Morocco- Housing Investment Landscapes
Introduction:
The formal housing sector in Morocco has changed significantly over the past 10 years, becoming attractive to international investors and local developers. With its economy developing and diversifying, the country’s need for housing translated into actual demand for housing. At the same time, Morocco was becoming more urban and its average household size was decreasing, which meant that the need for new housing units was growing faster than the total population. To support the production and improvement of housing, the Government of Morocco implemented numerous measures, several of which are still ongoing and represent an improvement to the housing investment environment. One of them is “villes sans bidonvilles” or “cities without slums”, a national programme that started in 2004 and aimed at eliminating slums from all Moroccan cities.
By May 2018, the programme had improved the living conditions of more than 277 583 households through in-situ upgrading or resettlement into apartment units or serviced plots of land. Fifty-nine cities have so far been declared “without slums”. The Government of Morocco has invested MAD 10 billion (approximately US$1.1-billion) 2in this programme, whose total cost so far is MAD 32 billion (approximately US$3.4 billion), in addition to the provision of land, as an in-kind subsidy that is usually transferred to the households through developers, both private and Government-owned. Another major component of government intervention in the housing sector is all the incentives granted to developers and landlords of affordable housing, commonly called social housing. The most notable of these interventions was enacted in the 2010 Finance Act. It grants significant tax exemptions (see Table 1) to any developer, private or government-owned, national or international, who builds at least 500 units of social housing over a maximum of five years.
Local institutional investors:
Capital markets:
The Casablanca stock exchange (Bourse de Casablanca) is one of the largest capital markets in Africa. While it has performed well in recent years, particularly in 2016 and 2017, its development has been slow, with few new listings. In 2016, the law was amended to help boost the stock exchange by encouraging the listing of smaller companies and, therefore, more initial public offerings, and creating exchange-traded funds and other new products. More reforms are expected over the coming years, including the creation of a clearing house for a local futures market.
Pension Funds:
Caisse de Dépôt et de Gestion (CDG) is the main pension fund in Morocco since 1959. It manages MAD 112.68 billion (US$11.899 billion) of savings. Between 2011 and 2015, CDG invested a total of MAD 45 billion17 (approximately US$4.8 billion) in different sectors. CDG group is active in the real estate development sector through several subsidiaries under the CDG développement umbrella : CGI, Dyar Al Madina, Dyar Al Mansour, Jnane Saïss Développement, SAPST (Société d’Aménagement et de Promotion de la Station de Taghazout), SAZ (Société d’Aménagement Zenata), Agence d’Urbanisation et de Développement d’Anfa, SONADAC (Société Nationale d’Aménagement Communal), Patrilog, Oued Chbika Développement, and SDS (Société de Développement Saïdia).
Local Housing investment schemes:
Housing in Morocco is a popular way to save and invest. Investment, however, does not always occur in an organised manner. Often, individuals will buy or build housing units and put them on the market for lease or leave them unoccupied until they appreciate in value. This puts the burden of managing the investment property on the individuals. It also exposes them to high risk as the value of their investment is linked to that of one or a few properties only.
DFI investment in finance and housing:
Although still present in the housing sector, DFIs started intervening in the sector more indirectly over the last years, through support to SME development (including construction), banking and microfinance, and investment funds. Recent examples of DFI investment in the financial sector include:
– A 2007 AFD credit line to a microfinance institution to support the provision of housing loans.
– A 2013 European Investment loan to FONDEP (a microfinance institution) to support its development.
– Three African Development Bank loans (between 2011 and 2014) to support the development of the financial sector (PADESFI).
– A 2014 European Bank for Reconstruction and Development (EBRD) grant to support the regulatory framework for the transactions of derivatives.
Conclusion:
Housing needs in Morocco are estimated at 1 573 000 units. The market overall is still undersupplied in spite of the development of large real estate development companies. Land registration in Morocco has progressed significantly and titles are considered secure enough by banks and other players.
Additionally, access to credit in Morocco is relatively well developed and offtake is only an issue at the bottom of the pyramid where the constraint is more one of affordability (irrespective of access to finance).