Earlier this year, the Moroccan Central Bank (Bank Al-Maghrib) introduced the gradual floatation of the Moroccan dirham, providing more flexibility to real estate investors and paving the way for a more buoyant real estate market in the year ahead. According to JLL’s Morocco 2018 report, the bank's move now allows the dirham to fluctuate up to 5 percent, with a maximum daily move of 2.5 percent above or below the official rate.
As part of a broader monetary reform, this move is intended to bolster the competitiveness of Morocco’s economy and could position the country as a regional economic hub.
As a gateway location between Europe and Africa, Morocco has attracted a number of major international manufacturers investing in key industrial areas. The government launched an industrial acceleration program in 2014, designed to generate half a million jobs in the industrial sector. In turn, this is expected to improve Morocco’s overall GDP, and can also provide further opportunities for real estate developers and investors.
Economic Growth
According to the report, the Moroccan economy is expected to record real growth of 4 percent in 2018, primarily driven by increased domestic consumption and public investment. The economy has attracted increased levels of FDI yearly since 2005 (with the exception of 2015) with real estate attracting around half of the total FDI.
The significant increase in FDI aligns with the Moroccan government’s Vision 2020, outlining Morocco’s goals of becoming one of the world’s 20 leading tourist destinations by 2020. Almost 40 percent of foreign investment is from the GCC region, with a significant proportion of this total being invested into the real estate sector.
“The reforms introduced by the Moroccan government, will have a ripple effect on the real estate sector, as investors across all sectors now have the opportunity to be more flexible in their decision making,” Craig Plumb, head of research, JLL MENA, said in a statement. “If the currency softens against the [U.S. dollar] and the euro, this will effectively make Moroccan property cheaper for investors from markets denominated in these currencies and attract further FDI into the real estate sector across Morocco and most specifically into Casablanca.”
REIT Benefits
Another factor likely to result in additional investment into the real estate sector is the launch of REITs. These trusts may reduce the level of investment required to own real estate and therefore expand the market to a wider range of investors.
Although there are no listed REITs on the Moroccan stock exchange as of yet, the merger of VLV and Petra in 2017 resulted in the creation of a new commercial real estate platform with 27 assets across 15 cities in Morocco.
Grit real estate income group (previously known as Mara Delta) has also announced plans to list its Moroccan assets separately as a REIT (with Anfa Place as a prime asset in its portfolio).
“REITs will boost the demand for investment in the office market,” Plumb said. “Casablanca is Morocco’s main commercial center, and has a significantly bigger office market than the capital Rabat. With many national and international companies located in the city there is a growing need for modern office space in Casablanca.”
Casablanca’s hospitality market is largely dependent on business travelers, and has relatively limited hotels in the luxury segment. Occupancy rates went from 62 percent in 2016 to 66 percent in 2017, which JLL credits to the performance of the four-star hotel segment, catering to conferences and exhibitions.
“With the government’s Vision 2020 of converting Morocco into one of the world’s hottest tourist destinations by 2020, occupancy rates seem to be growing positively. We look forward to seeing strong results in the hospitality market this year as performance shows an upward trajectory,” Plumb said.