Morocco's real estate sector could escape global crisis
2008-12-26
Moroccan officials appear confident that the country's real estate sector is impervious to the global crisis, but would-be buyers think otherwise.
By Sarah Touahri for Magharebia in Rabat – 26/12/08
 [Sarah Touahri] Moroccan officials have announced that their country has been spared the effects of the global real estate crisis. |
Moroccan officials have announced that their country has been spared the effects of the global real estate crisis. Ahmed Taoufik Hjira, the minister of housing, urban planning and land management, asserted on Tuesday (December 23rd) that the Moroccan sector is not linked to the global sector, adding, "There is high demand here, unlike in Europe. The housing shortage is estimated at five million units. Each year 123,000 new families enter the market. We therefore need to meet current demand and reduce the shortage."
"The sector is in good health and is showing no signs of the effects of the crisis, unlike foreign real estate markets," agreed Anas Sefrioui, president of real estate group Addoha.
Sefrioui ruled out the risk that anything similar to the sub-prime phenomenon will be seen in Morocco, since bank loans are granted according to the capacity of borrowers to repay them and demand for property far exceeds supply.
The president of the National Property Developers’ Federation, Youssef Ibn Mansour, disagreed. "Although the real estate sector is growing rapidly, the government’s change of strategy has driven a wedge between public-private partnerships," he said.
"So far," he added, "no developer specialising in social housing has signed a contract with the government this year."
The president of the Council of Architects, Omar Farkhani, stated that building large numbers of new homes is not enough, and that standardisation is necessary to ensure that new homes are of high quality.
Realtors have expressed fears. Mohamed Maliki, a house agent based in Marrakech, said that business has slowed down over the past few months.
"Only property developers can cause downturns in their own business by keeping prices high and supply lower than demand," economics researcher Driss El Fina noted.
Professor Mehdi Bouchaib said, "Since statistics on property and inventories are not published in Morocco, or are at least unavailable to the general public, it is difficult to make an objective assessment of the real estate sector."
Meanwhile, citizens, who lack a clear picture of the sector, eagerly wait for prices to fall. Said Madichou, a civil servant, has been hoping to buy a reasonably-priced flat for three years.
"Over the last few years, prices have shot up to the point where they no longer reflect the true value of properties. Because of the global economic crisis, I’m hoping that prices will drop."
Although the Ministry of Housing has expressed optimism, it also said that steps must be taken to prevent problems. Hjira commented that reforms are needed in urban planning, local governance, and the number of market players. He acknowledged the existence of certain economic factors conducive to a downturn, such as rises in the prices of raw materials and business services, the gap between supply and demand, and a slowdown in purchases, especially in the luxury apartments sector. However, the banking sector offers numerous financing possibilities.
The head of the Moroccan Central Bank, Abdellatif Jouahri, said that the value of national property assets is equal to 14% of GDP, as compared with a figure of 70% in the United Kingdom and 100% in the United States.
"To avoid the creation of a property bubble," he added, "the Central Bank has ordered banks to draw up a code of good conduct outlawing the provision of financing to high-risk property development programmes. Banks send the Central Bank monthly reports on the activity of the largest groups in the sector." Jouahri noted that
"The bulk of the Moroccan real estate sector consists of social and high-quality housing, which is protected by state guarantee funds," he said.
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Mohammed Jouhari Posted 2008-12-27
Most Moroccans know that the governmental announcements are always optimistic, and this is all the better because creating panic would be pointless.
elmahdi oummih Posted 2008-12-27
There is a real estate bubble in Morocco. There is a stock market crash on the horizon. In Morocco, the best indicators as to what is going on, can be heard from Taxi drivers and gleamed from the guests on Talk Radio. When you have the heads of Housing Giants like DOHA and OMRANE come on the airwaves to say that there is no problem in the Moroccan housing industry... well, that is exactly when you know that there is a very big problem in the industry. These executives spend most of their time vacationing in Ifrane, visiting their children in Europe or counting the money they have illegally funnelled into ofshore accounts. If they deign to come on the airwaves to reassure the average Moroccan that everything is ok in the housing markets... that is when you know that the truth is the exact opposite. You have to be a complete and total moron to believe that the Economic crisis will not affect Morocco. It is true that Mortages in Morocco for the average Joe are given based upon relatively reasonable financing principals... however, the average Joe is not the main owner of Real Estate in Morocco. The principal owners of Real Estate in Morocco, are x-pats living abroad in Spain, France and Italy. The x-pats who are raising families abroad and they are usually the first to lose their jobs and the last to be hired during periods of economic slowdown. The Crisis that the US and Europe are experiencing are still in the infancy stages. Things will get much worse and this will translate into much few dollars and Euro's making their way into Morocco. Remitances are Morocco's number one sourse of income. It is only a matter of time before these Remitances slow to a very meager trickle and then the Sh*t will really hit the fan.
djaouti mohamed chérif Posted 2008-12-29
Salam alaikoum- Real estate in Algeria has dropped. It is almost entirely in the black market now. This extend almost country-wide, because everyone is contributing to this. Take, for example, Algiers, where there are no F3 homes for less than ten million dinars or more. And, they declare less to the authorities in order to pay less tax. Everyone is up to date on this and the state has not come up with a way out. This is the crisis, and, moreover, it is the crisis in its healthy Algiers form. An F4 in private hands costs no less than eight million dinars. An honest senior officer cannot get one, because that requires at least 15 years of his finances. And, as a small reminder, I call upon Malaysia, a Muslim country, to urge it to invest in Syria and Algeria in order that they may at least get 3000 engineers working in each country. And, the same goes for Morocco, where my cousin, King Mohamed VI, a descendent of Mohamed himself, may prayers and peace be upon him, reigns. I grant him all of my moral, physical and diplomatic support. To me, he is my blood brother. Signed, The Saviour, The Christ, The Messiah, The Saviour, called Aissa
Anonymous Posted 2009-01-12
“January 2008: the real-estate crunch hits Morocco!” When I read these types of articles, I get a good laugh. Oh yeah, all the arguments of all kinds of speculators who made the price skyrocket to the point of making the average Moroccan (and I am not talking about the poor, who are the majority) incapable of housing himself are there: there is the scarcity of land; there is demand outweighing supply (which means there can be no crisis); there is the lack of state support (oh yeah, the state should help them, bleeding the citizens dry so that they can earn even more); and yada yada yada. In the end, this is an article made to reassure and further extend the housing bubble, which is beginning to seriously deflate, and to tell the citizens in general, “You have no choice but to offer up all of your savings and mortgage away your entire life for a loan so you can live in a cement cage that is, in reality, not worth two cents.” The average “real” cost is 1,500 dirhams according to a study made by the Ministry of Housing, so, can you imagine the profit the promoters make when the prices have passed 30,000 dh and, at times, even 50,000 dh in Tangier!? A few months ago I told my banker, who wanted to swindle me into a life-long loan to buy a crummy flat, which was made of materials that amount to a pigpen in Europe, and live an impoverished life, “I am not crazy enough to buy at the peak of the housing bubble.” He laughed in my face, telling me that prices will never go down, that they will increase indefinitely, that it was better to take up the first opportunity to by without thinking it through. This happened in 2007, and in the beginning of 2008 we see a drop of 50% in sales, and this was primarily with transactions underway since 2007. In the third quarter of 2008, it was…
Redsam Posted 2009-01-15
The truth is that even today the global financial crisis has only had negative repercussions on a few sectors such as tourism and the textile industry. However, it must not be denied that even the real-estate sector is subject to a sharp slowdown connected above all else to the inability of households of all standings to acquire housing at a proper price, and, as of late, this in addition to the inflation in food prices. The property developers will never admit this slowdown because it is not in their interest, and this is even in spite of us seeing a great reluctance on the part of buyers who are holding onto their hope for 2009 in finally seeing their dream of having a house come true. In the end, we must accept the reality that – in spite of what the big property developers are saying – real estate is not immune to a crisis of having demand that is now higher than supply. Those in high places are beginning to feel it.
Kariati Posted 2009-01-20
I completely agree with Elmahdi: Moroccan real-estate developers are trying to ensure they sucker us. The most tragic thing about Morocco’s or, at least, Agadir’s, Tangiers’ and Marrakesh’s real estate (I am excluding Casablanca and Rabat, where the inhabitants are more aware or, at least, have been warned) is the quality of the housing. It is pathetic and that is a nice way to put it. As for the infrastructure, joint ownership and capital, which I have not yet even spoken of, they are disasters. And, they want to sell the square meter for the same price it would cost in Monte Carlo or Miami. So, bubble or no bubble, you are already stuck finding one good argument for why you should invest in this quagmire! Love for the country and of sunshine, which in my opinion can be found elsewhere, do not justify such a sacrifice.
Alaoui Posted 2009-01-25
The real-estate market has not budged because the sq metre price of flat remains excessively expensive in comparison to the quality of the major construction projects and what they end up with. Real-estate developers are trying to find arguments to sell by whatever means possible. Without any embarrassment, they say that they are selling luxury, and their newest way to rip off the purchasers is that they allow themselves to say their buildings meet European standards. There is no one and nothing there to fix them or control them while they are building because corruption is ever present. Nor is their a professional conscience, because they build quick to sell as quick as possible. Everyone has become a real-estate developer and any person whosoever has become a real-estate agent. It is enough for them to just sell words that can make you dream, because, from the time you make the purchase, your problems being. It is difficult to pay the loan and, moreover, to make the repairs, which never end. How can they allow themselves to speak of luxury when there are leaks on all the piping, the balconies are poorly waterproofed, the latex paint deteriorates before even moving in, the door hinges do not even stay fixed to the carpentry, the lifts fall down, the double-paned windows let in all the noise, the emergency stairs are not closed off and that is the least that can be said. It is time that the finger-pointer take up arms and, meanwhile, that the real-estate developers pay for their mistakes. This crisis needs to become a form of alarm for the purchasers, because honest money is earned through great sacrifices.
hicham askour laayoune Posted 2009-05-14
“Morocco’s Real-Estate Sector will resist the Global Economic Crisis” – On Saturday, in Lyon, France, the Minister of Housing, Urban Development and Regional Planning, Ahmed Taoufiq Hejira, said, “Morocco’s real-estate sector will resist the global economic crisis, which may affect it, but only to a slight degree.” In a declaration to Maghreb Arab Presse during the official inauguration of the first Moroccan real-estate forum “Maroc’Immo 2009” on 17-19 April, Mr Hejira said that even if Morocco cannot indefinitely remain unaffected by this crisis, the effects of which are beginning to be felt in some sectors, real estate will “remain standing”. “This financial crisis, which is raging, for the most part, in Europe, should not be a pretext for a lack of our (powerful) presence in all the real-estate forums we planned on organising on this continent,” he said, underlining that the best response to this difficult environment is to offer quality products adapted to the needs of Moroccans living abroad. To further underline that the latter have no advantage over Moroccans living domestically, he said the organisation of these forums are dedicated only to better inform them of the real-estate possibilities offered by public and private actors in the sector. In his introduction to “Maroc’Immo 2009” in Lyon, the Minister noted that this first occasion is one to be encouraged, explaining that this forum was part of a new generation of shows that cover specific regions (this one being Rhône-Alpes), and not the entire country, as the forums in Paris, Brussels and Amsterdam do. The Minister, who welcomed the number of registered attendees in his official inauguration of “Maroc’Immo 2009” in Lyon said that the popularity of the Moroccan product is a sign of boldness and confidence in Morocco’s potential in this promising. Further referring to his ministry’s excellent relationship with the Ministry of Moroccans Living Abroad, Hejira assured that the two ministries will spare no effort to offer all possible opportunities for the success of the forums planned for Paris, Amsterdam and London this summer with the mass participation of real-estate, bank, city agencies and related professional promoters. Built on an area of 150 square metres in the prestigious central convention centre in Lyon, “Maroc’Immo 2009”, which will provide coverage for all real-estate offers throughout Morocco, is dedicated to the Moroccan diaspora living in south-western France, to Moroccans living abroad in Switzerland and Italy and to Europeans wishing to invest in Morocco. All real-estate actors (promoters, banks, notaries and city agencies) will be represented in order to provide potential purchasers with solutions adapted to their need. Initiated the organisation “The Rhône-Alpes French-Moroccan Movement" ("Le Mouvement franco-marocain de Rhône-Alpes") and under the auspices of the Ministry of Housing, Urban Development and Regional Planning and the Ministry of Moroccans Living Abroad, in partnership with the mayor if Lyon and the regional council of Rabat-Salé –Zemmou-Zaer and Attijariwafabank Bank, this forum has as its ambition the promotion of the Moroccan real-estate market as a whole. The inauguration of “Maroc’Immo 2009” was held in the presence of, most notably, the Secretary General of the Ministry of Moroccan Living Abroad, Mohamed Bernoussi; the Deputy Mayor of Lyon Delegated to Special Events, Youth and Community Life, Najat Belkacem; the regional president of Rabat-Salé-Zemmou-Zaer, Abdelkebir Berkia. The Consul General of Morocco in Lyon, Mohamed Bentaja and the Deputy Mayor of Lyon Delegated to International Relations, European Affairs and Tourism, Jean-Michel Daclin, and the Secretary General of the Progress and Socialism Party (PPS) Ismail Alaoui, also took part in this ceremony.
elmahdi oummih Posted 2009-05-17
The Real Estate Market is on the verge of absolute collapse. The fact that you get so many ministers into one room to participate in a big lie is even more proof that there is disaster on the horizon. Remittances from abroad registered their steepest % drop last month; There are less tourists coming to Morocco this year than last year. More importantly, the amount of income expected to be spent by the tourists that are coming is expected to be dramatically less too. The Moroccan x-pats who would normally be coming to Morocco on Vaction cannot afford to do so, or have chosen to go to more hospitable, and affordable vacation spots like Tahiti, Jamaica or Hungary. The dollar is much stronger at these destinations and even airfare much cheaper and better comparitavely speaking. This is not to say that Moroccans will not be coming back to Morocco from abroad. Many Moroccans will be coming to Morocco for two reasons: 1. They have lost their jobs abroad and are looking to stay with family in Morocco until things improve again in Europe/America/Canada. 2. They are coming back to sell real estate that has become a noose around their neck. Those who currently live in Europe and North America want to get rid of what they own in Morocco and buy in the US. In the US, you can buy a nice house, in a nice neigborhood for 100 to 200 thousand dollars. In Morocco, people bought apartments for that kind of money a couple of years ago and they are desperate to sell and free up their capital to buy in places where they can actually make a real return on investment. Look to see a dramatic drop in Real Estate values near the middle of August, and a 25% drop in values by the end of this year. This will be accompanied by a dramatic increase in unemployment and crime.
abderrahman Posted 2009-07-09
Listen, my dear friends, I just spent a few weeks in Morocco around 28 June 2009 and I spent a few days in Marrakesh. I will have you know that the price of apartments has dropped by somewhere between 30 to 50%. I just visited a few apartment that last year cost 3 million dirhams and now cost 1.7 million. The real estate developers are hoping to find buyers by any means possible. It is sure that the real estate bubble is beginning to pop. Just you wait. You are going to see worse in Morocco. Moreover, there were not many tourists or expats there.
غربى Posted 2009-08-30
Certainly there is a chaos in the real estate market in Morocco.
Simohamed Posted 2009-09-07
I think Casa and Rabat Bubbles would burst by the end of Summer 2010....
Dounia Posted 2009-09-25
I am an American hoping to settle in Morocco, either in the rural RIF mountains or near the sand dunes at Merzouga. I've been quoted approx. 5-6,000 euros for a plot of land 200 x 400 meters next to the sand dunes. Can anyone tell me how close to a "real" price I should pay for rural land in the RIF or near the Merzouga sand dunes? I'm lost here. Thank you! 25/09/2009
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