Interview: Nawfal Bendefa
In what ways do you anticipate REITs will impact the commercial real estate market?
NAWFAL BENDEFA: REITs are not an industry but a mechanism of support, an investment tool for all industries that rely on real estate as a tool for productivity, such as schools, offices and factories. How the commercial real estate segment performs is linked to the health of the industry as a whole. In an economy where education is taking off, and where health care, industrial and tourism infrastructure are needed, there is going to be a demand for commercial real estate to back these industries.
In Morocco we are in the midst of a growing appetite for industrial real estate. We have seen this demand in recent years, and the expectations for the future are promising. There is increasing supply and demand for office and retail space. We are also seeing more activity in the tourism sector, which is driving demand for tourism real estate and will add positive dynamics to the supply and demand of health and education services.
REITs will create a dynamic market by bringing in a new category of investors who will invest in commercial real estate without having too much exposure to the industrial aspect. New platforms are going to be created – some listed, some private – with different products being offered depending on the performance of the market at any given time. These new products will have a positive impact on the commercial real estate market.
To what extent will the new REIT legislation help attract foreign investment in Morocco?
BENDEFA: With the new legislation, we will now be able to attract asset managers who have an allocation for REITs. We currently have very low liquidity in our stock exchange. REITs will be a new product on the exchange, which will make it more attractive to foreign investors. Global asset managers’ strategies are often varied, and new REIT offerings will help Morocco – as well as other frontier markets – attract investors looking for new countries and markets to diversify their portfolios.
The framework and legislation have been well developed by regulators and its fundamentals are the same as REITs in the UK, the US and other developed markets. We will now see how the market reacts. The next step will be to introduce listing incentives to ensure that the product is put out to the market and not used as a private tax efficiency tool. Morocco’s REIT legislation only allows the REIT to be managed externally. The regulators will require a licensed manager for REITs. Only licensed asset managers will be allowed to manage REITs.
How has the real estate market performed recently, and in what direction is it moving?
BENDEFA: In recent years the market demand for commercial real estate has been showcasing strong and steady growth. As long as the economy grows and infrastructure is developed, interest in commercial real estate will increase. However, demand in Morocco is also driven by industry penetration and the transformation of existing assets into a more modern and actively managed real estate market.
Many international investors from developed economies have shown concerns about how technology may be disruptive and how consumer behaviour is changing, but these dynamics do not apply to Morocco as the market here is still undersupplied. Though the dynamic is not present here at the moment, it does not mean it will not be present in the future, and this is one of the main advantages that Morocco has. We have been observing the risks in other markets and are designing our commercial real estate market in response to those risks. The key is to design a dynamic space upfront that will be able to respond to all the changes in demand.
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