Investment Property in Morocco: 6 Reasons it’s a Smart Buy

Investing in Morocco Property hit savvy investor’s radars many years ago. For some time, French nationals have bought up dilapidated riads in Marrakesh at knock down prices and added value by restoring them to their former glory and convert into exotic holiday rentals designed to appeal to the ever growing Marrakesh tourist market in search of authentic places to stay in Marrakesh. These riads have since experienced significant capital growth and have proved to be very lucrative investments. No longer an emerging property market, buying off plan property in Morocco took off back in 2003, today there plenty of off plan developments to choose from. This has been largely due to ambitious regeneration plans, tax free incentives and open skies agreements which demonstrate the Moroccan governments commitment to putting tourism and travel to Morocco on the map. An improved property buying process has given overseas home buyers and investors the confidence to invest in property in Morocco.

1. Morocco is cheaper than neighbouring Spain

Property prices in Morocco are 50% of those in popular European property buying hotspots such as Spain, France and Italy. What Morocco currently lacks in significant infrastructure it makes up for with attractive lower costs of living given 1 euro = 10 Dirhams approx, you get a lot for your money. Prices in southern Spain in particular are very high averaging out at nearly 2000 euros per square metre compared to Morocco where one bedroom apartment prices start from as little as 800 euros a square metre. A 10 year build guarentee similar to the UK’s NHBC offers property buyers greater peace of mind. As a rising overseas market, Morocco foriegn buyers should enjoy significant capital gains as investments in Moroccan infrastructure to support the building boom come into fruition.

2. Plan Azure Vision 2010 boosts investment potential

The Plan Azure is part of King Mohammed 2010 Vision which should see some 10 billion euros allocated to bring Morocco’s tourism up to ‘premium’ standards. The aim is to attract 10 million tourist visitors a year by 2010 with the knock-on effect being an increased demand for hotel and holiday accommodation. The Plan Azure centres around six tourist resorts which focus on encouraging local tourism and creating locations which will have long-term tourist appeal. These investment areas together with a package of investments to deliver infrastructure upgrades with new ports, new regional airports, motorway construction, high speed rail links and even a plan to build a tunnel under the sea linking Morocco and Spain, should over the next few years, see any buy to let property investors sitting on lucrative real estate in addition to rise demand for rental property.

3. Budget Airlines bring in more paying tourists

Since the 1st Jan 2006 an open skies policy has been in effect in Morocco and the low cost airlines have flooding in, a strong sign of a country on the up. Less than 3 hours flying time from London and other major European cities, you can now fly to Marrakech for under £70 with easyJet, and Ryanair European hubs will be bases to develop low-cost air access over the next five years. As the cost and accessibility of travel to Morocco improves so too should tourist numbers, again creating a healthy demand for accommodation close to holiday amenities. Figures from Morocco’s Ministry of Tourism show the industry reached a new high in 2006 with some 6 million tourists visiting Morocco compared to 4.4 million in 2002, a direct impact of increased flights and greater awareness of Morocco as a mainstream holiday destination.

4. The Moroccan Economy is healthy and stable

In 2006 the Gross domestic Product (GDP) of Morocco stood at 8%, up on the previous year due to good rainfall. In the 80’s the Moroccan government implemented many economic reforms, which have been supported by the IMF and the World Bank. Many of these reforms such as local stock market modernisation have allowed Morocco to trade with the EU and USA. Changes to taxation and banking systems as well as improved credit availability have contributed to the westernisation of its property market. Today 70% mortgages are available to finance purchase of property in Morocco.

5. The perfect holiday destination

There are many factors blend to create the perfect holiday destination and Morocco has it. It offers the right mix of exotic appeal that travellers wanting something ‘different’ are looking for.
The lure of celebrity gives Morocco more appeal as the latest celebrity ‘hot spot’ with the high profile Beckhams, Jude Law, George Clooney and Brad Pitt all having holidayed there and puts Morocco into the media spotlight helping showcase the country’s tourism offerings. The added advantage is also the ability to enjoy a luxury lifestyle courtesy of Morocco’s low cost of living. Buyers are already drawn by the thousands of pure sandy beaches, a rich culture, fascinating places to explore and spectacular scenary but the new sporting facilities, lush golf courses, and leisure options resorts such as Mediterrania Saidia are set to enjoy will put it on par with many world class destinations and give Morocco its wow factor. Morocco’s greatest asset however remains it’s year round season. From January to December you can enjoy warm, sunny days with little rainfall. A mediterranean climate ensures a long rental season, great news for buyers wanting to maximise the rental potential of their investment.

6. Attractive Taxes for investment property owners

By fostering a tax regime sympathetic to overseas investors Morocco has made itself makes a highly attractive prospect for purchasers of investment property in Morocco due to the added financial benefits. Low annual property taxes and exoneration from certain taxes for a set period of time should increase rental yields overall. Easy repatriation of investments in the future ensures buyer confidence and a significant reduction on property rental tax, exemption on capital gains after ten years and 0% Inheritance tax are all strong draws. For UK investors, there is also the ‘double taxation treaty’ between Morocco and the UK meaning where tax is due, you will only pay it once.

Capital Gains on a Moroccan property

Moroccan Capital gains taxation works on a sliding scale:

Property sold within 5 years of purchase = 20% profit or minimum 3% sales price
Property sold 6-10 years from purchase = 10% profit
Property sold after 10 years from purchase = 0%

Gain is based on the difference between the sales price recorded and the purchase price.

Morocco Property Tax

All property owners are required to pay an annual property tax. For the first five years owners are exempt. The tax is then based on the annual rental value of the property, which is up to 30% on a sliding scale.

Moroccan Property Rental Tax

A buy to let investor who does not ever live in the property, will have to pay 13.5% on the rental p/a.

Learn more here:

Buying a Property in Morocco