Cash from the casbah

Source: Exec Digital UK

Date :01/11/2007 09:58:43

Morocco is currently one of the hottest places in the world to buy property. Exec UK spoke to developer Mark Oxley about opportunities for Western investors in North Africa

By Sam Wright

Since King Mohammed VI ascended to the throne in July 1999, Morocco has been steadily building up to the changes that have kick-started its current property boom. The King, widely considered to be one of the most liberal in the Muslim world, has long courted Western investment into his country, imposing a zero tolerance policy toward corruption and making sweeping reforms to his country’s treatment of women.

Forward vision

On January 10th, 2001 the King announced ‘Vision 2010’, a planned programme to overhaul Morocco’s tourist industry. The implication of this scheme has transformed the property market. With the media furore over here about capital gains and inheritance tax, Morocco’s benefits for investment now makes for eye-watering reading.

Under Vision 2010, there is between zero and 20 percent tax on any capital gains (fixed at zero if profit is under £40,000 or after ten years of ownership) and zero percent inheritance tax to family, along with no annual property tax for first five years. As a further incentive, mortgages are available up to 70 percent and there is 100 percent repatriation of funds when the property is sold. This is on top of properties up to 60 percent cheaper than European countries such as neighbouring Spain.

Cash influx

The King seems to have had his wish granted. Western investment has poured in; numerous firms have set up to aid Western buyers and the buy to let market has exploded. Mark Oxley is someone who has been bitten by the bug. Mr. Oxley is the English owner of Searchair (Marrakesh) SARL, a company developing a series of luxury riadh-villas 25 kilometres south of Marrakesh.

These properties are situated in Ard Amane, five miles from the base of the Atlas Mountains. This area has become something of a hotspot for developers, with a $5 billion dollar ski resort under construction nearby and plans underfoot to construct the world’s largest dry ski slope. Rocco Forte and Four Seasons have huge developments underway, and it is large branded groups such as these that are beginning to dominate the market.

Searchair’s vision is slightly different, however. “We’re lovers of architecture,” says Mr. Oxley. “So we feel we’re creating a better and more honest product, and a better value one at that. Ard Amane is quite unlike a project you’d be able to do anywhere else.” It is difficult to disagree with him. As he points out, ‘between October and March you can’t get good quality sunshine anywhere in Europe.” Morocco has up to 300 days a year, and, because of its proximity to the Ourika River, Ard Armane is amazingly lush and green.

Escaping the city

All this activity in Morocco’s countryside can be seen as a reaction to flood of investment into Marrakesh. This has been so overwhelming that the government has passed laws that restrict developments within 16 kilometres of the city to one house per hectare. Mr. Oxley points out that that anyone expecting an arcane and haphazard way of doing business in Morocco is in for a surprise.

“The thing is,” he explains “is that it all works on a very French system. There’s very tight regulations regarding things like quality of plans.”

For this reason, he says, it is ‘absolutely vital’ to have good contacts in the country. Searchair’s Moroccan representative, Tim Buxton, has been in the country for over eight years and has a huge amount of knowledge about its laws and culture.

Recently, he featured in Rick Stein’s Mediterranean Escapes television programme, showing Mr. Stein around the food markets of Marrakesh. Luckily, several companies have shot up to help potential investors. Seek and Buy Properties and A & M Property Services are just two notable names in a crowded market.

Price explosion

With all the activity from developers such as Mr. Oxley, prices have unsurprisingly soared. In fact, he says that ‘building land has gone from 1.15 million Moroccan dirham (around £400,000) to 4.5 million (£1.6 million) in one year.” In 2006, there was a 20 percent rise in the market, making Morocco one of the fastest-growing territories of the moment.

Knight Frank, the global property consultants, earmarked Morocco as their fourth growing market for this year with an increase of 15 percent –higher than anywhere else apart from Lithuania, Latvia and Slovenia. Even though this growth shows no sign of slowing from an investment point of view, it can be hard not to think that the ship has already sailed. But there is one important development yet to take in to account.

Crossing borders

Possibly the most ambitious of the King’s plans is to link Morocco to Spain with an underwater tunnel across the Strait of Gibraltar. The Washington Times reported back in February that this has been under consideration for more than 25 years, but developments have made a significant step forward with a Swiss engineering firm thought to be making preliminary assessments.

The initial plans state that the link would run between Cape Malabata in Morocco to Punta Paloma in Spain. Morocco’s minister of transport said earlier this year: "It’s not easy to predict a date yet, but it is a project that will happen. It will completely change our world."

As it stands, this world will change considerably even before these plans are finalised. “I think that King Mohammed is trying to create the European community without actually joining the EU,” points out Mr. Oxley “and the wonderful thing is that he’s using European money to do it.””

October 25, 2007