Guide to buying a property in Morocco

April 8, 2009 - PRLog -- Economy: Despite the global economic malaise, Moroccan GDP rose by 6.5% in 2008, compared with 2.7% in 2007 and 7.8% in 2006. The economy is predicted to grow by an average of 5.5% per annum from 2009 - 2013. Banks were very conservative during the global boom years and did not speculate in sub prime and now the Telecoms, Agriculture, Manufacturing, Mining and Services industries are growing fast. Real estate is also a major growth industry and the investment over the last 5 years from many of the worlds leading developers (Emaar, Quatari Diar etc etc.) is also having a positive impact in Morocco.

Once a French protectorate, the country has a modern economic system and a pro-west outlook with established trading links to both America and Europe where it is perceived as a strategically important stepping stone into the Muslim world.

Tourism: Kind Mohammed VI ascended in 1999 and is a young, forward thinking and extremely popular monarch. He has led many reforms including a comprehensive plan for the tourism sector called Vision 2010 that aims to attract 10 million visitors to the country by 2010, bringing in $9 billion of foreign exchange and creating 600,000 new jobs.

As part of this programme, miles of coastline, urban locations and infrastructure will be transformed. This includes the “Plan Azur” – 6 super luxury coastal resorts that will attract wealthy northern European investors and visitors to the country. The plans are based on real and not expected demand - hotel and guesthouse occupancy rates were up by 9% in 2008, boosting the average occupancy to 49%. Marrakech recorded the best results with occupancy rates of 70%.

With 8 million people flying into the country in 2008, the Vision 2010 goal is well on the way to being achieved and makes the target of tourism providing over 20% of GDP by this time eminently possible. It is already the 2nd largest source of foreign currency and income from the sector totalled 7.55 Billion Dollars in 2007 when tourist arrivals totalled 7.4 million.

The tourism industry attracted Dh4.46bn ($509m) in 2006, according to the Department of Investment (which only monitors large projects) and this represented some 22.3% of total recorded investment.  In March 2006, two Dubai-based companies pledged an impressive $17bn over the next 10 years to tourism projects – this deal was the largest ever recorded.

The market is firmly established in France and growing rapidly throughout Europe, the Middle East and beyond. The Government has invested millions in advertising campaigns promoting the country as a premier cultural and lifestyle destination.

Property: The government have responsible development plans for their country. Strict planning rules limit development and this control means that new property is sympathetically and responsibly developed. In Saidia, building controls restrict the supply of more property around the resort for another 15 years. Subsequently, no more completed building works for another 20 years.

King Mohammed VI has changed the laws, allowing foreign investors to take proceeds of property sales out of the country and there is a double tax treaty between the UK and Morocco to ensure that this is not paid in both countries.

Taxation: Value Added Tax is 20% for new build property and often included in the price. Municipal taxes (rates) are between 10% -30% of the yearly rental value of the property with a reduction of 75% if it is your main dwelling. Income tax is exempt for up to 5 years in Morocco but following this the rental income should be declared on 60% of the total at levels between 13% and 44%. Capital Gains tax in Morocco is currently 20% but is reduced to 10% for properties held for 5 years and to 0% after 10 years. This is required on all real-estate transactions and includes the difference between the purchase price and the price at which the property is sold, reduced by the selling costs and increased by the purchase costs, investment expenses and interest payments.  Inheritance tax is 0% for family members but expert advice should be obtained prior to implementing any inheritance tax planning strategies. Most importantly here you should make a Moroccan will.

Communications: An Open Skies policy is now in place between Morocco and Europe and this competition for Moroccan air space means new routes and carriers are entering the market and fares are coming down. Ryanair, Europe’s leading low fares airline have announced the completion of a five year agreement with the Government of Morocco to develop low cost air access and tourism to the country from its bases throughout Europe. This reflects the Moroccan Government’s policy of encouraging significant growth in its tourism industry as well as providing low cost access for its citizens for business and leisure purposes. The agreement covers most of the regional airports in Morocco including Oujda. Other airlines that provide comprehensive services to and within Morocco include Easyjet, Iberia, Air France, Royal Air Maroc, Atlas Blue, and Air Europe on a daily basis.

We all know that, amongst other factors, a healthy property market relies upon a thriving tourist economy. Free, easy passage for visitors via an efficient road system and public transport improves the quality and appeal of any investment location.

The announcement that a motorway construction programme to build a target 160 km of road per year until 2010 comes as no surprise within the rapidly expanding economic arena of Morocco. The result will be greatly improved communications to all areas of Morocco and a further increase in visitors who regard Morocco as an advanced country that competes well with EU standards.

Summary: Morocco is a fantastic year round destination and one of the most stable economies in northern Africa. In 2008, the IMF reported that its economy would grow over the next 5 years, even during the global financial crisis. Morocco has great long-term investment potential.

It has a warm Mediterranean climate ideal for year round tourism, 1000’s miles of unspoilt beach and a rich history / culture that attracts the more discerning kind of tourist and property buyer.

French, Spanish & English are widely spoken and because of a comprehensive government investment, programme, by 2010, Morocco will be well equipped to deal with a large number of international tourists. This growth is positioning the country as a leader in the worldwide property investment market place.

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