Prices in Morocco's residential real estate market are holding steady in 2011, with a slight overall decline balanced by increases in the key apartment segment and in some high-demand areas of the country. Residential rentals have also held up well and, in spite of the wave of political unrest in North Africa earlier this year, the development of major real estate projects is largely on track, with domestic investors and low-cost housing set to drive further growth.
According to figures released in February by Bank Al Maghrib, the Moroccan central bank, having risen 2.4% year-on-year at the end of September, residential real estate sale prices ended 2010 slightly down after a slow final quarter, at 0.9% below where they stood at end-2009 and 2% below end-September. However, the value of apartment sales - which account for the majority of transactions - rose slightly, up 0.3% on the previous year.
A number of areas, including the Fez-Boulmane and Marrakech-Tensift-El Haouz regions, also bucked the trend, witnessing notable price increases. The sale value of apartments and houses increased by 1.3% and 2.3%, respectively, in the business capital, Casablanca, which accounted for 40% of all sales. Prices also held up well considering a 28.4% fall in the number of transactions in the fourth quarter of 2010 compared to the same period in 2009.
The residential rental market appears to be performing more strongly, with property agencies reporting both a solid 2010 in terms of rentals and optimism regarding 2011. Rental prices are reported to have risen in the country's respective political and commercial capitals, Rabat and Casablanca, in particular.
Recent regional political developments have had an impact on the sector in 2011. For example, in April Abu Dhabi-based property developer Sorouh Real Estate said that it had put on hold a 200-ha mixed-use development in the country due to the unrest in other parts of North Africa.
Other Gulf-backed projects appear to be going forward as planned, however. For example, Al Maabar, also based in Abu Dhabi, said in January that the first phase of its $750m Bab Al Bahr community project had sold out. The project is located on the banks of the Bouregreg River, which divides Rabat from the neighbouring city of Sale. Noting that it had seen strong demand in Morocco, the company stated in April that it has begun work on the second phase of the project, which is scheduled to be completed by 2013-14 and is a 50:50 joint venture with the Bouregreg Development Authority. When finished, the development will include approximately 1700 residential units, 60,000 sq metres of commercial space, 61,000 sq metres of office space and two hotels.
While much attention has focused on Gulf-backed projects in recent years, domestic investors are also helping to drive growth in the market. For example, in October a consortium of some of Morocco's major investment groups announced the creation of a joint Dh2.25bn (€197.7m) fund that will invest in property development, with a focus on projects in the north and north-west of the country. Major investors in the fund, to be known as A6 Immobilier (A6 Real Estate), include the Chaabi group's Chaabi Capital, ONA-SNI-backed Wafa Assurance, Moroccan-Emirati holding group Société Maroc-Emirats Arabes Unis de Développement and Moroccan pension fund Caisse Interprofessionelle Marocaine des Retraites, all of which have agreed to put Dh400m (€35.1m) into the fund. Other investors contributing smaller shares include state-backed institutional investor Caisse de Dépôt Depot de Gestion.
Social and low-cost housing also continue to be major drivers of the real estate market. Having already provided significant tax advantages to incentivise developers to build social housing, the minister of housing, Ahmed Toufiq Hejira, announced in February that the government was forming an inter-ministerial committee to help firms involved in the segment overcome any administrative delays encountered during the development process.
The committee will be comprised of representatives from several ministries, including interior, finance and housing. Hejira said that 140 firms had already signed agreements with the government to build social housing and that 600,000 units were in the pipeline, including 50,000-60,000 scheduled to be completed this year.
One major recent deal in the segment was made public in March, when Moroccan housing giant Addoha announced that it was partnering with the Military Equipment and Accommodation Agency (Agence des Logements et d'Equipements Militaires, ALEM) to build 37,000 new housing units, at a cost of approximately Dh10bn (€878.5m). Military and defence personnel will be given priority to purchase the units. Under the agreement, ALEM will provide land for the project while Addoha will take care of financing and carry out the development. While the sector has not yet fully regained its previous pace, there are positive signs in a range of segments and the outlook remains good for Morocco's real estate market.
via Oxford Business Group 2011
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