Housing Finance in Morocco

Macroeconomic Overview

Morocco, with its capital Rabat, is a North African country with an estimated 36 910 558 inhabitants. Its currency is the Dirham. This country is stable and hosts many international companies. It is 53rd in the world for the ease of doing business. Although it is very advanced compared to many other African countries, with an average interest rate of 4.41%, the Moroccan housing market has many problems such as the lack of social housing or low value housing. In 2020, the number of beneficiaries of housing loans rose from 67 332 to 63 456 and the gross outstanding amount of financing by banks reached MAD237.7 billion (US$26.6 billion).

In 2020, the growth rate fell by 7% and inflation was 0.7%, achieving its lowest level since 1968 of 0.2%. The country, which had opted for a more flexible exchange rate regime in 2018, began a new stage of its transition on 9 March 2020 with increased ownership of the reform by economic operators and a growing recourse to hedging instruments. Despite a decline of 21.8% in 2020, the Casablanca Stock Exchange, which also participates in the financing of the social housing sector, achieved a net result of MAD15.4 billion (US$1.7 billion).

COVID-19 forced the state to react and provide supportive measures. The central bank lowered its key interest rate by 75 basis points to 1.5%, and released the entire mandatory reserve account to the banks.  It also asked banks to suspend dividend distributions and encouraged them to build up provisions as a precautionary measure. These measures prevented the contraction of credit, which grew by 4%. The average exchange rate was MAD9.65 to the dollar in 2019.

In 2020, the volume of employment fell by 432 000 jobs to 10.5 million, with 295 000 jobs being lost in rural areas and 137 000 in cities. These job losses, which resulted in the loss of income for many households, exacerbated the housing problems that the country was already facing, including the lack of affordable housing and the difficulties associated with self-build.

To limit the impact of the crisis on the labour market, the government provided monthly allowances to private sector employees affiliated to the National Social Security Fund (CNSS) and made transfers to households with incomes from informal activities under an operation called Tadamon. The fixed monthly allowance was MAD2 000 (US$224) for private sector workers and MAD800 to 1 200 (US$90 to US$134) for households working in the informal sector. The amounts varied depending on household size.

[1] World Bank (2020). Doing Business 2020: Update on the ranking. https://francais.doingbusiness.org/content/dam/doingBusiness/pdf/db2020/DB20-FS-MNA—french.pdf (Accessed 1 September 2020). Pg. 1.

[2] Banque Al-Maghrib (2020). Annual Report 2019. http://www.bkam.ma/Publications-statistiques-et-recherche/Publications-institutionnelles/Rapport-annuel-presente-a-sm-le-roi (Accessed 2 September 2020).

[3] Ibid. Pgs. 1 & 52.

[4] Ibid. Pg. 58.

[5] Ibid. Pg. V.

[6] Office of the High Commissioner for Planning (2020). Population Clock. https://www.hcp.ma/Demographie-population_r142.html (Accessed 1 September 2020).

[7] World Bank (2016). Poverty has declined in the Maghreb, but inequalities persist. https://www.banquemondiale.org/fr/news/feature/2016/10/17/poverty-has-fallen-in-the-maghreb-but-inequality-persists (Accessed on 1 September 2020).

[8] LIBE (2019). Morocco: investment opportunities in the real estate sector in Morocco highlighted in Paris. Allafrica.com. https://fr.allafrica.com/stories/201911190555.html (Accessed on 2 September 2020).

[9] Chaheb, N.  (2020). Morocco/Covid-19: The government helps 4.3 million families. Agence Anadolu. https://www.aa.com.tr/fr/afrique/maroc-covid-19-le-gouvernement-vient-en-aide-%C3%A0-4-3-millions-de-familles/1821801 (Accessed 1 September 2020).

Access to Finance

The banking system in Morocco had 91 institutions in 2020, divided between 19 conventional banks, participative banks, 27 financing companies, six offshore banks, 12 micro-credit associations, 20 payment institutions, the Caisse de Dépôt et de Gestion (CDG) and the Caisse Centrale de Garantie (CCG). Abroad, there are 51 subsidiaries and 22 branches with 1 710 points of sale. All the Moroccan banks have the capacity to grant credit. Despite the pandemic, the structure of the banking system remained broadly stable, with the exception of the payment institutions sector, which saw the entry of a new operator authorised to offer services backed by services linked to payment accounts.

The growth rate of household credit slowed in 2020 as a result of the general containment measures put in place during the second quarter of the year and the impact of health restrictions on their consumption. At the end of 2020, household bank debt totalled MAD369 billion (US$41.3 billion), up by 2.9% compared to 5% in 2019.

To finance a property in Morocco, you have to go to a bank branch with the relevant documentation. Tough competition forces each bank to have different products with rates ranging from 0 to over 10%. However, the average interest rate applied, which was established at 4.41%, is down 5 basis points compared to 2019 but the share of loans with a rate below 6% has continued and strengthened by one point in 2020.

The Morocco Bank of Commerce and Industry (BMCI) bank offers a housing loan with financing up to 100% of the purchase price of a main or secondary residence. It also offers the possibility of choosing between a fixed or variable rate for a repayment period of 25 years. It allows you to defer repayment for up to six months and to increase or decrease the monthly payments once a year.

After a decline in 2019, housing credit production contracted in 2020 by 4% to nearly MAD25.2 billion (US$2.8 billion). The average loan amount increased by MAD6 000 (US$672) compared to the previous year to stand at MAD396 000 (US$44 336). The gross outstanding housing loans amounted to MAD237.7 billion (US$26.6 billion), up by 4.6% against 4.2% a year earlier. The average interest rate was 4.41%. This increase was mainly recorded in the second half of 2020, following the lifting of the general containment.

The government, in partnership with private real estate developers, established the Guarantee Fund for Irregular and Modest Incomes (FOGARIM) to alleviate the housing deficit in the country. The outstanding amount of Guarantees amounted to MAD16.2 billion (US$1.8 billion) in 2020.

The Casablanca Stock Exchange underperformed in 2020. Its benchmark index lost 7.3% after a 7.1% rise in 2019. The most impacted sector was real estate development, with the index falling by 44.1%.

The government has taken a series of measures to deal with COVID-19. These include establishing a special fund for the management of COVID-19, moratoriums on credits and cash loans guaranteed by the State, direct financial aid to targeted populations through the network of banks, payment institutions and micro-credit associations under the aegis of Bank Al-Maghrib.

[1] Banque Al-Maghrib (2020). Annual report on banking supervision – Financial year 2019. http://www.bkam.ma/Publications-statistiques-et-recherche/Publications-institutionnelles/Rapport-annuel-sur-la-supervision-bancaire (Accessed 2 September 2020). Pg. 7.

[2] Ibid. Pg. 25.

[3] Ibid. Pg. 79.

[4] Ibid. Pg. 67.

[5] Ibid. Pg. 68.

[6] Ministry of National Land Use Planning, Urban Planning, Housing and Urban Policy (2020). Main indicators of the real estate sector. http://www.mhpv.gov.ma/wp-content/uploads/2020/07/1.indicateurs-Flash-juin-2020.pdf (Accessed 2 September 2020). Pg. 1.

[7] Casablanca Stock Exchange (2020). Annual Report 2019. http://www.casablanca-bourse.com/BourseWeb/UserFiles/File/rapports_annuels/2019/Rapport_Annuel_VF_2019-fnn.pdf (Accessed 2 September 2020).

Affordability

Morocco is an unequal society and COVID-19 has exacerbated this. The unemployment rate rose from 9.2% in 2019 to 11.9% in 2020. On the other hand, there were wage increases. The average wage increased in the private sector by 3.1% in nominal terms, after 1% in 2019, and by 2.4% in real terms, compared with 0.8%. In the public sector, it rose by 1.8% in nominal terms and 1.1% in real terms.

However, despite the increases, it is difficult to find affordable housing, especially in urban areas. There are several reasons for these difficulties. These include the lack of materials or, when they are available, the high cost of them. Indeed, the decline in economic activity, particularly the consumption of cement, which fell from 13 628 000 tonnes to 12 264 000 tonnes, has accentuated this shortage, making it more difficult for households to obtain materials.

In Morocco, in a city like Casablanca, the price of land varies between MAD 3 000 (336US$) and MAD45 000 MAD (US$5 038) per m2 depending on the area, the type and the condition of the property (apartment, small house, or newly developed). In view of the average salary of MAD4 107.5421 (US$460), it is impossible for most households to acquire a property at the market price. Faced with this situation, many households opt to rent. It is possible to rent a property from MAD2 000 (US$224) monthly for a 60m2 apartment. Renting is a more affordable housing option.

The government, through the implementation of programmes such as low-cost housing and social housing, wishes to enable the entire population to have adequate housing. However, these programmes suffer from a lack of availability or insufficient delivery to meet demand. For example, in 2020, only 85 556 dwellings were built, which is low when compared to the estimated housing needs of 2.1 million dwellings by 2025.

[1] Kellaris, M. (2020). The average salary in Morocco. Business Cool. 25 August 2020.  https://business-cool.com/decryptage/international/salaire-moyen-au-maroc/ (Accessed 2 September 2020).

[2] Banque Al-Maghrib (2020). Annual Report 2019. http://www.bkam.ma/Publications-statistiques-et-recherche/Publications-institutionnelles/Rapport-annuel-presente-a-sm-le-roi (Accessed September 2020) Pg. 47.

[3] Medias24. (2019). The new reference framework for property prices has come into force in Casablanca. 9 July 2019. https://www.medias24.com/le-nouveau-referentiel-des-prix-immobiliers-est-entre-en-vigueur-a-casablanca-3405.html (Accessed 2 September 2020).

[4] Ministry of National Land Use Planning, Urban Planning, Housing and Urban Policy (2020). Main indicators of the real estate sector. http://www.mhpv.gov.ma/wp-content/uploads/2020/07/1.indicateurs-Flash-juin-2020.pdf (Accessed 2 September 2020). Pg. 1.

[5] Ibid.

Housing Supply

In 2019, 66.4% of urban households owned their homes, three times the proportion of renters (20.9%). In rural areas, these percentages are 91.3% and 1.0% respectively.

There are three types of housing in Morocco: buildings, villas and Moroccan-style dwellings. In 2020, 23 942 building permits for all types of property were issued compared to 46 995 a year earlier. The consumption of cement for the same period confirms in part this decline in the issuing of building permits. Cement consumption dropped to 12 264 tonnes in 2020 against 13 628 tonnes in 2019. The supply of affordable housing is low compared to the ever-increasing demand. In order to reduce this demand, the government has created several housing programmes including the social housing programme for households with a budget of MAD250 000 (US$27 990). The Low Total Property Value (FVIT) for households with a budget of MAD140 000 (US$15 674). The middle-class housing programme, which aims to facilitate access to home ownership for middle-class households. Lastly government has introduced an urban upgrading programme that consists of generalizing access to basic equipment and infrastructure for the benefit of under-equipped districts. These programmes are implemented with private developers through the signing of agreements. From 2010 to March 2021, 1 507 agreements have been signed for social housing, 82 agreements for housing with low real estate values for a total production of 2 147 253 housing units.

Moreover, an eco-city named Zenata located near Casablanca covering about 1 860 hectares (30% of which will be reserved for green spaces) is under construction. It aims to accommodate about 300 000 households.

[1] Habitat Worldmap (2019). Morocco. https://habitat-worldmap.org/pays/afrique/maroc/ (Accessed 2 September 2020).

[2] High Commission for Planning. Key Figures 2020. https://www.hcp.ma/downloads/Chiffres-Cles_t18706.html (Accessed 2 September 2020).

[3] Ministry of National Land Use Planning, Urban Planning, Housing and Urban Policy (2020). Main indicators of the real estate sector June 2020.

Property Markets

In 2019, 73.4% of the population were property owners and 14.6% tenants. These figures remain relatively the same when compared to the previous year. Although it has many problems, the real estate sector in Morocco is more advanced than in other African countries. It has an agency (Agence Nationale de la Conservation Foncière, du Cadastre et de la Cartographie – ANCFCC) which is in charge of different tasks including the registration of land ownership, establishing and maintaining the National Land Register and implementing basic infrastructure works, related to geodetic and levelling networks. This agency is committed to the digitalisation of its activities and services. To date, it has been able to process 722 473 registrations including 139 114 mortgages. It establishes an average of 305 290 real estate transactions per year, including 57 422 in the city of Casablanca and 278 069 other listings.30 According to the Doing Business 2020 report, it takes 16 days to obtain a building permit, 81 days to transfer ownership and 60 days to execute contracts. This costs about 3.3% of the value of the property to be built.

The Moroccan real estate sector includes two types of agents: formal and informal. However, the informal real estate sector has always had a larger share than the formal sector, which is trying to become more professional. Unfortunately, this professionalisation is encountering many difficulties, to such an extent that the Moroccan Association of Real Estate Agents has been dissolved.

The lack of social property, or property with low real estate value, coupled with the high price of land per m2 in certain areas, does not allow the majority of households to own a property. They therefore opt to rent. Renting a property is possible from MAD2 000 (US$224) per month for an apartment of between 50 and 70m2, which consists of a living room, a kitchen, a bedroom and a bathroom. The rental price varies upwards taking into account parameters such as the location, the nature or the condition of the property.

COVID-19 has had and continues to have a negative impact on the economy. As far as the real estate sector is concerned, the supply of properties has fallen but the demand is increasing. However, in the majority of cases, there is stability in apartment prices in certain cities such as Casablanca, Rabat or Agadir. With regard to villas, it is the cities of Rabat, Témara and Bouskoura which show stability in their property prices for the first quarter of 2021.

[1] World Bank (2020). Doing Business 2020. Economy Profile Morocco.  https://www.doingbusiness.org/content/dam/doingBusiness/country/m/morocco/MAR.pdf (Accessed 2 September 2020). Pg. 10.

[2] National Agency for Land Conservation, Land Registration and Cartography. Key Figures. https://www.ancfcc.gov.ma/pr%C3%A9sentation/chiffres-cl%C3%A9s/ (Accessed 3 September 2020).

[3]Kellaris, M. (2020). The average salary in Morocco. Business Cool. 25 August 2020. https://business-cool.com/decryptage/international/salaire-moyen-au-maroc/ (Accessed 2 September 2020).

Policy and Regulation

The Moroccan government has been increasing its efforts to provide access to affordable housing for its population. In addition to setting up programmes for the poorest, it is working to ensure that legislation is in place to support the success of its initiatives.

The creation of the National Real Estate Company of Morocco allows it to intervene directly in the real estate market but also in an indirect way via the signature of partnerships and conventions with the private developers. With regard to banks, the central bank lowered the key rate twice by a total of 75 basis points, bringing it to 1.50%, its lowest level ever. It has set up specific refinancing lines for micro-credit associations and participatory banks.

In response to the pandemic, the government created a special fund for pandemicmanagement and the outpouring of solidarity from businesses and the public. This provided support to households and businesses. Thus, 5.5 million households received direct cash transfers and more than 66 000 businesses benefited from guaranteed credits amounting to more than MAD55 billion (US$6 157 770 575) by the end of 2020.

Several other decisions were taken to benefit households and businesses, including the suspension of the payment of social security contributions until 30 June 2020. Government established a zero interest credit rate for self-entrepreneurs impacted by the COVID-19 crisis, up to an amount of MAD15 000 (US$1 679) and introduced the payment of allowances under the “Tadamon” operation to workers in the informal sector ranging, depending on the size of the household, from MAD800 to MAD1 200 per month (US$90 to US$134). Government provided for the exemption of lease fees for the tenants of the premises of the Habous intended for trade, professions, services and housing and postponed the maturity of consumer, car or property loans for individuals whose income had been affected by COVID-19.

With regard to the legislative aspect, the government has introduced, within the framework of the rectifying finance law, incentive measures consisting in particular of a temporary reduction of 50% of the registration fees for transactions relating to housing or land for residential use, the price of which does not exceed MAD 2.5 million (US$279 899).

[1] Jaidani, C. (2020). Real Estate: The provisions of the PLFR 2020 are insufficient to revive the sector. Finances News Hedbo. https://fnh.ma/article/alaune/immobilier-les-dispositions-du-plfr-2020-insuffisantes-pour-relancer-le-secteur (Accessed 2 September 2020).

[2] Wadie El Mouden, W.  (2020). COVID-19. Housing recovery plan: projects worth 3 billion dirhams reviewed by urban agencies. 30 June 2020.  https://fr.le360.ma/economie/covid-19-plan-de-relance-du-logement-des-projets-de-3-milliards-de-dirhams-reexamines-par-les-218315 (Accessed 2 September 2020).

Opportunities

Despite COVID-19, the Moroccan real estate sector is full of opportunities. The demand for property, particularly affordable property, is considerable and still growing. This deficit alone represents a huge market for any investor wishing to operate in this country. With an active population of 4 169 000 people aged between 18 and 24, the demand for housing is only increasing.

Real estate agents, in addition to becoming more professional, must also think differently about their profession. Technology offers new working methods such as virtual visits via augmented reality or the implementation of online communication platforms to organise virtual open days. The crisis has highlighted the need to dematerialise as much as possible in order to be fluid and responsive. The government must continue to play its role not only as a regulator but also as a player by creating the conditions for a reorganisation and revitalisation of the sector. This requires a reform of the housing tax system, the establishment of an independent regulator responsible for identifying needs in a rigorous manner, and for ensuring that the supply of and demand for social housing are matched both in terms of number and type of products.

[1] High Commission for Planning. Morocco in Figures 2019. https://www.hcp.ma/downloads/Maroc-en-chiffres_t13053.html (Accessed 2 September 2020).

 

Availability of data on housing finance

Data on housing finance in Morocco are available. Most of the data are updated annually and are publicly available.

The Central Bank of Morocco (AL-MAGHRIB) publishes an annual report on banking supervision and the annual report presented to His Majesty the King. These are reports on the economy in general. (www.bkam.ma)

The High Commission for Planning is the body responsible for the production, analysis and publication of official statistics in Morocco. It collects data at regular intervals and varies according to the type of data. They are available on their website. (www.hcp.ma)

The Ministry of National Land Management, Urban Planning, Housing and Urban Policy is responsible for implementing the government’s policy on housing and urban development. Data collection is not as frequent as that of the central bank, but it is also freely available. (www.mhpv.gov.ma)

Urban Informality

Morocco very early on adopted several instruments to govern the urbanisation of cities and the urban planning of the latter. These are materialised in urban planning documents the objective of which is to apprehend the modes of land use, and more generally to respond spatially to the objectives drawn up with regard to the major issues of housing, infrastructure and equipment.

There are four urban planning documents that govern urban development in the country. The Urban Development Plan and Rural Settlements Development Plan, which are regulatory urban planning documents that define the right to use the land within the territories to which they apply. The Urban Development Master Plan, is an urban planning tool that sets out, for a defined time frame (generally 25 years) the main lines of integrated development of urban areas and their direct influence zones and the Zoning Plan which is a document that governs the use of the land in a zone

In 2014, Morocco estimated that about 13% of its urban population were living in slums. In 2018, that figure was reduced to 9%. This decrease is the result of the “Cities Without Slums” programme set up by the government on 24 July 2004. However slum housing continues as the country is primarily urban, with 63.4% of the population living in urban areas. this number is growing by 2% per annum.

Morocco is on the way to providing ¬water supply to its entire population. According to the Director-General of the National Office of Electricity and Drinking Water (ONEE), Abderrahim El Hafidi, “the rate of access to drinking water in rural areas has reached 97% and 100% in urban areas” in 2018.

Websites

The Central Bank of Morocco (Banque Al-Maghrib) www.bkam.ma

High Commission for Planning www.hcp.ma

The Ministry of National Land Use Planning, Urban Planning, Housing and Urban Policy www.mhpv.gov.ma

National Agency for Land Conservation, Land Registration and Cartography www.ancfcc.gov.ma

The World Bank htpps://www.banquemondiale.org/