Investment Factors in Morocco

Professional investors consider Morocco as one of the best parts of the world to invest money buying properties. The price of land in some areas has trebled over the last five years and the property system is similar to that of the UK and Ireland, where foreigners are able to buy property without restrictions. Favourable taxation for foreign investors including double taxation agreements exist meaning Capital Gains Tax is only paid once, low Capital Gains Tax with no CGT payable if the property is kept for 10 years and exemption from Inheritance Tax if property is left to a family member. Morocco is considered a secure investment – many developers offer building guarantees and resorts that form part of the “Plan Azur” are government backed. Increase in tourism figures will ensure properties offer excellent rental potential. Facilities are superb with professional golf courses, fine beaches and water sports attracting tourists. Morocco offers an abundance of varying environments, from the cultural hubs of Marrakech, Casablanca, Fes and Tangiers to the virgin coastlines along both the Atlantic and the Mediterranean seas for investors looking for more relaxed, beach orientated living.

In 1999, Prince Sidi Mohammed was declared King of Morocco. After his enthronement, the King revealed his ambitious development plans for the country. In 2001, the Moroccan government presented Vision 2010 as Morocco 's national tourism strategy. The main objectives were to attract five times as many visitors in 2010 as in 2002 and to create 600,000 new jobs in the tourist sector.

Due to the envolvement of King Mohammed VI in the development of the coastal resorts, many of the resort developers are restricted to building a maximum of 3 story buildings within the resort. This is to ensure that the coastline does not become overdeveloped like some parts of the Spanish coastline and locations like Sunny Beach Bulgaria.

Morocco’s Vision 2010, the country’s tourism development plan initiated in 2001, was translated into a framework agreement between the government and the country’s leading sector players, with a set of key objectives, including increasing the number of visitors by 15% each year to reach 10 million visitors by 2010, adding 160,000 new beds, creating 600,000 new jobs in the sector and increasing tourism revenues fourfold.

The Plan Azur is a key component of this endeavour. Six new generation coastal resorts are encompassed by the plan which will bring the country to achieving it’s beach tourism potential while also enhancing the culture of the country. It is noted as an “intelligent” tourism offer.

Morocco signed an Open Skies agreement with the United States in 2002, with the EU in December 2005 and is in talks discussing an Open Skies policy with Libya, Tunisia, Algeria and Mauritania. Ministers from the five-member Arab Maghreb Union (AMU) have set up a committee to examine Morocco's proposal for an "open skies" deal and estimates are that air transport in the region will be liberalised by 2008. These “Open Skies” agreements are expected to boost tourist arrivals by 1 million per year from 2005 to 2010.

With the growth in economy and the development in the tourist sector, viewed as a premium option for real estate investors.

Morocco has a stable economy with continuous growth over the past half-a-century and has signed Free Trade Agreements with the United States of America and the European Union. The agreement with the United States has been ratified on July 22, 2004 in the United States Senate, by a vote of 85 to 13, while the agreement with the EU is to take effect by 2010. Why Invest in Morocco?
Not only for the well known benefits of the country, but also because returns on investment are excellent, investors have realized of the potential of these country. Some of the reasons to underline the investment in this part of the world could be:

Low cost of living - experience a luxury lifestyle at little expense
Property prices lower than other European resorts at similar travelling distance (aka Spain, France)
Emerging market: Booming property market has captured the attention of savvy investors
Up to 20% tax on any capital gains
0% Inheritance tax to family
No annual property tax for first 5 years
70% mortgages available; mortgage market set to transform as more projects come to completion.
Vision 2010 and Azur Plan, backed by King Mohammed VI and the UAE.
Open Skies policy is ushering in low-cost European carriers.
Increased tourism generated by the Azur Plan projects will create huge requirement for rental accommodation
Growth: Expect excellent capital growth for early investors & guaranteed rental incomes on some resorts
Safe investment – Notary supervised property registration similar to France & Spain ; Free Hold readily available.

Risks Assessment
The highest return on investment ratio involves selling the property prior to completion as the capital invested is much smaller, however the risk is also higher as the investor is relying on finding a buyer for the property within a short amount of time.

To determine the correct purchase, the investor should take into consideration all and any factors which will influence the demand for property within the timeframe that their strategy dictates, to be able to assess the risk associated with the development they are considering. Key factors to consider is the increase or decrease of permanent and temporary residents in the area as well as the increasing or decreasing amount of tourists visiting the region. Local infrastructure, facilities available on site and increase of employment opportunities in the region will also dictate how easily the property will be resold or rented in the interim. As always with real estate investments, holding on until the perfect time to sell is an absolute necessity.

Return
Capital appreciation in Morocco is in constant movement with most experts pointing to an average of 15% to 30% per annum and with rental returns of between 5% and 8% per annum. Generally, developers sell the initial units in their developments at undervalued prices to generate cash flow to finance the remainder of the development. Once a certain number of sales has been achieved, the prices for the remaining units are increased substantially. This is one of the main reasons that early investors are able to achieve maximum return on their investments.

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