The Real Estate Market is Slowing
Statistics and other collected data paint a very clear picture and the only conclusion which can be made is that the property market in Morocco is slowing. This is widely blamed on the slowing Moroccan economy and because of the unrelenting pressure of the slowing economy house prices are steadily falling all across Morocco. The result is that there are considerably fewer real estate transactions and this, in turn, is resulting in a significantly smaller mortgage market. In 2019 house prices decreased by 1.4% while there was a 0.5% decrease in the prices of apartments. But the prices of villas have decreased by 3.5% clearly indicating that fewer people have the financial means to purchase such properties. There was a 3.5% increase in properties in Rabat in 2018 but this was immediately followed by a decrease of 1.5% in 2019. There was a 0.4% decrease in the properties in Casablanca as well as a 0.2% decrease in prices in Marrakesh.
A shrinking demand
Because of the slower economy, there was a substantially smaller demand for properties and in fact, there was a 10.5% decrease in the number of transactions involving residential properties. This statistic is even more significant when one considers the 16% increase one year earlier. In 2017 the economy has grown by 4.2% while in 2018 it was 3% and only 2.3% in 2019. All of this has forced Bank Al-Maghrib to revise its initial economic forecast. The prediction of 3.8% has been changed to only 2.3% but this is widely blamed on the negative impact of Covid-19. There is so much uncertainty because even the above predictions could be reviewed very soon if progress is not made with the containment of Covid-19. This pandemic has led to many problems most of which have devastated economies worldwide. In Morocco, the government was forced to close cafes, restaurants, schools, mosques, and many other less essential places. International flights had to be suspended and all of this was a huge economic burden.
Ongoing construction operations
On the positive side, the construction industry has never ceased its operations. This is clearly seen by statistics which show that more than 165,000 residential units have been completed in 2018 which is substantially more than the 155,000 which was completed in 2017. All across the country, new shopping centers are constantly been opened for business. The government and major investors in Morocco are already planning ahead and one of the projects on the table is a collective real estate investment scheme which is somewhat like real estate investment trusts are in the planning stages in an attempt to substantially boost the real estate sector. This is important because construction along with the real estate market contributes approximately 18% of GDP. The planning phase started in 2019 and there is the possibility of adding approximately $20 billion in assets to the real estate market. The preliminary idea was to transform at least 15% of all of the real estate in the country into such assets. Therefore, not everything is doom and destruction and it is very clear that there is still a lot that can be done to turn the real estate market around.
Future expectations and predictions
Every economy generates a tremendous amount of data and statistics and this is also true for the economy in Morocco. Economists already have an excellent idea of what to expect in the next four years. Gross domestic product is simply the total value of all services and goods which is produced in a specific country during one calendar year. Gross domestic product is widely considered to be an extremely important and also very accurate indicator of how strong the economy of a country actually is. When one looks at the statistics for the year 2014 the GDP per capita was in the range of $3300. This was slightly better than the figures which are available for 2010 which was around $2900. Many economists are positive about the future and in fact, the Gross domestic product is expected to improve significantly because of excellent economic growth which is expected in the nearby future. Projections and predictions for Morocco show that a 3 to 5% growth rate can be expected over the next couple of years. There are also many other factors which will be having a positive impact on the economy. Therefore, there has been an ongoing consolidation effort in 2020 and fortunately, there was the healthy construction industry which has done a lot to relieve some of the pressure on the economy.