Morocco’s Real Estate Market Faces Crisis as Demand Plummets and Costs Soar

Situation of unsold properties, slowdown in construction starts, sharp drop in demand, inflation, soaring raw materials, scarcity of land, lack of coordination between public and private actors, mismatch between supply and demand... The real estate sector is going through a deep crisis. According to operators, "the market must start from the analysis of the demand of potential buyers and households," reports L’Économiste, noting that it is no longer a question of producing large volumes of housing and trying to sell them at all costs. This option has the consequence of significant unsold stocks. It is therefore necessary to change the paradigm.

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Currently, Morocco has an urbanization rate of 65% which will rise to 70%, even 75% in the coming years. "We will therefore have to produce housing that anticipates this new demand and above all affordable offers for the purchasing power of potential buyers," insists Anice Benjelloun, vice-president of the National Federation of Real Estate Developers (FNPI). But achieving this goal will involve overcoming certain challenges, the most important of which is land. The scarcity of land creates value. Land prices are becoming more and more expensive in the major agglomerations, mainly in the coastal cities like Casablanca, Rabat, Tangier, Agadir.

Today, land represents nearly 50% of the cost price of a real estate asset in Morocco, while it is 20 to 25% in OECD countries, it is specified.

Inflation and the rising cost of construction materials are another constraint. They have soared since 2021-2022. Increases of 40 to 50% on certain products, even 100 to 200% for others. Glass, wood, marble and aluminum are recording the biggest price increases. Explanation: these are "inelastic constraints that are ultimately passed on to the final selling price".