Interview: Youssef Ibn Mansour
What segments should be the main drivers of the real estate recovery in 2014?
MANSOUR: Even though Morocco’s real estate sector was not as affected by the international crisis as Spain or the US in 2013, the sector has experienced a slowdown in some areas and segments. One of the main reasons for this is a rise in taxes on benefits for property operations. An increase from 20% to 30% in 2013 has had a negative impact on the real estate market and directly reduced the number of operations. Consequently, the market is likely to remain stagnant, as property owners prefer to hold onto their land instead of selling it. One of the unavoidable conditions for the recovery is the collaboration of banks in fostering a new dynamic in the sector by accommodating a more favourable credit policy to real estate buyers.
Still, social housing, accounting for 70% of the domestic market, should remain the key driver of real estate growth in 2014, as demand in most Moroccan cities stays high due to population growth and the numerous projects of new bedroom suburbs promoted by authorities and local construction players. Middle range housing is also a dynamic segment in which demand has not yet been fully tapped by the offer, as there is a current need for 30,000 units. On the other hand, the luxury and tourism-related segment, which forms only 5% of the total national offer, has experienced a serious drop in prices, especially in Tangier and Marrakech. Overcapacity and reduction in demand from international buyers or Moroccans living abroad, all affected by the EU crisis, are the main reasons.
To what extent can a vertical urban planning scheme lead to better profitability?
MANSOUR: Urban areas such as Casablanca and Rabat have been built horizontally over the years due to strict restrictions regarding the number of floors for each building. Simultaneously, domestic developers have been encouraged to conceive real estate products complying with Moroccan architecture to attract local and international customers and spur the market. Currently, most of the middle class projects are developed downtown, close to existing infrastructure such as schools and transport facilities, but these areas cannot host high rises because of insufficient technical supply. However, given the price of land in Morocco, it will be suitable to promote high-density vertical housing with seven or eight floors in the new urban areas, and this is a fact that will ensure better cost-competitiveness for real estate projects and more affordable prices for middle-class clientele.
The promotion of vertical housing for the middle class should be accompanied by the identification of land owned by the state. Secondly, the developer should be in charge of equipping the new housing to reduce public costs and calculating the optimal density to identify the most suitable number of units for a specific piece of land. However, to carry out such projects Morocco needs substantial investment, either from domestic or international developers. However, particular new projects, like Casablanca Finance City, which is meant to host business and housing spaces, are being planned and managed differently.
What measures should be launched to guarantee price transparency in the real estate sector?
MANSOUR: FNPI has launched a Quality Label Engagement for the new projects in order to build confidence among real estate developers and constructors. It consists of encouraging the “labelled” market players to comply with a set of standards to ensure a quality and certified product to the end consumer at a transparent price in line with market trends. This strategy will help in reducing the informal sector. This new Quality Label Engagement is expected to gradually remove the untrustworthy players, as customers will be more and more demanding. Banks are also involved in the process as they will be encouraged to invest in labelled projects, where the quality of the processes is guaranteed from the conception to the delivery of the product.
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