The property market in Morocco, a North African country, is booming and property development is taking hold in a big way. Morocco is already beginning to garner notice from holidaymakers in Northern Europe, and its government’s plans to create more jobs and increase tourism by 2010 are likely to boost the economy and the property market in the next two years. Investors interested in getting in on a promising market before it peaks might want to give Morocco some thought.
Located at the northern tip of Africa, Morocco is just a ferry ride away from southern Spain. It shares a border with Algeria to the east, its western edge is Atlantic coastline and the Mediterranean lies to the north. The country is slightly larger than the state of California, covering a total area of 446,550 square kilometers. Approximately 34.3 million people are estimated to live in the country by July 2008, and the population is growing at an estimated rate of approximately 1.5 percent, according to the CIA World Factbook.
Morocco is a Muslim country, with 98.7 percent of the population subscribing to the religion, and the country’s official language is Arabic. The government is a constitutional monarchy—similar in structure to the governments of the United Kingdom, Malaysia and Spain—with a monarch who rules in conjunction with a bicameral parliament. The Moroccan Parliament is divided into the Chamber of Counselors and the Chamber of Representatives. There is also a Supreme Court. King Mohamed VI has been the king of Morocco since 1999. Elected Prime Minister Abbas El Fassi has been in office since 2007.
Morocco has an estimated GDP of $127 billion as of 2007. Its major industries include tourism, textiles and rock mining and processing, according to the CIA World Factbook. The national currency is the Moroccan dirham; one dirham is worth approximately $0.14. The inflation rate for consumer prices is 2.1 percent as of 2007.
Why buy property in Morocco?
“The [Moroccan real estate market] is booming; real estate development is everywhere,” according to Amine Maoouni, business development coordinator for the Moroccan American Trade and Investment Center (MATIC).
The U.S. and Morocco signed the U.S.-Morocco Free Trade Agreement in June 2004. The first treaty between the U.S. and Morocco was ratified in 1787 at the urging of Benjamin Franklin, and is the longest unbroken treaty in U.S. history, according to the Office of the U.S. Trade Representative.
King Mohammed VI implemented Plan Azur/Vision 2010 in January 2001. This is a strategic tourist development program which will develop holiday property and encourage the growth of Morocco’s tourist industry. Under the plan, the government hopes to create 600,000 new jobs and reach 10 million visitors in 2010, according to Commercial Site Development Services (CSDS) Ltd. (www.csdsltd.com), a U.K.-based Moroccan property agency.
“Since the launch of ‘Vision 2010,’ more than 20,000 new hotel beds have already come on the market and thousands of others have been renovated. In 2010, Morocco will have more than 250,000 hotel beds, including 180,000 located in or around the cities,” according to CSDS. The plan also calls for six new seaside resorts, five of which will be along the Atlantic coast and one of which will be on the Mediterranean coast. This plan to bolster Morocco’s tourist industry and the creation of new jobs could mean opportunity to overseas investors hoping to get in before prices jump as value rise.
“There’s a huge property boom at the moment....There’s even talk of a tunnel that will run from Spain to Tangiers. It’s becoming very popular with the U.K. and Northern Europeans,” Nolan Everard, managing director of CSDS, said. “It’s only really beginning at the moment. It’s like Dubai was five years ago.”
The main square in Marrakesh is the largest of its kind in Africa
Where should investors look to buy if considering property in Morocco?
“Marrakesh, Marrakesh, Marrakesh!” Everard said. “Marrakesh is essentially two cities, [there is] the old medina which is like going into an Indiana Jones film. And it also has the main square in Marrakesh and it’s the largest open square in Africa....Every day there are new people coming to Marrakesh. There are 99 flights to Marrakesh every week from [the] U.K., just the budget airlines. Year-round occupancy is 85 percent.”
Agadir, a favorite holiday destination among Northern Europeans on Morocco’s Atlantic coast, is also a good place to consider, he said.
If purchasing property off-plan (VEFA), be aware that Morocco has implemented specific rules governing the sales process for these properties. Not all developers may abide by these rules, so be sure to complete proper due diligence and check into developers’ processes and credentials beforehand. These laws require that the deposit and all payments prior to the sale’s completion must be underwritten by a bank guarantee, according to CSDS. They also enforce a penalty for late delivery. VEFA developments are also required to be inspected by independent engineers to ensure that each stage has been properly completed before further payments are made.
Agadir is a favorite destination for many Europeans
Potential problems
“It’s still very early....What’s happened is, where there’s any gold rush where property’s concerned, you get a lot of cowboys. Everyone’s trying to get a piece of Marrakesh at the moment,” Everard said. Sometimes developers may be so eager to cash in on Morocco’s promising market that they may not follow all the necessary regulations. Investors need to be cautious and conduct thorough due diligence on all possible real estate purchases to ensure that they are legitimate before proceeding.
“Before [some developers] even get permission, they start building,” Everard said. “Make sure the developer has outline planning, has a construction permit, and has all of his ducks in a row.”
Investors should also know that any contracts for off-plan properties that do not follow Morocco’s VEFA guidelines are void. If the developer goes bankrupt or fails to complete the property for any other reason, investors could be left in the lurch without any way to recoup their payments.
It’s critical that U.S. investors use a reputable overseas property lawyer when making property purchases in Morocco. Approach trade organizations or use Google to get the initial search started. Everard recommends looking for large groups that practice in multiple countries, as they are more likely to be reputable, researchable and to have the necessary resources to help investors with their purchases.
