Morocco - Investment Rationale

Morocco is a richly diverse country with something to suit all tastes; from the majestic Atlas Mountains and vibrant souks, to miles of stunning coastline and historic imperial cities. Since the 1970’s, Morocco has been a fashionable retreat for the rich and famous and has attracted real estate investment from such names such as Yves Saint Laurent, Malcolm Forbes and Richard Branson.

In recent times a new generation of investors and holidaymakers have begun to head to Morocco and the country now has significant opportunities for the astute property investor.

"Vision 2010" and "Plan Azur"

King Mohammed VI came to the throne in 1999 and, in conjunction with the Moroccan government, has since implemented a programme of progressive policies aimed at improving the social and economic outlook of the country:

• In 2001, he instigated his ambitious "Vision 2010" initiative which aims to attract 10 million visitors per year to Morocco by the year 2010. There has already been massive investment in improving infrastructure with new motorways and airports under construction plus existing facilities being upgraded. Visitor numbers are showing significant year on year increases as the efforts of the early stages of the programme begin to come to fruition (official visitor numbers have more than doubled since the initiative was launched from around 3.5 million in 2001 to 7.5 million in 2007).
• In conjunction with "Vision 2010", the Moroccan government also announced the "Plan Azur" which sets out to develop 6 state-of-the-art coastal resorts in partnership with some of the world’s biggest property developers. New marinas, golf courses, hotels and commercial zones are all part of this initiative. The first of these mega-resorts is due to open later this year on the Mediterranean coast with 5 more planned along the Atlantic coastline.

Major Foreign Investment

To achieve its ambitious growth plans, the Moroccan government is actively encouraging foreign investment through banking reforms and trade liberalisation. Foreign Direct Investment has growth from around US$500million a few years ago to over US$4.5billion last year. As such, billions of dollars worth of foreign investment has already been allocated toward new projects with plenty more in the pipeline:

• Emaar Properties (the world’s biggest property developer) have pledged billions of dollars toward construction of 5 new developments in Morocco including a winter sports resort in the Atlas Mountains.
• Kerzner International (developers of Sun City casino-resort in South Africa plus owners of the Atlantis and One&Only hotel brands) are the major force behind the "Mazagan" casino-resort in Azemmour near Casablanca.
• Colony Capital (US real estate investment company) recently won the tender for another ‘Plan Azur’ site near Agadir and have pledged to invest over US$1bn in the resort.
• A variety of multinational companies including Renault, Vivendi, Nokia and Dell are currently investing into Morocco and see it as a base for future expansion into Africa and the Middle East.

The Gateway between Europe and Africa

"Morocco is a tree with its roots in Africa and its branches in Europe" - H.M. King HassanII, (1921-1999)

• Until independence in 1956, Morocco had been a French protectorate (with parts under Spanish control). As a result, most of its legal systems are based on French law and French is the standard language of business.
• Tangier in northern Morocco can be reached in only 30 minutes by ferry from Spain and plans are under way over the construction of a tunnel to link Spain to Morocco under the Straits of Gibraltar.
• Morocco is only 3 hours flying time from London and there is no time difference between UK and Morocco for much of the year (1 hour in summertime).
• In 2006, Morocco signed an ‘open skies’ agreement with the EU. There are now airlines from all over Europe and beyond with new routes into Morocco.

Morocco and the "Credit Crunch"

Morocco has been largely insulated from the ongoing turmoil in international credit markets. This is down to a stable and well regulated financial sector which has little exposure to foreign institutions and funds affected by toxic debt.

• A World Bank report found that the Moroccan banking sector was generally strong and resistant to external shocks due to sound macroeconomic policy and a conservative approach to external investment.
• With confirmed GDP growth of 5.8% for 2008 and estimates of further growth for 2009 by the IMF, Morocco is set to outperform many developed nations which are predicted to have shrinking GDP's during the same period.
• There is no issue with liquidity among Moroccan banks and in fact commercial and mortgage loan lending is on the increase as the financial sector continues to open up.
• Domestic demand for property (especially at the mid and low levels) is continuing to far outstrip supply and as a result average property and land prices are continuing to rise in Morocco.
• Unemployment continues to fall due mostly to growth of the tourism and construction sectors.

Tax Regime Sympathetic to Investors

The Moroccan government has implemented a number of changes to the taxation regime to make investing in Moroccan property attractive to overseas buyers.

• 5 year exemption on annual property tax.
• 5 year exemption on payment of income tax for rental income.
• 0% inheritance tax.
• Exemption from capital gains tax for any property held for longer than 10 years (50% reduction for properties held over 5 years).
• There is a double taxation treaty in place between the UK and Morocco, so where tax is payable you'll only pay it once.
• No restriction on repatriation of funds that have come from abroad.