Fez Real Estate Update 2012

After a very quiet time in the Moroccan real estate market, things look set to change. One early indicator is that major media players are giving space to stories about buying property in Morocco. From airline inflight magazines to the lofty heights of the New York Times, journalists are pointing to Morocco as a good place to invest.

What is particularly interesting is the attention is not on Marrakech, but Fez. Although Fez is the spiritual and cultural heart of the country, Marrakech has always been the 'party town' with a louche reputation akin to that of Tangier, and been the choice particularly of French investors. While Casablanca is the commercial heart, it has not attracted attention from British, American and French home buyers. So, what is happening in Fez, and why the attention?

The first unusual thing about the Fez market is that it is actually two different markets - the World Heritage listed Medina and the Ville Nouvelle or New City. The Ville Nouvelle is often the choice of Moroccans and those with businesses there, but for foreigners the charm of the Medina, being car-free, with its medieval houses and labyrinthine alley ways, is the key point.

A riad for sale in Fez  - in perfect condition

Then, having chosen the Medina, there is another choice to be made; a riad or a dar. A riad is normally larger and has an open central courtyard with trees, a fountain or garden. A dar is smaller, with a central courtyard that can often be closed over against inclement weather. Dars do not have a central garden or fountain although they may often have a wall fountain.

Another consideration is the age of the house. David Amster, in his fine website A House in Fez.com has this to say: In terms of age, you need to decide whether you want a older house, generally 17th to 19th century, or a "neotraditional" house from the early 20th century. Older houses are more interesting, but generally need more restoration and are deeper in the medina. Note too that the age of a medina house is often hard to determine. There is often a date on the plaster above one of the main salon doors, but this is the date in the Islamic calendar of when that plaster was completed and generally has nothing to do with when the house was built. It's also normal for doors, beams, carved plaster, and zellij to be replaced every one to two hundred years, which means that a seven-hundred-year-old house sometimes looks like it's 19th century.

For sale a potential maison d'hôtes

Quoted in a recent New York Times article, Cédric Elsener, the owner of Maroc Immobilier Capital, says, “The Medina is really bewitching. It has a weird effect on you. Either you love it or you hate it — nothing in between.” According to Frédéric Sola, owner of Fez Real Estate, a company that sells and renovates riads in the Medina, “Time stopped about five centuries ago. What you see in the Medina, you don’t see anywhere else in the world.”

Also quoted in the New York times is Tim McTighe, a partner of Fes Properties, which sells, restores and manages properties in the Medina. Like others he reflects that the property market has been slow since 2008. “I’d say the glory days were between 2004 and 2007,” said Mr. McTighe. He and other brokers attribute that primarily to the global economic downturn, though they acknowledge that the regional political turmoil of the Arab Spring hasn’t helped. “Unfortunately some people put Morocco in the same basket” as Libya, Egypt, Tunisia, and other strife-torn countries in the area, said Mr. McTighe, suggesting that possible investors might be watching and waiting. “But Morocco is a very peaceful country, night and day with a country like Libya.”

Fred Sola points out that despite the sluggish market prices have not fallen sharply, because there are fewer properties on the market. “There have been some good bargains from foreigners who had to resell riads quickly,” said Mr. Sola. Mr. Elsener said it was a good time to buy, especially given improvements in Fez’s accessibility. “There are more direct flights to Europe,” he said, “and they are working to double the size of capacity at the airport. We also have a new highway that opened last June — from Fez you can drive to the Mediterranean in two and a half hours.”

One changing demographic is the nationality of those purchasing properties. For a long time the major buyers were French, but with the increase in budget airline flights to Morocco, other nationalities are catching up. Also present in the market are Belgians, Italians, Americans, Britons and several Australian or New Zealanders. While a majority of investors are buying in order to set up a guesthouse, a small number are buying private residences.

Traditional restoration takes time and money 

The initial purchase of a house can be a relatively simple procedure, however, the cost of restoration needs to be factored in. In general terms, restoration is likely to cost two to three times the purchase price, depending on the structural condition of the building. Those who have been through the renovation process will be quick to advise that it is best to be on site for any major work as communicating day to day decisions by email or telephone is far from efficient. For this reason, a growing number of buyers are looking at properties where a majority of the restoration work is already completed.

Further reading:

David Amster's site
Suzanna Clarke's A House in Fez 
Tahir Shah's The Caliph's House


Moroccan Property - latest information

One of the many properties on offer: this five bedroom guest house in the Fez Medina is for sale at 540,000 euros through Fez Real Estate. 

The Moroccan property market has been in the doldrums for the past few years, but according to The Sunday Times, buyers are set to return.

In an article published last weekend, writer Zoe Dare Hall points out that Morocco, along with Turkey, is an attractive alternative to Spain, Italy and France and has considerably lower prices.

Since King Mohammed VI opened the skies with a view to increasing tourism, the abundance of cheap flights to Morocco has made the country a haven for those looking for a beautiful and unusual home or retreat.

While property prices rocketed in 2006-7, especially in Marrakesh, the global financial crisis; public perception of the Arab Spring and the bombing in Marrakesh in April have combined to dampen recent investment. However, the bombing appears to be an isolated incident and Morocco has remained stable during the recent political upheavals. With the debt troubles in Greece likely to impact on the entire eurozone, Dare Hall suggests that now is a good time to invest in Morocco.

Renovated four-bedroom riads near Djemaa el Fna square start at £370,000 through Savills (020 7016 3740, savills.com), but less touristy cities like Fez, Essaouira, on the Atlantic coast, Tangier, on the Strait of Gibraltar, offer better opportunities. You can find old houses in Fez for as little as £20,000 through Fez Real Estate (00 212 535 637775, fez-realestate.com). They also list high-end properties, such as the guest house shown above.

If you want to let out your property, while Marrakesh remains the strongest market for short-term lets, it is worth considering Casablanca suggests Kate Stinchcombe-Gillies, head of marketing for Holidaylettings.co.uk. “Demand for lets there is phenomenal, but we have little inventory.”

You can find the full article on The Sunday Times website.

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Morocco's Residential Real Estate ~ Update

Prices in Morocco's residential real estate market are holding steady in 2011, with a slight overall decline balanced by increases in the key apartment segment and in some high-demand areas of the country. Residential rentals have also held up well and, in spite of the wave of political unrest in North Africa earlier this year, the development of major real estate projects is largely on track, with domestic investors and low-cost housing set to drive further growth.

According to figures released in February by Bank Al Maghrib, the Moroccan central bank, having risen 2.4% year-on-year at the end of September, residential real estate sale prices ended 2010 slightly down after a slow final quarter, at 0.9% below where they stood at end-2009 and 2% below end-September. However, the value of apartment sales - which account for the majority of transactions - rose slightly, up 0.3% on the previous year.

Fez and Marrakech see price rises

A number of areas, including the Fez-Boulmane and Marrakech-Tensift-El Haouz regions, also bucked the trend, witnessing notable price increases. The sale value of apartments and houses increased by 1.3% and 2.3%, respectively, in the business capital, Casablanca, which accounted for 40% of all sales. Prices also held up well considering a 28.4% fall in the number of transactions in the fourth quarter of 2010 compared to the same period in 2009. The Fez area appears set to continue in a positive way as it is not subject to security concerns and visitor numbers are expected to increase in the coming months.

The residential rental market appears to be performing more strongly, with property agencies reporting both a solid 2010 in terms of rentals and optimism regarding 2011. Rental prices are reported to have risen in the country's respective political and commercial capitals, Rabat and Casablanca.


Fez hangs its hopes on Atlas Blue.

The Atlas Blue direct flights to Fez are set to reignite the property market. In the last week or so visitors from Britain and also Germany have been scouring the Medina for bargains. The sleeping tiger in the equation is America. Despite the credit crunch there are still a large number of Americans interested in Fez. The percentage of Americans visiting sites such as The View from Fez, has almost doubled in the last six months - a trend that looks set to continue for a while. Meanwhile with a look back at the gloomy past the Daily Telegraph reports on the impact of Ryanair's decision to quit Fez:

Frederic Sola has seen first-hand what happens when direct flights to an emerging property destination are halted. Since Ryanair stopped its route to the Moroccan city of Fez at the end of last year, Sola, who runs Fez Real Estate, has seen sales drop by more than 80 per cent.

"Last year we sold 37 riads, 27 of them to British people who wanted somewhere they could travel to directly and cheaply," says Sola. "This year we have sold six. Buyers now have to fly to Casablanca, a three-hour drive away, or via another airport such as Paris or Frankfurt." Fez may win a reprieve as Atlas Blue, Royal Air Maroc's low-cost branch, has said it will resurrect the route from December.

David and Sally Arnold, from Warwick, who paid £25,000 for an unrenovated house in the medina last year, certainly hope so. "Our next trip to Fez will take 12 hours and the return will need an overnight in Madrid," says David, 72. "The reasonably priced three-hour flight was a bonus. Now, travel to Fez is increasingly inconvenient, significantly more expensive - and it has undoubtedly diminished the interest of the UK market." Fez is a classic case of buyers piling in to a new second-home destination boosted largely by low-cost flights - then being left in the lurch when the airline changes its mind.

Fred Sola http://www.fez-realestate.com/

Morocco and the impact of the World Economic Crisis

According to a Reuters report Morocco's Central Bank is more worried by inflation than by global financial markets turmoil originating in the United States.

Le Matin
reports sources close to the Royal Palace as saying, "For the time being, inflation remains a cause of concern because despite efforts to keep it in check, imported inflation has an impact. Inflation through costs has an impact and creates, with wage rises, a vicious circle".

Moroccan consumer price inflation rose to a year-on-year 5.1 percent in July from 4.7 percent in June, according to latest official figures released on August 18.

The annual inflation rate was 5.4 percent in May.

In June, the government said it forecast annual inflation of 2.7-2.9 percent, up from an initial estimate of 2.0 percent.

Commenting on a sell-off on Casablanca bourse prompted early this week by fears of contagion from global financial turmoil the source says, "We are not affected by the international crisis because we do not have subprime loans in our banks. We are not concerned by the mortgage crisis and our banks do not have such assets".

Moroccan stocks, mainly property shares, tumbled this week on concern that the global credit crisis could dry up foreign investment flow in the country's fast-growing real estate market, wiping out more than 50 billion dirhams in shareholder value.

Government officials played down investor fears of possible repercussions from the international credit crisis on the local property market, insisting that the domestic sector would continue growing in the next years.

"Where is the crisis when credits to the property market had risen 33 percent in July?" asked Finance Minister Salaheddine Mezouar in the business daily L'Economiste.

Morocco is immune to the subprime crisis for several reasons, notably the fact that the financial sector does not hold securities or loans in financial institutions or international investment funds affected by subprimes, Salaheddine Mezouar said on Thursday.

Speaking at the weekly cabinet meeting on the recent developments of national economy and international environment, Mezouar said that real estate loans in Morocco are mainly fixed interest rate loans with the possibility for variable interest rate loan beneficiaries to opt for fixing these rates under regulated and predictable conditions, Communication minister and Government Spokesperson, Khalid Naciri, said in a press briefing at the end of this meeting.

The financial situation of Moroccan banking institutions has significantly improved in recent years, thanks mainly to the strengthening of banking supervision in general and the stabilization of the public financial sector in particular, the minister said, adding that the upsurge in the energy and food products had an impact on our balance of payments and our public finances.

However, he noted, thanks to government support through the fund of compensation, the effects of this upsurge has had no impact on the purchasing power of our citizens, nor on production factors.

According to the minister, real GDP rose respectively by 7% and 6.7% in the first two quarters of 2008, which would allow for a growth rate estimated at 6.8% this year.

According to a report being run by Maghreb Arabe Presse, Morocco's cost-of-living index for August has edged 4.8% from the same period of last year, the High Commission for Planning (HCP) said on Thursday.

The rise is pinned on a 8.3% hike of the food product prices and a 1.8% progress of non-food product prices, the Rabat-based HCP said in its monthly bulletin.

Compared to July, the index edged 0.4%, inflated by a 0.8% rise of the food product prices and a 0.1% progress of non-food products, it said.

The year-on-year index for July had jumped 5.1% on the food price hike, which had rocketed 9.1%.

The highest rise was registered in the western city of Kenitra, with 1.3%, followed by Tangier, where the index rose 1.2% and Fez and Tetouan (1%), the commission said.