Morocco Residential Real Estate Market Analysis 2024

Morocco's housing market is still weak, amidst moderating economic growth. Property prices are more or less static. Transactions remain depressed. And, the mortgage market is continuously shrinking.

Table of Contents

• Housing Market Snapshot
• Demand Highlights
• Supply Highlights
• Historic Perspective
• Rental Market
• Mortgage Market
• Socio-Economic Context

Housing Market Snapshot

During the year to Q1 2024, the nationwide residential real estate price index (REPI) rose slightly by 0.7%, following a y-o-y increase of 0.8% in Q4 2023, zero growth in Q3, a decline of 0.5% in Q2, and a slight growth of 0.2% in Q1, based on figures released by Morocco's central bank, Bank Al-Maghrib. However, when adjusted for inflation, residential property prices declined slightly by 0.2% y-o-y in Q1 2024.

Morocco's house price annual change

Quarter-on-quarter, the REPI increased by 0.2% (0.1% inflation-adjusted) in Q1 2024.

By property type:

• Apartments: prices rose slightly by 0.8% (but declined by 0.1% when adjusted for inflation) in Q1 2024 from a year earlier. On a quarterly basis, apartment prices were up by 0.6% (0.6% inflation-adjusted) in Q1 2024.
• Houses: prices increased by a minuscule 0.1% in Q1 2024 from a year earlier but declined by 0.8% in real terms. Quarter-on-quarter, house prices fell by 1.1% (-1.1% inflation-adjusted) during the latest quarter.
• Villas: prices fell slightly by 0.2% y-o-y in Q1 2024 and actually dropped by 1.1% when adjusted for inflation. In Q1 2024, villa prices declined by 2.3% (-2.4% inflation-adjusted) q-o-q.
• Urban land: prices rose by 1.2% y-o-y in Q1 2024 (0.3% inflation-adjusted). Quarter-on-quarter, urban land prices fell slightly by 0.1% (-0.2% inflation-adjusted) in Q1 2024.

During the year to Q1 2024, almost all of Morocco's major cities registered lackluster performance:

• In Casablanca, residential property prices fell slightly by 0.1% y-o-y and declined by 1% when adjusted for inflation.
• In Marrakesh, residential property prices rose by a modest 3% y-o-y in Q1 2024 (up 2.1% in real terms).
• In Fes, nominal prices fell by 1.1% in Q1 2024 from a year earlier and dropped by a slightly bigger 2% in real terms.
• In Meknes, residential property prices were down by 2.7% and fell by 3.5% when adjusted for inflation.
• In Oujda, residential property prices rose slightly by 0.2% but actually dropped by 0.7% when adjusted for inflation.
• In Tangier, residential property prices rose by 3.2% in nominal terms and by 2.3% in real figures.
• In Kenitra, nominal prices dropped by 0.2% and by a bigger 1.1% in real figures.
• In Agadir, residential property prices fell by 1.4% and 2.3% in nominal and real figures, respectively.
• In El Jadida, both the nominal and real residential property prices fell by 0.8% and 1.7%, respectively.
• In Rabat, nominal prices increased slightly by 0.2% but dropped 0.7% in inflation-adjusted terms.

Demand continues to fall, with the total number of residential transactions declining by 3.1% in Q1 2024 from a year earlier, according to Bank Al-Maghrib. On a quarterly basis, transactions dropped by a huge 14.3%.

After contracting by 7.2% in 2020 due to the Covid-19 pandemic, the Moroccan economy bounced back immediately in 2021, registering a strong real GDP growth rate of 8%. The economy grew further in 2022 but at a much slower pace of just 1.3%. The country experienced a modest economic growth of 3% in 2023.

The International Monetary Fund (IMF) expects the Moroccan economy to grow by 3.1% this year and by another 3.3% in 2025.

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 Highlights

Demand continues to fall

The housing market's lackluster performance may continue in the medium term because demand remains weak. Residential transactions fell by 3.1% y-o-y in Q1 2024, according to Bank Al-Maghrib. Quarter-on-quarter, residential sales transactions dropped by a bigger 14.3%.

By property type:

• Apartment sales fell by 2.2% y-o-y in Q1 2024. During the latest quarter, the number of apartments sold dropped 13.9%.
• House sales fell sharply by 13.7% in Q1 2024 from a year ago. But house sales transactions saw a bigger quarterly decline of 21.3% over the same period.
• Villa sales plunged by 21.6% y-o-y in Q1 2024. On a quarterly basis, sales fell by 18.5% during the latest quarter.
• Urban land transactions, in contrast, rose by 3.6% in Q1 2024 from a year earlier. Though, quarter-on-quarter, sales dropped 10.4% in Q1 2024.

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.

Supply Highlights

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$25,572). Middle-income housing costs are capped at MAD6,000 (US$614) per square meter (sq. m.) for units ranging from 80 sq. m to 120 sq. m.

Since 2010, 1,507 agreements have been signed to provide 2,107,543 social housing units in the country, according to the 2023 Africa Housing Finance Yearbook published by the Centre for Affordable Housing Finance (CAHF). To date, about 400,000 housing units have been delivered under the social housing program.

Other housing programs included the Cities Without Slums and viable housing at MAD140,000 (US$14,320).

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$25,572), 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$102,287) in value.

Morocco's housing deficit has fallen to 400,000 units from 1.2 million units in 2002. 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. Fortunately, many delayed projects have finally resumed construction recently.

Historic Perspective

Government: significant reforms, but significant corruption too.

Like other Middle Eastern countries, Morocco has experienced social and political unrest. However, 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 strong real GDP growth rate of 8%. The economy grew further in 2022 but at a much slower pace of just 1.3%. The country experienced a modest economic growth of 3% in 2023.

The International Monetary Fund (IMF) expects the Moroccan economy to grow by 3.1% this year and by another 3.3% in 2025.

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 biggest 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 rallied 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.

Rental Market

Moderately good rental yields

Gross rental yields in Morocco are moderately good, ranging from 4.43% to 8.99% in Q1 2024, according to a Global Property Guide research conducted in February 2024. 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 from 4.43% to 7.94%, with a city average of 6.75%.
• In Marrakesh, one can earn higher rental yields of around 5.18% to 8.99%, with an average of 6.95%.
• In Agadir, rental yields range from 5.17% to 6.79%, with an average of 5.98%.
• In Tangier, rental yields fall between 6.65% and 6.93%, with a city average of 6.79%.

Interest rates start to fall again as inflation eases

In June 2024, the Bank Al-Maghrib slashed its policy rate by 25 basis points to 2.75%, after holding it unchanged since March 2023, as inflation declined dramatically in recent months.

"The Board assessed that the calibrated tightening of monetary policy, the regular monitoring of the transmission of its decisions and the measures rolled out by the Government to support household purchasing power and some economic activities allowed for considerable progress in steering inflation back to levels consistent with the price stability objective and in maintaining the post-covid recovery," said Bank Al-Maghrib in its June 2024 Board Meeting.

"Against this backdrop, and after keeping the key rate unchanged for four consecutive meetings, the Board decided to lower it by 25 basis points to 2.75 percent," added the central bank.

In May 2024, nationwide inflation stood at 0.4%, sharply down from 7.1% in the previous year and from a record 10.1% seen in February 2023.

Overall inflation averaged just 1.0% from 2011 to 2021, before accelerating to 6.6% in 2022, the highest level recorded since 1992. Inflation remained high at 6.1% in 2023.

In Q1 2024, the average interest rate for real estate loans in Morocco stood at 5.05%, down from 5.14% in the previous quarter but still up from 4.79% in the same period last year, 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 5.03% last year. Overall, the interest rate for real estate loans averaged 5.31% in the past decade.

Mortgage Market

Mortgage market slowing

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 2023 the size of the mortgage market has actually contracted to 20.9% 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 May 2024, the total value of property loans in Morocco rose by a meager 1.3% y-o-y to MAD 304.82 billion (US$31.18 billion), according to the figures released by Bank Al-Maghrib. Over the same period:

• Housing loans outstanding increased by 1.5% y-o-y to MAD 244.92 billion (US$25.05 billion).
• Property loans to developers were up by 3.8% y-o-y to MAD 54.46 billion (US$5.57 billion).

Socio-Economic Contex

The budget deficit continues to fall

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 7.1% of GDP in 2020.

The budget deficit gradually dropped to 5.9% of GDP in 2021 and to 5.3% of GDP in 2022. Based on Bank Al-Maghrib's figures, the deficit narrowed further to about 4.7% of GDP in 2023, due to the combined effect of strong budget revenues and lower subsidies.

"The central government fiscal deficit improved more than envisaged in the 2023 Budget. The 2023 overall deficit closed at 4.4 percent of GDP, about 0.5 percent of GDP less than projected in the 2023 Budget," said the IMF. "This reflects better-than-expected fiscal revenues (with non-tax revenues boosted by the Earthquake Fund) that more than offset higher-than-planned spending."

Morocco's budget deficit is projected to narrow further to 4.1% of GDP this year and approach 3% of GDP in 2027, according to the credit ratings Standard and Poor's.

Public debt was estimated at about 69.7% of GDP in 2023, down from around 71.5% of GDP in 2022.

Tourist arrivals at new record high

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 2023, Morocco welcomed about 14.5 million tourists, sharply up by 33% from the previous year. It already exceeded the record 13 million arrivals seen during the pre-pandemic year of 2019.

As a result, tourism revenues reached a record high of MAD 105 billion (US$10.5 billion) last year, up by 12% from the prior year, according to the Morrocan Ministry of Tourism. This follows a surge of 166.1% in 2022 and a decline of 5.9% in 2021.

"This achievement falls within the goal of the roadmap to achieve 120 billion dirhams (US$12 billion) by 2026," said Moroccan Minister of Tourism Fatim-Zahra Ammor.

Tourism is one of the country's largest providers of hard currency.

The growth of the tourism sector continues this year. In the first half of 2024, tourist arrivals rose by 14% from a year earlier to 7.4 million.

The upward trend was mainly attributed to the growth in outbound tourism markets, including the Spanish, British, Italian, and American markets. 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.

"We maintain course and continue to implement regional and national programs outlined in the roadmap, which should enable us to welcome 15.5 million tourists by the end of 2024," said Ammor.

The country aims to attract 17.5 million visitors and create 200,000 new jobs by 2026. Tourist arrivals are projected to surge to 26 million by 2030 when the country will co-host the World Cup together with Spain and Portugal.

Plan Azur

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.

Morocco's attractions

The attractions of Morocco center on its traditional cities as Marrakech, Fes, Meknes, Casablanca, and its coastal resorts, Agadir and Essaouira.

Marrakech

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.

Fes

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.

Casablanca

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

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

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

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, and 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

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 a magnet for Moroccan poets and creative talent. In the Place de Lâ Independence, 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.

Sources:

1. Real estate price index (Bank Al-Maghrib): https://www.bkam.ma/
2. Overall Real Estate Market Trend in Q1 2024 (Bank Al-Maghrib): https://www.bkam.ma/
3. Morocco's Housing Market Cools Despite Modest Price Increase (Morocco World News): https://www.moroccoworldnews.com/
4. Housing Finance in Morocco (Centre for Affordable Housing Finance in Africa): https://housingfinanceafrica.org/
5. Gross rental yields in Morocco: Casablanca and 3 other cities (Global Property Guide): https://www.globalpropertyguide.com/
6. Key indicators of monetary statistics (Bank Al-Maghrib): https://www.bkam.ma/
7. Morocco interest rate (Trading Economics): https://tradingeconomics.com/
8. Bank Al-Maghrib's Board Meeting - June 25, 2024 (Bank Al-Maghrib): https://www.bkam.ma/
9. Azur Plan (Maroc.ma): https://www.maroc.ma/
10. Marrakech Features on Top 10 Best Destinations for International Tourists (Morocco World News): https://www.moroccoworldnews.com/
11. Morocco: Tourism Revenues Exceed $10 Billion in 2023 (Qatar News Agency): https://www.qna.org.qa/
12. Morocco tourist arrivals increase (TRT Afrika): https://trtafrika.com/
13. Morocco Attracts 4.6 Million Tourists in First 4 Months of 2024 (Morocco World News): https://www.moroccoworldnews.com/
14. Morocco Outlook Revised To Positive On Improving Socioeconomic And Budgetary Reform Trajectory; 'BB+/B' Ratings Affirmed (S&P Global): https://disclosure.spglobal.com/
15. Morocco's Budget Deficit Amounts to MAD 62.8 Bln in 2023 (Embassy of the Kingdom of Morocco in the United States): https://us.diplomatie.ma/
16. Morocco Government Budget (Trading Economics): https://tradingeconomics.com/
17. Morocco Economic Outlook (African Development Bank Group): https://www.afdb.org/
18. Morocco Outlook Revised To Positive On Improving Socioeconomic And Budgetary Reform Trajectory; 'BB+/B' Ratings Affirmed (Standard and Poor's): https://disclosure.spglobal.com/
19. Morocco country profile (BBC News): https://www.bbc.com/