Morocco’s Real Estate Sector Faces Double Crisis: COVID-19 Compounds Existing Challenges

"[...] Before 2020, the real estate sector in Morocco was already experiencing an ongoing crisis. The reasons are mainly intrinsic and they act in a vicious circle. The relatively high prices of property on the market are the main obstacle to the growth of the sector. This has been exacerbated by the scarcity or unavailability of land in sought-after areas, particularly in large cities and their immediate suburbs," said Zakia Medkor in an interview with Afrique Midi.

According to her, the construction sector is currently suffering from a structural anarchy that is counterproductive for its development. "In the absence of a construction code, roles and responsibilities are poorly defined and it is quality that suffers," she stressed, noting that the resulting shortcomings are not likely to encourage the confidence of the local consumer or the foreign investor, nor even to promote support from other sectors such as insurance.

"After the start of the crisis, the demand for real estate has dropped significantly, due to buyers’ reconsideration of their purchase decision and their fear (sometimes justified) of seeing their purchasing power decrease, notes the Head of Technical Risks and Specialties Underwriting. This inevitably led to the accumulation of unsold stocks with developers and affected their cash flow." She also mentions the new redistribution of customer preference after the confinement experience. She cites as an example the orientation of city families towards individual houses and second homes. "On the financing side, interest rates in Morocco remain high for a large segment of the population," she added.

To reverse the trend, she suggests strengthening demand as a priority by restoring consumer confidence in the quality of the constructed goods, including for economic products, through the implementation of the Construction Code and ensuring its application; through the implementation of the law on the obligation of insurance for construction sites and decennial civil liability; by extending (and why not instituting) the reduction on registration and registration fees for the acquisition of eligible properties; by putting in place incentives for buyers (administrative fluidity, assistance...) and in particular for first-time buyers; by setting up guarantee agreements with banks aimed at supporting the lowering of interest rates for borrowers, etc.