Morocco has a developed housing finance sector. As the mortgage market does not yet meet the breadth of the population who might afford a mortgage, most households still finance their housing independently, with savings or non-mortgage credit.
The lowest recorded interest rate on a mortgage in Morocco is 5.85 percent, as of September 2016, and requires between zero and 50 percent down payment. The cheapest newly built house by a developer recorded by CAHF is US$ 14 170, which is for a 45 square metre unit. Cement prices are lower than the continental average, at US$ 8.50 for a 50-kilogram bag.
With an urbanisation rate of 2.16 percent, demand for affordable housing will remain strong, both for rental and purchase. Housing microfinance will play an important role in increasing the supply of housing, and efforts to increase access should be undertaken. The two largest microfinance institutions are Al Amana and Attawfiq. Loans given are also for house purchase and construction. Al OMrane is developing a 60 000 housing unit development and Societe d’Amenagement Zenata is developing an eco-city expected to accommodate 300 000 inhabitants by 2030. Another developer, GARAN is developing a new urban pole that will accommodate 150 000 people in Bouskoura. With a good macroeconomic environment, sound policy, better data and increased access to affordable credit, an enabled housing market can increasingly provide housing that the average household in Morocco can afford.
Find out more information on the housing finance sector of Morocco, including key stakeholders, important policies and housing affordability:
- Access to Finance
- Housing Affordability
- Housing Supply
- Property Markets
- Housing Policy and Regulations
- Housing Sector Opportunities
Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2016 edition, which has up-to-date profiles for 51 African countries.Download yearbook
Morocco is a lower-middle income country in North Africa with one of the most diversified and developed economies on the continent. Despite its exposure to a succession of crises in recent years (the global financial crisis of 2008, protracted low growth in its European trading partners since 2009, and the onset of the Arab Spring in 2011), the Moroccan economy has remained resilient. Morocco has a number of comparative advantages that provide reasons for optimism for the country’s future. These include relative security compared to the rest of the region, an attractive geographical position for investors, a relatively diversified economic base, and a large pool of young workers. While the country does not have any hydrocarbon wealth, it does have an estimated 70 to 75 percent of the world’s reserves of phosphates, and is the third largest phosphate producer after the US and China. The phosphate and auto industry are the country’s top exports.
Morocco’s economic growth slowed down significantly over 2016 to 1.5 percent (compared to 4.5 percent in 2015). The all-important agricultural sector accounts for close to 15 percent of Morocco’s GDP and employs close to 40 percent of the Moroccan workforce. On the upside, exports will continue to outperform, and investment will remain elevated, as the country pushes forward with its plan to become a regional exporting hub between Europe and Africa. Morocco is currently ranked 68 on the World Bank’s Doing Business index – the same ranking as in 2016 but an improvement of five places from its ranking of 80 in 2015.
Despite relatively good growth prospects, the country remains in the bottom half of the group of countries with medium human development. This is primarily due to the extremely low literacy rates (about 65 percent), and relatively high unemployment rates (10.7 percent in general and 25.5 percent among the youth). There are still significant differences in the living conditions of urban and rural communities. Poverty rates are on average three times larger in rural areas. Educational opportunities are lower in rural places, where many children drop out of primary school.
Between 2016 and 2017, property prices decreased across the country (-5.2 percent) with the exception of a few cities that include Marrakesh and Tangier. Real estate experts expect however the industry to start recovering in 2017. The recent announcements made by the Minister of Housing confirm that the Government remains committed to providing affordable housing.
Access to Finance
In recent years, Morocco’s banking sector has deepened (with total bank assets reaching 140 percent of GDP), and become more diversified (including a rapid expansion into Sub-Saharan Africa). Banks are well-capitalized and profitable and benefit from stable funding sources. In 2014, in aggregate, the capital adequacy ratio stood at 13.5 percent, well above the Basel III requirements, and bank profitability has been stable despite slower lending activity. However, since 2012, the non-performing loan ratio has been rising due to weaker economic activity and strains in the corporate sector, reaching 7.8 percent in May 2017.
In July 2016, there were 84 institutions that fell under the supervision of Bank Al-Maghrib, Morocco’s central bank, including 19 commercial banks, 34 finance companies, 13 microfinance associations and the Central Guarantee Fund. In addition to those, Bank Al-Maghrib granted in 2017 five licenses to new Islamic Banks as well as three “windows” (existing banks that will be authorized to sell Islamic finance products). None of these banks is yet active in mortgage lending.
In September 2016, Morocco announced a transition from a fixed-rate to a free exchange rate regime, a 15-year process that was supposed to start in June 2017, but this has been postponed to September 2017. The Moroccan Dirham so far has been pegged to a basket of Euros and Dollars, and the Central Bank has recently changed the weights (60 percent Euros and 40 percent Dollars) in order to further deepen the country’s financial markets and help the economy absorb external shocks while preserving its competitiveness. Going forward, authorities will begin to increasingly rely on inflation targets. Furthermore, a new banking law was adopted in November 2014, further implementing Basel III that enhances the systemic risk surveillance.
On July 13, 2017, law 40-17 was adopted by the Government. The law further strengthens the Central Bank’s independence and extends its supervisory powers.  It gives it total independence from the executive branch and political partisanship, therefore granting more credibility to the monetary policy.
Morocco has the most advanced and diverse housing finance market in the region. There is a wide range of sources for mortgage lending in the country, from public and private commercial banks, as well as consumer credit companies and microfinance institutions. Typical terms are 15-25 years and housing finance can be between 50 to 100 percent of the property’s appraised value. Up to 70 percent of residential properties have fixed interest rates. In March 2016, the Central Bank cut its key interest rate by 25 basis points to 2.25 percent- its lowest rate since 2000. As of June 20th, 2017, this interest rate remained unchanged. In 2015 the size of the mortgage market contracted by 24 percent of GDP (down from 25.6 percent in 2014). In February 2016, the annual value of property loans outstanding increased slightly by 0.9 percent to MAD240.81 billion (US$ 25.29 billion). These figures comprise of two elements – housing loans outstanding (75 percent by total property loans) and property loans to developers outstanding (25 percent of all property loans).
Partnerships between banks and the government make lending more accessible to middle and low income families, through the FOGARIM mortgage guarantee fund. FOGARIM stands for “Fonds de Garantie pour les Revenus Irréguliers et Modestes,” or “Guarantee Fund for Irregular and Low Incomes.” Launched in 2004, FOGARIM guarantees 70 percent of a mortgage loan made to a household with an informal income for the purchase of a unit worth less than MAD250 000 (US$25 303). Monthly instalments are capped at MAD 1750, around US$184 (upper income threshold) and 40 percent of the households’ income (lower threshold).  This Fund guarantees approximately 1 200 new beneficiaries each month. Another guarantee programme, FOGALOGE, targets moderate income civil servants, middle class independent workers and non-resident Moroccans buying or building houses up to about MAD one million (US$104 042) in value.
FOGARIM is open to all banks in theory, but only two of them grant more than 80 percent of all FOGARIM loans. While FOGARIM has not been entirely successful at convincing banks to go down market and at extending access to housing finance to the populations with irregular income, it represents a significant improvement compared to the pre-FOGARIM period.
In 2014, Morocco continued to develop the law for covered bonds that is intended to diversify funding sources and overcome maturity mismatches for the rapidly expanding mortgage market. In this law, only banks will be authorised for issuance, where the total amount of covered bonds must not exceed 20 percent of the total assets of the bank and the net present value of the cover portfolio must be, at any time, more than 105 percent of the net present value of the covered bonds. Selected loans for the cover portfolio must have a remaining capital under 80 percent of the value of the asset. The first covered bonds issues are expected for 2018. Covered bonds are expected to expand and diversify the sources of financing for mortgages.
Morocco maintains promising capital markets for housing finance, with a diversity of financial institutions beyond banking. This includes a dynamic insurance sector, growing pension funds and the Casablanca Stock Exchange. Growth in the microfinance sector has been rapid in Morocco since the Microfinance Act was passed in 1999. The two largest microfinance institutions, Al Amana and Attawfiq, control 72 percent of the market and focus on women, who represent almost 80 percent of micro-borrowers in Morocco. MFIs together with the Moroccan government have set high goals for growth, 3.2 million clients and MAD25 billion (US$2.53 billion) in loans by 2020. Loans are given not only for the development of income-generating enterprises but also for housing purchase or construction as well as for connections to basic utilities. There are MFIs that offer non-collateralised housing finance micro loans The Moroccan Postal Service also plays a key role as a provider of depository, payments and other retail banking services for small savers via Al Barid Bank. With more than 1 800 branches, the postal service serves about 13 percent of the population, though it represents only two percent of total financial sector assets.
Affordability remains an important challenge for housing in Morocco, a country where disparities remain high (income Gini coefficient of 40.9 in 2009).
Between 2014 and July 2015, Morocco increased the minimum wage by 10 percent, to MAD2568.84 (US$270) a month, the highest rate in Africa. Average monthly incomes of households in Morocco were recorded at U$996 in 2012 by Euromonitor’s World Consumer Income and Expenditure Patterns Report.
The 2013 Finance Law had set the nominal price for middle income housing at MAD6 000 per m² (US$607), for units ranging from 80m2 to 120m2. That price included all taxes. The 2014 Finance Law increased this maximum price to MAD6000 per m² excluding taxes, which gives a maximum price of US$74 457 for a 120 m² apartment. This type of housing is aimed at people earning up to US$2 068 a month.
The Moroccan government defines two types of affordable housing units, both commonly called “social” housing and differentiated by their maximum price: the first one was created by the 2008 Finance Act with a capped price of MAD140 000 (about US$14 286). It is between 45 m² and 60 m² and targeted at individuals who earn less than twice the minimum wage (now MAD2 570 a month (US$ 260), up from MAD2 455 (US$ 248) as of July 1st 2015) or US$531 a month.
The second type of social housing was initiated under the 2010 Finance Act. The covered surface area of these apartments is defined by law from 50 m² to 100 m² but developers usually build them closer to 50 m² as the sale price and tax exemptions are not linked to the surface area but only to the maxim sale price of MAD250 000. Its price is capped at MAD250 000 (about US$25 303) but there is no maximum income requirement to purchase those “social” housing units. Important tax incentives have made this type of housing very popular among real estate developers.
According to the Ministry of Housing and Urban Planning, the housing shortage between 2012 and 2016 is estimated at 834 500 units. Since 2000, over two million social housing units have been built. Housing demand has been increasing by 150 000 units every year, while annual housing production is only around 100 000 units.
Almost 6.4 million people (20 percent of the population) struggle to afford decent housing. Low-income households account for around 75 percent of the total households without access to adequate housing. In contrast, the high-end market is well supplied with around 820 000 units (20 percent of the urban stock either vacant or used as secondary or vacation homes). In order to deal with this demand, the government has implemented several housing projects over the past decade, including social housing and the mobilisation of available land. The Ministry of Habitat and Urban Planning has provided incentives for private real estate developers to invest in social housing projects, and as a result these investors have committed to building 900 000 units by 2020.
The villes sans bidonvilles programme (or “cities without slums”) started in 2004 in order to eliminate slums throughout Morocco, as they were perceived as a ground for terrorism. While the programme has suffered from a continuous increase of the population targeted (due to the extension of the urban perimeter of cities, population growth within the existing slums, and the development of new slums), it has succeeded at providing better living conditions to 1.24 million people. 56 cities have so far been declared free of slums.
The programme was financed through the following means: 40 percent from the general budget, 30 percent through beneficiary household contributions; the housing solidarity fund (funded from taxes on several building materials); profits earned from upper-income house sales; as well as international donor contributions.
Since 2004, the government has started establishing new master-planned suburbs and cities to better channel further population growth. Some of the country’s largest housing projects in Casablanca include, a 60 000 housing unit development 20km to the south-west of the city (being developed by Al Omrane) and an eco-city that is expected to accommodate 300 000 inhabitants and be completed by 2030 by Societe d’Amenagement Zenata. Saudi-Moroccan real estate developer, GARAN is developing a new urban pole in Bouskoura that will accommodate 150 000 people and is now 65 percent complete. Other developments include Tamesna, just outside Rabat, which is expected to house 250 000 inhabitants. Tamansourt, located 10km from Marrakech, is designed to accommodate as many as 250 000 people (a five-fold increase from its existing 50 000 residents). Furthermore, the International Finance Corporation (IFC) has invested more than MAD207 million (about US$21.74 million) in development company Alliances Group to boost affordable housing builds..
New supply of affordable housing tends to be apartment-buildings of typically four levels, in large-scale projects located on government provisioned land in peripheral locations. In addition to the cost of land, the average middle class self-built house will cost MAD2 800 – 3 000 per m² (about US$ 283- US$ 304) for a villa, and MAD2 000 – 2 500 per m2 (US$202-253) for a traditional Moroccan home, and take eight months to construct.
Morocco’s law requires the registration of land rights. Two systems of land registration exist: a formal and relatively sophisticated land market maintained by the Land Registry and found predominantly in urban areas, and a traditional system maintained by local leaders. Approximately 30 percent of the land in Morocco (almost all in urban areas) is registered under the formal system. The country has made significant progress in streamlining its registration process. According the World Bank, it takes approximately five procedures, 30 days and costs almost six percent of the property value to register a property.
Between January 2016 and January 2017, property prices decreased across the country (-5.2 percent) with the exception of Marrakesh and Tangier. The residential real estate price index (REPI) (which gives detailed information on all formal property transactions in the country) shows however a 7.1 percent increase between the first trimester of 2016 and the first trimester of 2017, suggesting that the industry has already started to recover from the slowdown. 
According to the Central Bank, the number of registered residential property transactions dropped by 1.4 percent in 2016. Urban land transactions also dropped by 3.2 percent in 2016. urban land, houses 4.9 percent, and villas 1.2 percent.
Transparency in the sector is improving with the quality label and pricing reference that was introduced in 2014.
Housing Policy and Regulations
The Government has devoted significant human, financial and technical resources to implement its national urban strategy. The government considers cities as engines for regional and national growth plans and central to the country’s overall competitiveness. The government has encouraged investments in skills and connective infrastructure and has focused on the development of new towns.
In recent years, considerable efforts have been made to increase transparency in the sector, in terms of pricing, oversight and contracts. In 2014, the Ministry of Habitat and Urban Planning introduced a new regulation making written leases mandatory. This was complemented by the work of the Ministry of Economy and Finance that adopted a pricing reference for real estate transaction, which bases taxation on the minimum price per square metre for different types of real estate. And, as mentioned above, REPI, which was developed by the Central Bank in cooperation with the Land Registry, has helped reduce disparities and price gouging.
Policies that directly or indirectly have an impact on affordable housing include:
- Constitution of 1996:
- Guarantees private property rights.
- Strategie Nationale de Developpement Urbain:
- Emphasis on the creation of regional growth poles and competitive cities while prompting social cohesion and the efficient use of resources.
- 2015 Finance law:
- Rental housing targeted at the low and lower middle-classes benefited from tax exemptions with the condition to respect a ceiling rental price.
- For the MAD250 000 type of social housing, the maximum rent was increased from MAD1 200 to MAD2 000 a month.
- For the MAD140 000 type of social housing, the maximum rent was increased from MAD700 to MAD1 000 a month.
- Those incentives, that previously had little impact on the rental market, did not change the situation any further when improved.
- 2014 Finance law: The sale price per square meter of housing for the middle class was limited to MAD6000 all taxes included in the 2013 Finance law. The 2014 Finance law increased this maxim price to MAD6000 excluding taxes.
Housing Sector Opportunities
Over the longer term, Morocco’s economic prospects are among the most promising in the Middle East and North Africa region. The country has a young and growing population, an improving business environment, and is well-placed to serve as a manufacturing hub for exporters to Europe and rapidly-growing economies in Sub-Saharan Africa.
While the real estate and construction sectors are currently experiencing a slower period, demand for affordable housing is still high, particularly among the low and middle-income population. This demand, coupled with government led initiatives and incentives, could continue to present opportunities for investors. The Minister of Housing has already announced several housing programmes to be implemented by 2021 in order to boost supply and further reduce the gap between supply and demand.
Although slow to develop, covered bonds will be another significant innovation for Morocco, opening up the market for longer and more affordable housing finance.