Interview: Karim Beqqali
What are the most recent developments observed in the real estate sector?
KARIM BEQQALI: Since 2014 Morocco’s real estate sector has undergone a reshuffling. The business model of the few major groups that used to dominate the market has been put into question, while new medium-sized operators with a more disruptive approach have arisen. This evolution is mainly due to a paradigm shift in demand. The buyers’ approach has become increasingly sophisticated, making it challenging for some developers to sell their stock.
This power shift from offer to demand has taken place during a period of overall difficulty for the sector. While real estate development projects remain profitable, there is a challenging mix of criteria to fulfil. First, the location must be carefully chosen. Second, the conception of the project must be differentiated, and lastly, selling prices should be in line with market expectations.
Given the changing dynamics of the market and the strict criteria for property development, most of the segments, including social housing and high-end property, are finding it difficult to remain competitive. Therefore, property developers must offer more to stand out from the crowd. As for the commercial segment, it is also going through a difficult phase as a result of the average global economic growth over the past few years.
How would you characterise the demand for mixed-use development projects?
BEQQALI: Mixed-use development projects have great potential in Morocco, especially within the high-end segment. They belong to a new generation of real estate products, which focus on combining where people live, work, have fun and go out all in a single development. This type of project enables developers to create a broad lifestyle experience and to combine different offers. It also allows for buildings to become convenient destinations and innovative communities, rather than just concrete infrastructure. Today, we have higher expectations of our surroundings because we travel more, eat out more frequently and are exposed to designed environments of a much higher quality.
Instead of designing a real estate project based on the location, developers must now design it from the end-user’s perspective. To be forward-thinking, it is critical that property developers are open to innovation and ready to offer distinctive architecture; re-envisioned living areas, such as co-working or co-living spaces; as well as eco-friendly environments. Features such as digitally controlled homes, automation, proximity to services and safety are also very important to high-end consumers.
What could be done to spur activity in the sector?
BEQQALI: One of the main challenges is the ability to secure land in Morocco, especially along the Casablanca-Rabat axis where most of the demand lies. Tax pressures on land owners and buyers has caused a significant slowdown in the number of transactions in the market. On top of this, the last time the national budget included major reforms to encourage activity in real estate development was in 2010. This regulatory framework will come to an end in 2020. After this we will need a new programme to stimulate project development.
As far as the investment market is concerned, the legislation enabling the creation of real estate investment trusts is a positive sign and could represent an interesting means to boosting the level of investment in income-generating assets. Moreover, it would also help to structure the sector and raise the level of professionalism of real estate operators. To ensure that this model will have the expected impact, its offerings must be fiscally appealing in order to attract domestic and foreign investors.
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