Morocco - Investment Strategies

Today Morocco offers an ideal investment climate for many reasons. Below is a detailed analysis of just what makes Morocco such an investment hotspot as well as information regarding the various strategies available to investors in Moroccan property.

General Factors

The national development strategy, named the ‘Plan Azur’, is designed to increase tourism numbers in Morocco from 2 million to 10 million by the year 2010. The Plan is structured to incorporate six ‘Kings Resorts’ which will be backed by the government, including multi-billion dollar foreign investment and significant advances in the national infrastructure.

Some of the world’s most substantial and well respected development companies have committed to the Moroccan national development programme and they will be releasing numerous projects of both a coastal and city nature over the next 24 months.

Construction within the Kings Resorts will be strictly low density, resulting in these resorts maintaining their exclusivity, thus avoiding the problem of oversupply. Furthermore, strict planning regulations in Morocco mean height restrictions in prime beach resorts. Early investors will benefit from owning property in the prime first line beach locations, before building takes place on second line developments.

On many projects, capital appreciation has seen price rises of around 1.5% to 2% per month (such as Le Jardin de Fleur), reinforcing annual growth estimates of around 20% per annum.

An ‘Open Skies’ policy means there is no restriction on the number of airlines permitted to negotiate landing rights to Morocco, meaning increased services and competitive air fares.

Economic Factors

According to the Moroccan Minister for Tourism, Mr Adil Douriri, since the launching of the Plan Azur, non-resident tourist numbers are continuously rising. It is expected the number of tourists having visited Morocco by the end of 2006 will already be 6.5 million, comparing overwhelmingly with a yearly average of just 2 million in 2002. Morocco indeed appears to be on course to achieve its target of 10 million tourists per annum by the year 2010.

As a result of the new construction and increased tourist activity via the ‘Plan Azur’, 600,000 new jobs will have been created for Moroccan citizens by the end of 2010. Meanwhile, Morocco will have increased hotel capacity by a further 160,000 beds.

A World Bank report in July 2006, titled “Doing Business 2007”, highlighted Morocco’s simplification of business regulations, strengthening of property rights, easing of tax burdens, increased access to credit, and reduction in import and export costs. The report illustrates how committed Morocco is to economic reform within every economic sector, not just tourism.

Foreign investments in Morocco reached MAD 20.2 billion by May 2006. The main origins of this investment are the Middle East, France, Spain and the US.

According to the International Monetary Fund, Morocco is currently Africa’s fourth largest economy and stands at number 58 in the global list, based on Gross Domestic Product (GDP). Moroccan inflation at year ending 2005 was a manageable 2.1%, while unemployment remained high at 10%. The contribution of tourism to the GDP is today predicted to rise annually by 8.5%, bringing it to around 20% by the year 2010.

Political Factors

Morocco is governed by a Constitutional Monarchy. King Mohammed VI is the Head of State, having been crowned in 1999. The Constitution guarantees a multi-party system and at present 29 parties are represented in the National Chamber of Representatives. Prime Minister Abderrahmane Youssoufi has been in office since March 1998 after successfully campaigning for re-election in 2002.

As King Mohamed VI’s first general election since his coronation, the poll of 2002 was considered to be the first free and fair campaign since Morocco’s independence from France in 1956. The results confirmed a broad coalition, with the Union Socialiste des Forces Populaires (USFP – Socialist Union of Popular Forces) and the conservative Istiqlal as the major parties.

Since his coronation in 1999, King Mohammed VI has been keen to build a stronger relationship with his citizens in the north of the country, which was largely ignored by his predecessor and father; King Hasan II. This priority had a large bearing on where would be awarded the site for the very first ‘Kings Resort’, and hence Saidia in the NorthEast won the honour.

The legal system in Morocco is based on Islamic law and incorporates the French and Spanish civil law system, making it a modern and familiar system to many investors. The judicial review of legislative acts takes place in the Constitutional Chamber of the Supreme Court.

Morocco has occupied the territory of Western Sahara since 1975, in violation of UN Security Council resolutions and the International Court of Justice. The future for this region is therefore unclear, although a ceasefire in hostilities between Morocco and native forces has been in effect since 1991. It is recommended that full consideration is given to this political situation when considering investments in this particular area of Morocco, although the rest of the country is completely unaffected.

Morocco is an active participant in the ENP (European Neighbourhood Policy), which King Mohamed hopes will be instrumental in obtaining a ‘special status’ relationship with the European Union. An action plan to this end was completed in July 2005 and confirms Morocco’s firm intent to increase ties with the EU.

Natural Factors

Southern Morocco basks in a year-round hot, dry climate and borders the Sahara Desert. Southern destinations such as Marrakech and Agadir enjoy average temperatures of 21ºC in winter months and a searing 38ºc during in the summer. Meanwhile, average winter temperatures in the north around Tangiers and Oujda are around 18ºC, with summer averages of 30ºC.

The coastal plains are rich and fertile and therefore form the backbone for agriculture in Morocco. The majority of the country’s interior is mountainous, including the beautiful Atlas Mountain range which is home to well-established ski resorts.

Morocco boasts 1,140 miles of Mediterranean and Atlantic coastline, most of which consists of sandy beaches. The sea temperature on the Mediterranian coast to the North is enhanced by the presence of many off-shore sand banks, giving the waters a much warmer feel than the nearby Med coast of Southern Spain for example. The waters of the Atlantic coast are more unsettled as you would expect, but offer fantastic surfing conditions and continue to have fantastic beaches.

Morocco’s geographic location means it is easily accessible from northern and central Europe (2.5 hours flight from the UK), and it is a relatively short transatlantic flight from the eastern United States.

Logistical Factors

The ‘Open Skies’ airline agreement is in place, in anticipation of the completion of the six new King’s Resorts and the inevitable increase in tourist numbers these will prompt. The agreement will open up all routes into Morocco, encouraging healthy competition between airlines and keeping air fares low for investors and tourists alike. In addition to Royal Air Maroc, the National flag carrier for Morocco, a selection other airlines will be operating to Morocco from Europe including:

  • Ryanair (UK, Ireland, Germany & France)
  • Easyjet (UK)
  • British Airways
  • Thompson Fly (UK)
  • Atlas Blue (UK, Belgium & France)
  • Jet4You (France & Belgium)
  • Air France
  • Air Berlin (Germany & Austria)
  • Lufthansa (Germany)
  • Hapag Lloyd Express (Germany)
  • Transavia (Netherlands)
  • JetairFly (Belgium)
  • Helvetic (Switzerland)
  • Binter Canarias (Spain, Canary Islands)
  • Iberia Airlines (Spain)

Infrastructure improvements include new roads currently being completed throughout Morocco, such as the Fez to Oujda road, which will link the North East with the rest of the country for the first time. In addition, the airports at Oujda and Nador are due to handle international flights, opening access to visitors wishing to fly to Morocco’s new Mediterranean resorts.

Short Term Investment Strategy

Key Opportunity

Morocco is widely considered to be one of the brightest emerging markets in the Northern Hemisphere.

Property development in the majority of areas is currently in its infancy, enabling early investment in prime locations before capital appreciation takes hold. Six government backed “Kings Resorts” are to be constructed by high profile multi-billion dollar companies. The first of these Kings Resorts at Mediterrania Saidia is now underway and includes a 15 year building embargo after completion, an outstanding hook for investors looking to protect their investment’s value and sustain exclusivity.

When purchasing off-plan property when a market is in its infancy, investors enjoy the lowest possible prices in prime locations. Prices on the Atlantic coast are even cheaper than those on the Mediterranean coast, as the Atlantic is considered to be up to two years behind in its development and as a result, the land is cheaper.

Capital appreciation is predicted to perform outstandingly well over the next 5 years, with conservative predictions of 20% per annum, subject to investment location.


Average construction time on Moroccan projects is 18 to 24 months.

A buy-to-flip strategy in Morocco could have a timescale of anything between 12 and 24 months from reservation date. On the majority of projects, 40% of the purchase price is required over the course of the first year, with nothing else to pay until completion, although the investor would possibly have exited by this point.

Level of Complexity

Short term strategies are attractive to investors in Morocco. They entail simple capital investment, with no need to purchase a contract or make finance arrangements. Additionally, there is no long term liability on the part of the investor and no ongoing property management or maintenance costs.

Administration fees are charged by the majority of developers to investors, when selling a unit prior to completion. These cover the re-assigning of contracts, which usually amount to around 1.5% of the sale price. Higher, variable administration fees are applicable if the developer sources the buyer for the investor.

Key Risks

It is important for the investor to be aware of how attractive a chosen property will be to buyers when there is so much other construction underway. The more outstanding the chosen property unit is, the lower the investment risk.

A unit needs to be in a prime location to attract the buyer, for example a corner unit on frontline beach or golf location, or perhaps a penthouse with outstanding views. A standard first floor unit with pool views will generally take longer to sell than a similar unit with beach or golf views.

Not only should the unit be well chosen, the prestige of the entire investment location will need to be examined. The King’s Resorts of Morocco and a limited number of other major projects completed by large developers such as Fadesa and Emaar, will be the most sought after locations in Morocco for years to come.

Competition is another critical factor. If there is a large volume of construction or existing properties at the investment location, investors will need to keep a watchful eye on the potential for oversupply.

Mediterrania Saidia offers the best short term investment conditions throughout Morocco at the present time. Prime units are already up for resale, having benefited from monthly appreciation of around 2% in many cases.

Investors should bear in mind when considering this short term strategy that Morocco is at present an investors’ market. The first major tourist facilities of the Plan Azur are not expected to be ready until approx 2010, which makes finding a buyer more difficult until this time. If a buyer is not found prior to completion of the property, the investor will need to be confident that the investment can be adapted and completion achieved.


Capital appreciation potential is at its highest level early in the investment market. As an emerging market of huge potential, Morocco currently offers the conditions necessary for early investment and high returns on investment.

Basing returns conservatively on 20% growth per annum, return on capital invested over a short period will be considerable. Depending on the investment location and amount, a capital return of over 50% could easily be achievable.

Please see the example below

  • A fully furnished unit is reserved with a value of €150,000
  • The investor pays a 20% deposit of €30,000 upon signing the purchase contract, plus expected legal costs at this point of €500.
  • The second 20% stage payment of €30,000 is paid when the developer breaks ground on the project, approximately 4 months after the initial deposit payment.
  • After year one of the investment, capital appreciation has realised at 20% for the year, and the property is now valued at €180,000.00
  • The investor decides to instigate an exit strategy after 18 months, with capital appreciation continuing to perform at 20% per annum, meaning the property is now valued at €198,000.
  • The investor finds a buyer for the property, and therefore minimises administration fees to 1.5% of the sale price, at €2,970.00.
  • Total capital invested €63,470.00.
  • Sale price €198,000
  • The €60,000 of capital invested is recouped and growth on the sale of the unit stands at €48,000.
  • The total profit realised in using this short term strategy is €44,530.00, a return of just over 70% inside 2 years.


This short term investment strategy is purely capital based. No finance arrangements can be made in Morocco until completion of the property, by which time the investor should already have made their exit of the investment on this strategy anyway.

However, it is suggested that ALL investors receive finance advice prior to proceeding with their investment in order to cover all possibilities. It is NEVER a guaranteed fact that a unit will sell exactly when required, so investors should be fully prepared to take on the necessary finance should this circumstance arise.


Taxation is subject to the declaration of gains in Morocco. There is no obligation to declare gains to the relevant tax authorities when conducting a short term flip strategy because until the property is completed and keys are handed over, this transaction is not considered to be a purchase.

Medium to Long Term Investment Strategy

Key Opportunity

Capital appreciation in Morocco is predicted to remain strong for at least the next 5 years as the results of Vision 2010 fully take effect.

Off-plan prices currently remain low, with development concentrated around prime locations such as frontline golf and beach. As time goes by, construction will move further from these prime positions, making later investments weaker due to their location. In general, the earlier the investment is taken on, the greater the capital appreciation an investor can realize.

At the ‘Kings Resort’ of Mediterrania Saidia there is a 15 YEAR BUILDING EMBARGO in operation in and around the resort after completion. This investment factor protects today’s investors against increased competition from new projects. Exclusivity on the resort will therefore be maintained, making units here highly desirable.

The Moroccan government’s ‘Plan Azur’ development programme aims to boost tourist visitors to 10 million by the year 2010. Excellent facilities will be on offer in and around all six Kings Resorts, including marinas, golf, commercial centers, etc. This is an important factor to remember when considering the best location for a Moroccan property investment.

There are multiple entry points within Morocco such as Marrakech, Casablanca, Tangiers, Fez, Agadir and Oujda, near Saidia. This is another positive factor when considering Morocco’s appeal to tourists and investors alike. Morocco is only 2.5 hours flight from the UK, Ireland and other parts of northern Europe, making property here viable for holiday makers and investors looking for a short-haul destination in which to purchase.

Finance for property in Morocco is available for 60% of the purchase price, at base rates of approx 5.5% interest.


Average construction time on Moroccan projects is 18 to 24 months. On the majority of projects, 40% of the purchase price is required over the course of the first year.

Over a 5 year investment period, while a maximum of 2 years is taken up by the construction schedule, the remaining 3 years is aimed at maximising income via rentals. Capital appreciation is set to have a positive effect over the full 5 year period and investors can expect appreciation to increase when projects such as Mediterranea Saidia are completed and demand for holiday homes dramatically increases.

It is beneficial for off-plan investors to seek a long completion timeframe, allowing maximum time for capital growth prior to completing the purchase. This will also allow facilities such as golf courses enough time to be constructed and allow investors to achieve immediate rental returns.

Level of Complexity

Although potential returns are much higher, there is far more to consider when beginning a 5 year investment plan than a short term strategy.

Finance information must be compiled prior to making a reservation, informing the investor on issues that could lower or increase their budget. In doing so, the investor has peace of mind that they are indeed eligible for finance upon completion.

Records should be kept of rental income and ongoing costs such as monthly mortgage repayments, although rental returns should cover much (if not all) of these payments. In addition, rental management will need to be organised. Any good project should be able to offer these facilities or confirm they will be in place upon completion.

A Moroccan bank account will need to be opened and maintained for funds generated in Morocco via rentals, as well as for mortgage payments and ongoing costs.

Full taxes and costs will need to be paid at various stages of the purchase process.

Key Risks

Longer term strategies are lower risk investments when compared to short term options, as they do not rely on finding a buyer within a short time frame. If the correct investment is made on a good quality, sought after project with multiple facilities, then establishing rentals and eventually a buyer for the investment should not be difficult.

The cheapest investment is not always the best investment in Morocco. There are many stand-alone projects at low prices but upon completion, investors in such projects run the risk of being overshadowed by the major Kings Resorts and other substantial purpose built tourist resorts. Investors must also consider the lack of bank guarantees when considering these smaller, independent developments and be sure that all paperwork is satisfactory before placing any monies.

On the first Kings Resort at Mediterranea Saidia, major household names are already committed to the project such as prestigious retail brands, hotel chains and large, globally recognised developers. Companies such as these always compile meticulous degrees of due-diligence, so wise investors tend to follow them.

Bank Guarantees are not a legal requirement in Morocco while only a couple of projects are covered. This should not put investors off Morocco as an investment destination, but simply highlights the need to conduct their research thoroughly and invest with only the most reputable projects and developers.

By appointing independent legal representation, investors can be sure that all necessary paperwork is in place prior to signing purchase contracts.


Based on conservative estimates, investment growth for property in Morocco is expected to be 20% per annum for a 2 to 3 year period.

Appreciation could either dip or grow at the end of the third year, depending on the investment location and market demand. By investing in one of the major resorts, investors can expect this figure to be either maintained or increased still further for the following 2 years.

Please see the example below *

  • A fully furnished unit is reserved for €150,000, plus 6% purchase costs
  • The investor pays 20% deposit upon signing the purchase contract (€30,000) plus expected legal costs at this point of €500.
  • The second stage payment of 20% is completed (€30,000) when the developer breaks ground on the project, approximately 4 months after the initial deposit payment.
  • After year one of the investment, capital appreciation has realised at 20% for the year, meaning the property is now valued at €180,000.00
  • The property is completed after a 24 month construction period, and the investor pays the outstanding 60% balance.
  • Upon completion, the investor also settles all remaining costs of purchase, such as notary fees, stamp duty, remaining legal fees, etc. The final figure is €9,000 which represents 6% of the purchase cost. €500 had already been paid up front, leaving €8,500 to be paid.
  • Two years after the initial reservation, capital growth has continued at 20% per annum, and the unit now has a value of €216,000.
  • The investor decides to rent the unit to tourists, via on-site rental management services which charge approximately 15% of rental return.
  • All rental monies go towards ongoing costs such as maintenance fees, finance repayments if applicable, utility bills and general upkeep.
  • Capital appreciation remains at 20% for the following 3 years, giving the investor a valuation of €373,248.00
  • After 5 years, the investor decides to exit the investment and finds a buyer.
  • Including all costs, the total return on investment after 5 years is €214,248.00

* This is a simple example without taking potential finance arrangements/costs and rental returns into consideration. Property purchase tax (TVA) has been included in the price of the unit on this occasion, as is normally the case with good projects in Morocco.


Finance is available in Morocco for property investment at the time of completion. Interest rates are approximately 5.5%, with 60% loan to value available to investors. It is always recommended that finance is taken out to avoid tying up too much capital in one investment as greater returns can always be generated by spreading investment capital across multiple units, be it in the same market or elsewhere.

It is suggested that ALL investors receive finance advice before proceeding with their investment in order to cover all possibilities. Based on finance advice, the investor may then decide to alter the purchase criteria if more or less monies are available than previously expected.


Property purchase tax in Morocco (TVA) is high at 14% of the purchase price. Although many developers include TVA in the price of the unit, this tax should always be taken into consideration when searching for potential investments.

Capital Gains in Morocco are structured to encourage longer term investment. Any investment exited in under 5 years is subject to 20% tax on the total gain. After 5 years, gains are taxed at 10% and any investment still ongoing after 10 years is exempt of Capital Gains Tax all together.

Finer taxation details vary between different regions. For example, an investor in Tangiers would be subject to the local council taxation whereas those at Mediterrania Saidia are subject to specific Saidia and Oujda terms.

It is recommended that all investors receive advice from their finance and/or legal advisors when making their reservation for any property investment strategy in Morocco.

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