Arabic;
- The Arab-Hassani Language and Morocco’s other linguistic components are seen as part of the national heritage;
- Additional powers to the prime minister, who the King must appoint from the winning party in parliamentary elections;
- Parliament now has the power to grant amnesty;
- Independence of the judiciary;
- 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.
Yet 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.
In 2011, thousands of people rally in Rabat and other cities, calling for a new constitution that curbs the powers of the King.
A decade after, the liberal party, National Rally of Independents, led by oil and gas billionaire Aziz Akhannouch narrowly won the September 2021 election, pushing the conservative Islamist Justice and Development Party (PJD) out of power after it had led Moroccan politics for a decade. The PJD lost favor with voters amid the country’s lagging economic performance during the pandemic.
Budget deficit falling again
To dampen popular protests at the time of the Arab spring, the King went on a spending spree in 2011, raising public sector wages and pensions, as well as subsidies. The budget deficit widened to 6.7% of GDP in 2011, up from 4.4% in 2010, according to the African Development Bank - a dramatic contrast to previous surpluses. The budget deficit rose further to 7.4% of GDP in 2012.
Morocco’s budget deficit has since been reduced to 3.6% of GDP in 2019.
However, due to the introduction of pandemic-related measures, the shortfall soared again to about 7.6% of GDP in 2020.
The budget deficit gradually dropped to 6.5% of GDP in 2021 and to 5% of GDP in 2020. Accordingly, Morocco’s national budget deficit amounted to MAD69.5 billion (US$6.8 billion) by end-2022, based on figures from the Ministry of Economy and Finance.
The central government debt-to-GDP ratio was estimated at about 69% of GDP in 2022, down from around 78.4% of GDP in 2021.
Tourism continues to recover
Tourism’s share of GDP is about 18% when indirect contributions are considered. In addition, the tourism sector employs more than 2.5 million people (both direct and indirect) – representing almost 25% of the total labor force.
In 2022, Morocco welcomed about 10.9 million tourists, sharply up from just 3.7 million in 2021 and 2.8 million in 2020. However, it remains below the record 13 million arrivals seen during the pre-pandemic year of 2019.
Tourism revenues also surged by 166.1% by end-2022 to reach MAD 91.3 billion (US$8.82 billion, following a decline of 5.9% in 2021.
The tourism sector’s recovery continues this year. In Q1 2023, the total number of tourist arrivals reached a record 2.9 million people, up by 17% as compared to the same period in 2019, according to the Ministry of Tourism, Handicraft, and Social and Solidarity.
The upward trend was mainly attributed to the growth in outbound tourism markets, including the Spanish, British, Italian, and American markets, which grew by 45%, 28%, 9%, and 5%, respectively. Moreover, the government’s recent efforts to boost the sector through improved marketing and air connectivity, and position Morocco as among the top 10 destinations worldwide through its newly developed 2023-2026 action plan called “Light in Action”, are starting to yield positive results.
“The tourism sector has shown good resilience and managed to resume its pre-COVID performance, thanks to a series of initiatives launched by the government to put tourist activity back on track with its achievements in the past,” said Morocco’s Minister of Tourism Fatim Zahra Ammor.
The country aims to attract 17.5 million visitors and create 200,000 new jobs by 2026.
Plan Azur, which consists of a bundle of tourism expansion projects, was launched in 2001 to boost the country’s tourism sector and attract 10 million visitors annually. It was developed to provide 80,000 beds and 10 golf courses. This massive project suffered several setbacks and delays, due to financial difficulties.
It focused on 6 seaside resorts, namely: Mazagan Beach Resort (in El Jadida province), Mediterrania Saidia (in Berkane province), Mogador Essaouira Resort (in Essaouira province), White Beach (in Guelmim province), Port Lixus (in Larache province), and Taghazout (in Agadir province).
- Mediterrania Saidia – located 60 km to the north of Oujda, it was inaugurated in June 2009. It includes a marina, luxury hotels, 3 golf courses, an aquapark, a fitness center, a convention center, villas, apartments and tourist villages, and other sports facilities.
- Mazagan Beach Resort – Inaugurated in October 2009, it is the second station of the Plan Azur situated in El Jadida. It was built on 250 hectares of land and offers a 5-star hotel, villas, an 18-hole golf course, a spa, a casino, and several restaurants.
- Mogador Essaouira Resort – Built on a 600-hectare of land, Mogador Essaouira is dedicated to luxury tourism, with a capacity of 3,300 beds. It was inaugurated in late 2011, with the opening of Sofitel Essaouira Mogador Golf & Spa. The station will also offer four 5-star hotels, two 18-hole golf courses, villas, a village including shops, restaurants, a gym, and a spa.
- Lixus Beach Resort Larache – Located in the Larache region a few kilometers away from the ruins of the ancient Roman city of Lixus, this 4.62 million sq. m. project offered its first beds in 2009. It includes a marina, three hotels, luxurious apartments and villas, an 18-hole golf course, and a sports and leisure complex.
- Taghazout Bay – Situated north of Agadir, the first hotel in this station was opened in 2009. It includes a campsite, an 18-hole golf course, hotels, apartments and villas, restaurants, shops and galleries, and a commercial area.
- White Beach – Located on the Atlantic, 40 km from Guelmim, the project is planned to be the second largest among the Plan Azur resorts, next to Mediterrania Saidia.
The attractions of Morocco center on its traditional cities as Marrakech, Fes, Meknes, Casablanca, and its coastal resorts, Agadir and Essaouira.
Marrakech dates back at least to 1070 A.D. It is famous for its palaces, open markets, and gardens. It is an extraordinarily exotic city, with its drama heightened by its 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 center 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 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.
TripAdvisor recently named Marrakech as one of the best tourist attractions in the world, with the city voted as the 8th best city for tourists in 2023, next to Dubai, Bali, London, Rome, Paris, Cancun, and Crete. This means that Marrakech remained the most popular tourist destination in Africa this year.
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 its 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 center has a modernist grandeur, with plenty of space and light. Casablanca is large, modern, and agreeable, with at least ten golf courses less than 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 - fills most of the old city.
Agadir is Morocco’s main seaside destination. Beautiful beaches, luxurious hotels, and an ultra-modern airport are all combined with a moderate climate. Agadir’s beach is spectacular. 10 kilometers in length, it is clean and wide. Agadir enjoys a continuous breeze from the Atlantic so 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 had a louche reputation from the 1920s onwards when it was an outpost for British pederasts. 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 center of Essaouira, there are dozens of cafes and restaurants. It is a pleasant place to eat, drink, and watch the world go by.
- Real estate asset price index (Bank Al-Maghrib): https://www.bkam.ma/Statistiques/Prix/Indice-des-prix-des-actifs-immobiliers
- Morocco’s Real Estate Market Slows, Amid Dropping Demand (Morocco World News): https://www.moroccoworldnews.com/2023/02/354213/moroccos-real-estate-market-slows-amid-dropping-demand
- Morocco produces moderate to good rental yield returns (Global Property Guide): https://www.globalpropertyguide.com/Middle-East/Morocco/Rental-Yields
- 2022 Housing Finance Yearbook: Morocco Profile (Centre for Affordable Housing Finance in Africa): https://housingfinanceafrica.org/app/uploads/2022/12/Morocco.pdf
- Buying Real Estate in Morocco (Guide) (Global Property Guide): https://www.globalpropertyguide.com/Middle-East/Morocco/Buying-Guide
- Monetary Policy Decisions History (Bank Al-Maghrib): https://www.bkam.ma/en/Monetary-policy/Strategic-framework/Monetary-policy-decisions/Decisions-history
- Bank Al-Maghrib Board Meeting - March 21, 2023 (Bank Al-Maghrib): https://www.bkam.ma/en/Press-releases/Bank-al-maghrib-board-meeting/2023/Bank-al-maghrib-board-meeting-march-21-2023
- Monetary Statistics – October 2022 (Bank Al-Maghrib): https://www.bkam.ma/Statistiques/Statistiques-monetaires/Revue-statistiques-monetaires/Statistiques-monetaires-2022
- Inflation (Haut Commissariat au Plan): https://www.hcp.ma/Inflation_a2950.html
- Morocco Tourism Up Following Historic World Cup Run (Voa): https://www.voaafrica.com/a/morocco-tourism-sees-boost-following-historic-world-cup-run/6966376.html
- Marrakech Features on Top 10 Best Destinations for International Tourists (Morocco World News): https://www.moroccoworldnews.com/2023/01/353666/marrakech-features-on-top-10-best-destinations-for-international-tourists
- Tourist Arrivals in Morocco Reached Record 2.9 Million in First Quarter of 2023 (Morocco World News): https://www.moroccoworldnews.com/2023/04/354971/tourist-arrivals-in-morocco-reached-record-2-9-million-in-first-quarter-of-2023
- Tourism Recovery: Morocco Records Over 19 Million Overnight Stays in 2022 (Morocco World News): https://www.moroccoworldnews.com/2023/02/354133/tourism-recovery-morocco-records-over-19-million-overnight-stays-in-2022
- The Number of Tourists in Morocco Increased (Tourism Review): https://www.tourism-review.com/number-of-tourists-in-morocco-went-substantially-up-news13088
- Morocco country profile (BBC News): https://www.bbc.com/news/world-africa-14121438
- Azur Plan (Maroc.ma): https://www.maroc.ma/en/content/azur-plan
- Morocco (International Monetary Fund): https://www.imf.org/en/Countries/MAR
- Morocco Government Budget (Trading Economics): https://tradingeconomics.com/morocco/government-budget
- Who Is Aziz Akhannouch, The Billionaire Tapped To Become Morocco’s Next Prime Minister? (Forbes): https://www.forbes.com/sites/daviddawkins/2021/09/13/who-is-aziz-akhannouch-the-billionaire-tapped-to-become-moroccos-next-prime-minister/?sh=2ff45072552a
- Morocco’s Treasury: National Budget Deficit Stood at 5% of GDP in 2022 (Morocco World News): https://www.moroccoworldnews.com/2023/01/353685/moroccos-treasury-national-budget-deficit-stood-at-5-of-gdp-in-2022