Morocco

Morocco Residential Real Estate Market Analysis 2024

Lalaine C. Delmendo

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

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.

Morocco Residential Property Price Index by Type graph

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.

Morocco Residential Property Price Index per Location graph

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.
RESIDENTIAL TRANSACTIONS, Q1 2024
Property type Annual change (%) Quarterly change (%)
Total Residential -3.1 -14.3
Apartments -2.2 -13.9
Houses -13.7 -21.3
Villas -21.6 -18.5
Urban Land 3.6 -10.4
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.

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.

Morocco GDP Growth and Inflation graph

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.

Morocco Bank Al-Maghrib's Policy Rate graph

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.