State support for property developers stirs debate in Morocco

2008-07-29

The Moroccan government, politicians and business leaders are sparring over recent allegations that a property development group was allowed to buy land from the state at bargain prices.

By Sarah Touahri for Magharebia in Rabat – 29/07/08

[Sarah Touahri] Former Prime Minister Driss Jettou spoke to the Moroccan press last Tuesday (July 22nd) to dispel a controversy regarding public-private real estate partnerships.

A major controversy over allegations of state involvement in improper real estate state deals garnered the Moroccan public's attention last week. Property development pioneer Miloud Chaabi has accused the state of facilitating land transfers to private developer Douja Promotion Group Addoha S.A. without first issuing calls for tenders.

Chaabi accuses Addoha of benefiting from preferential treatment from the state and questions the company's acquisition of several large tracts.

"Since it came onto the stock exchange, Addoha has received over 5,000 hectares of land for the equivalent of 2 billion dirhams, when in reality it was worth over 25 billion dirhams," he said.

Chaabi, who is also a deputy in the lower house of Parliament, has called for a public inquiry into the matter.

Addoha has done well with its recent deals, outperforming the Casablanca stock market. On July 14th, the firm announced that it would ask shareholders on August 13th to approve bond issues worth 3 billion dirhams over the next five years and a 10-for-1 share split.

Speaking to the press for the first time since he left office, former Prime Minister Driss Jettou held a briefing on Tuesday (July 22nd) to clarify the situation.

"No land investments have been carried out according to any procedure other than that laid down by law," he avowed, adding that "all developers were equal before the law and had to go through the same administrative procedures".

Allowing developers to buy land from the state at a reduced cost was intended to bring a swift solution to the problem of housing, Jettou said, adding that, "It was impossible to go from 40,000 homes to 200,000 in the time we had without freeing up land."

"Land is only valuable when developed, and land is something we’re not short of in Morocco," Jettou told reporters.

The ex-prime minister noted that while "there is certainly room for improvement in the system…the state cannot afford to relax its policy of encouraging investment and stabilising prices".

The land transfers to Moroccan and foreign investors are in accordance with established procedures, General Confederation of Moroccan Businesses (CGEM) President Moulay Hafid Elalamy confirmed. Moreover, he said, all business interests are equally eligible to take advantage of the offerings.

"The criticisms of the Chaabi group regarding Addoha, which it accuses of having received preferential treatment by the state in the transfer of land, are actually aimed at the public-private partnership aspect of the Moroccan economic model," Elalamy stated.

Miloud Chaabi has shown signs of backing down. He continues to obtain signatures from deputies in the hopes that an inquiry committee will be established to investigate the matter. So far 80 of 325 deputies have given him their backing.

He claims to have all the proof he needs.

Finding that the advantages granted to private developers have not helped lower the prices of flats, many Moroccan citizens are also demanding explanations from the government.

"I think Miloud Chaabi is right," says teacher Farid Lmouden.

"The state has been selling plots of land measuring 50 and 100 square metres. Once they’re built, the flats are sold for up to 20,000 dirhams per square metre. Who benefits from this?" Lmouden asked.