Buying Property in Morocco - A guide to real estate Investment in Morocco
Demographics and Economic Overview
Demographics:
Population: 33,241,259 (July 2006 est.)
Age structure:
0-14 years: 31.6 (male 5,343,976; female 5,145,019)
15-64 years: 67.3% (male 10,505,018; female 10,580,599)
65 years and over: 6.7% (male 725,116; female 941,531) (2006 est.)
Population growth rate: 1.55% (2006 est.)
Birth rate: 21.98 births/1,000 population (2002 est.)
Death rate: 5.58 deaths/1,000 population (2002 est.)
Ethnic Groups: Berbers 45% (of which Arabized 24%), Arab 44%, Moors 10%, other 1%
Economic Overview
According to the African Development Bank, the GDP of Morocco accounts for 7% of the African continent.[11] Morocco is the fifth economic power of Africa with an annual GDP of $152 billion, after South Africa, Egypt, Algeria and Nigeria.
Morocco’s largest industry is the mining of phosphates. Its second largest source of income is from nationals living abroad who transfer money to relatives living in Morocco. The country’s third largest source of revenue is tourism.
Morocco has signed Free Trade Agreements with the European Union (to take effect 2010) and the United States of America. The United States Senate approved by a vote of 85 to 13, on July 22, 2004, the US-Morocco Free Trade Agreement, which will allow for 98% of the two-way trade of consumer and industrial products to be without tariffs. The agreement entered into force in January 2006.
GDP growth
Morocco is a fairly stable economy with continuous growth over the past half-a-century. Current GDP per capita grew 47% in the Sixties reaching a peak growth of 274% in the Seventies. However this proved unsustainable and growth scaled back sharply to just 8.2% in the Eighties and 8.9% in the Nineties.
This is a chart of trend of gross domestic product of Morocco at market prices estimated by the International Monetary Fund with figures in millions of Moroccan Dirhams.
Year Gross Domestic Product US Dollar Exchange Inflation Index (2000=100)
1980 74,090 3.93 Dirhams 33
1985 129,507 10.06 Dirhams 53
1990 212,819 8.24 Dirhams 67
1995 281,702 8.54 Dirhams 91
2000 354,208 10.62 Dirhams 100
2005 460,855 8.86 Dirhams 107
2006 503,714 8.72 Dirhams 72
Macroeconomic stability coupled with relatively slow economic growth characterize the Moroccan economy over the past several years. The present government has introduced a number of important economic reforms.
Inflation
Through a foreign exchange rate anchor and well-managed monetary policy, Morocco has held inflation rates to industrial country levels over the past decade. Inflation in 2000 and 2001 were below 2% and as little as 2.8% in 2006.
Interest rates
The interest rates available are fixed or variable and the current lowest rate is below 6%
Unemployment
Morocco’s unemployment rate is 7.7% currently.
Budget deficit
Despite criticism among exporters that the dirham has become badly overvalued, the current account deficit remains modest. Foreign exchange reserves are strong, with more than $7 billion in reserves at the end of 2001. The combination of strong foreign exchange reserves and active external debt management gives Morocco the capacity to service its debt. Current external debt stands at about $19 billion.
Currency
The Dirham is the currency of Morocco. Since the early 1980s the Moroccan government has pursued an economic program towards stable, sustainable growth with the support of the International Monetary Fund, the World Bank, and the Paris Club of creditors. The country’s currency, the dirham, is now fully convertible for current account transactions; reforms of the financial sector have been implemented; and state enterprises are being privatized.
IMF
The IMF’s Deputy Managing Director, Murilo Portugal had this to say in April 2007:
“Morocco’s strong economic performance clearly demonstrates that the country is reaping the rewards from the reforms it has put in place during the last decade. Per-capita income has been rising steadily since the beginning of the century, nonagricultural growth is taking off, the external position is comfortable, and macroeconomic stability has strengthened. The key challenge for Morocco is to sustain and improve upon its good economic performance to further reduce unemployment and ensure that growth benefits all.
“The authorities have already strengthened their efforts to eliminate the remaining impediments to growth. The recent improvement in the public finance position is particularly encouraging in that regard. The success of the early retirement program for civil servants has significantly reduced the public wage bill as a share of GDP, which had been high by international standards. Replacing oil and fuel subsidies with targeted spending toward vulnerable groups would increase the efficiency of social spending and provide further fiscal flexibility. Tax reform is also a priority, and the reduction of the top marginal income tax rate is a good step forward. Ensuring that the tax burden is fairly shared by all through further measures is important to accelerate investment and growth.
“Morocco has also achieved significant progress in other key areas for growth. The banking sector has significantly strengthened in the last few years, and the recent pick-up in certain categories of credit—particularly in real estate—is a sign that recent measures to enhance financial intermediation are beginning to bear fruit. Pursuing efforts in this area is important to further improve financing conditions for small and medium-sized enterprises.
Trade/current accounts
Over the past several decades, Morocco has relied more and more on imports, and has maintained a steady trade balance as a result. The value of imports in 1999 was estimated US$12.2 billion, but exports were estimated to be only US$7.6 billion in 2000. Capital goods (industrial and semi-finished products) account for well more than half of Morocco’s imports, followed by food and beverages, consumer goods, and fuel. Morocco’s export base is diversified, with phosphates and phosphate byproducts being the largest contributor, accounting for one-third of exports. Textiles and leather items come in second place, followed by fish and fish products.
Morocco exports and imports most of its goods from the European Union, with France being its largest trade partner, providing one-fifth of total imports and accounting for one-quarter of exports. Spain comes in second place, followed by the United States, Italy, and Saudi Arabia. Morocco initialed a free-trade accord with the European Free Trade Association in 1997, which stipulates the elimination of trade barriers in industrial goods by 2010.
The substantial and growing trade imbalance that Morocco endured over the years has been partially offset by tourist spending and monies sent home by Moroccans working abroad. Morocco is a member of the World Trade Organization, which has stipulated that tariffs on goods be lifted. The government has moved to gradually reform the trade sector and remove barriers to export by approving a new foreign trade law that minimizes the state’s role in the export of goods and that liberalizes import practices.
Politics
Morocco’s history after independence and in the beginning of the reign of Hassan II was marked by the period of political tensions between the monarchy and opposition parties. Those years of tension are labelled by the opposition as the Years of Lead. Politically motivated persecutions were common especially when Gen. Oufkir became responsible for home security. However, during the last decade of the rule of King Hassan II and especially under the reign of Mohammed VI, and with the launch of Equity and Reconciliation Commission (IER) to investigate into the abuses committed in the name of the state, Morocco is trying to make reparations to the victims. Many new laws and codes concerning all aspects of life are being launched. The most notable event was the creation of the Mudawana — a family code which was the first unique initiative of its kind in the Arab and Muslim world. The code gives women more rights.
External relations
Morocco maintains close relations with the European Union, especially the former colonial rulers, France and Spain.
It also has close and long-standing ties with the United States. The city of Tangier contains the American Legation, which is the first foreign property ever purchased by the US government. The Moroccan-American Treaty of Friendship was negotiated in 1786-1787 and was the first treaty between the US and any African, Arab, or Muslim foreign power
It is a member of the United Nations and belongs to the Arab League, Arab Maghreb Union (UMA), Organization of the Islamic Conference (OIC), and the Non-Aligned Movement. Current King Mohamed VI is the chairman of the OIC’s Al-Qods (Jerusalem) committee.
Morocco is quite active in Maghreb, Arab, and African affairs. Although no longer a member of the OAU (Organisation of African Unity), Morocco remains involved in developing the regional economy, as the city of Casablanca contains North Africa’s busiest port and serves as the country’s economic center. There are significant ties with West African and Sahel countries.
It supports the search for peace in the Middle East, encouraging Israeli-Palestinian negotiations and urging moderation on both sides. In 1986, then King Hassan II took the daring step of inviting then-Israeli Prime Minister Shimon Peres for talks, becoming only the second Arab leader to host an Israeli leader. Following the September 1993 signing of the Israeli-Palestinian Declaration of Principles, Morocco accelerated its economic ties and political contacts with Israel. In September 1994, Morocco and Israel announced the opening of bilateral liaison offices. These offices were closed in 2000 following sustained Israeli-Palestinian violence.
Morocco maintains close relations with Saudi Arabia and the Persian Gulf states, which have provided Morocco with substantial amounts of financial assistance. Morocco was the first Arab state to condemn Iraq’s invasion of Kuwait and sent troops to help defend Saudi Arabia. Morocco also was among the first Arab and Islamic states to denounce the September 11, 2001 Terrorist Attacks in the United States and declare solidarity with the American people in the war against terrorism. It has contributed to UN peacekeeping efforts on the continent. In recognition of its support for the War on Terrorism, in June 2004 U.S. President George W. Bush designated Morocco as a major non-NATO ally.
Tourism
Tourism has become increasingly important to Morocco’s economy, with more than 2 million tourists visiting the country each year. Tourist complexes have been built along the coast, and large new hotels have sprung up in Fès, Marrakech, and other popular tourist destinations. Agadir is the chief coastal resort.
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Overview
Morocco’s entry as a real estate investment destination has been a fairly recent one. The Vision 2010 program with King Mohammed’s modern outlook is spearheading the drive to make Morocco one of the top tourism and investment destinations in the African continent. The Moroccan government has also tied up with various large scale developers in the UAE and abroad to make their vision a reality.
Included in this ambitious plan is the development of infrastructure - with the construction of new highways, the increase of telecommunications, electricity, banking, insurances along with improvements in education and health care. Apart from this, the Plan Azur is a new initiative by the Moroccan government that has earmarked 6 key areas within Morocco whose primary goal is to develop luxury resort projects to attract large scale foreign tourism.
Some sizable investments are coming into these resorts from UAE developers. During a visit by the President to Morocco, plans were announced for the construction by the UAE of a state-of-the-art hospital. A UAE-backed venture for a residential and tourist complex was also announced.
Emaar, the largest developer in the world, have invested over ADE 25.3bn in six world class real estate projects in Morocco. It’s latest offering, Tinja, was said to have been launched recently at an investor ceremony with its public offering slated to be released very soon.
With so much happening in the country and developments and investments pouring into Morocco from various sources, coverage of information and relevant news has been scant to say the least.
