Why Are You Buying Property in Morocco?

If you scan the news for opinion and data about the Moroccan property market at the moment, you will be immediately struck by the amount of general and generic information that there is out there backed up by very little substance at all.  We are meant to accept that the government in the nation has a plan to bring in more tourism, create a real estate industry out of luxury resort developments and that lots of Brits, Irish, Spanish and French people are buying in and that that should be sufficient data to get us hooked.

Well, if you’re thinking of a Moroccan real estate investment may we ask the question ‘why are you buying property in Morocco?’ please – because off the back of the above data we certainly wouldn’t invest!  That’s not to say we’re not interested in Morocco right now – we are – but we have been doing much deeper due diligence than simply following the crowd.  And if you’re like us and want a bit more substance to back up your buying decision, read on…

Morocco is in an incredibly exciting place at the moment.  There is massive potential for Morocco to thrive and develop and economically prosper over the medium to much longer term, because sincere and concerted efforts are afoot in major sectors of the economy to develop a robust financial backdrop to this nation based on diversification away from agriculture.  However – Morocco’s prosperity is certainly not assured, at least not yet, and added to this there are a number of underlying issues that could destabilise the smooth emergence of this country’s success.  But then, the risks add to the fun of property investment don’t they?!

So – on the positive side we have excellent fundamentals in place in Morocco supporting a property investment decision.  For example, because adverse weather conditions seriously affected the agriculture industry last year and undermined the economy, this has added greater resolve to the government to diversify the financial future of the nation away from this sector. 

According to a report in Reuters, output from the cereal harvest in Morocco dropped from 8.3 million tonnes in 2006 to just 2 million in 2007 resulting in a contraction in this economic sector of almost 20%.  This, combined with other adverse factors, saw the Moroccan economy expand by an unimpressive 2.2% in 2007 according to the High Planning Commission.

To completely reverse the declining economic fortunes of the nation there are schemes in place, plans under development and positive actions taking place in Morocco - and it is these factors which are creating an air of positive expectation which should draw the attentions of a would-be property investor! 

First things first there is Vision 2010 which is now entering its second phase.  This is a plan that was enacted by the King of Morocco to create an environment for sustainable investment in his nation with specific focus levelled on the legal environment, innovation and monitoring technology, marketing and communication, and organisational structure and human resources.  The underlying objective of Vision 2010 is to make Morocco more attractive and robust an environment for foreign direct investment.

The real estate industry and tourism industries have both benefited off the back of this plan as the environment for the development of both has improved significantly.  Tourism numbers are up, government support is in place for the development of luxurious real estate, major international constructors have committed to developing property in Morocco and this is why so many developers and agents are now in Morocco marketing their wares to Europeans and North Americans.  But that alone is not sufficient proof that now is the time to invest in property in Morocco.

What about infrastructure, what about accessibility, what about the long term desirability of the nation, what about affordability…?

Well, according to a report in the International Herald Tribune, where the luxurious new resort style real estate developments are going in, so is the required infrastructure for accessibility.  And, added to this is the fact that Morocco now has an open skies agreement in place which means gone is the stranglehold a couple of airlines had on the nation’s airports and in have flown low cost carriers from across Europe. 

In terms of affordability – well, the luxury resorts which are being developed across Morocco are being marketed to an international market.  So, if you buy in to any of these you needn’t worry about local affordability – you need to concern yourself with the long term desirability of the nation and indeed your property if you want to rent or resell.  However, local affordability is actually a concern and one which most investors are completely unaware of.  If Moroccans see their nation developing around them and the benefits only being accessible to seemingly wealthy overseas nationals who fly in and out when it suits them, underlying feelings of resentment may grow.

This has happened time and time again in emerging markets and it can completely destabilise the positive development of a country completely.  Fortunately the authorities in Morocco are aware of this fact and are seeking to address the high levels of unemployment and poverty in the country in a number of ways.  This ties back in with the aforementioned way in which the government is seeking to diversify the economy.  The King of Morocco has recognised his country’s geographic advantage and resultant strategic advantage.  It is the closest point linking Europe with Africa and now a massive project is underway to build the largest port in the Mediterranean just east of Tangier.  The port will be the front to an impressive logistics and industrial zone employing at least 100,000 and adding significantly to the economy and therefore the underlying affluence of local Moroccan people.

Renault and Nissan have already seen the potential of the port, the affordability of setting up operations in Morocco and the long term opportunity now being created in Tangier.  They have committed to a multi million pound investment into developing a factory in Tangier to produce up to 400,000 cars annually – and their commitment has set a serious precedent for other companies to follow.

The final positive factor that we would like to raise in support of a property investment commitment in Morocco is the fact that Standard and Poor’s have come out in support of the Moroccan banking sector.  Whilst their support is slightly muted with an undertone of warning about untested credit growth for example, they cite strong levels of profitability and maturity in funding performance as supporting their placing of Morocco in Group 8 of their global Banking Industry Country Risk Assessments.

This is just a small peak at what’s going on in emerging Morocco – but it should give substance to your property investment decisions or at least inspire you to look more closely at the fundamentals supporting a potential investment commitment…

Special Reports: Property News for Morocco

Morocco Investment Property Facts
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Morocco Property Buying Process
It’s becoming increasingly fashionable to buy property in Morocco but the complexity of the purchase process puts many investors off!

Morocco Property Investment Introduction
The real estate market in Morocco presents property investors with an emerging market within an emerging market hot opportunity.