Buying a Property in Morocco
Introduction to Morocco
BUYING ABROAD AND WHAT IT CAN OFFER
Morocco has recently arrived on the international property scene for a number of reasons. For starters it has a progressive forward thinking leader, a growing economy and excellent appreciation rates. Secondly, and most importantly for a number of potential relocators, it enjoys a fabulous climate, miles of sandy white beaches, an unspoilt and diverse landscape, an exotic climate and a fascinating culture. No surprise then that Morocco has become a major target for investors, second-home buyers and permanent relocators looking for a better lifestyle.
Twenty years ago buying abroad was considered a difficult and risky business, but today perceptions have altered, and now more than one in ten Britons live overseas, with 400,000 owning a property abroad. Foreign currency exchange experts, HiFX, recently published figures which stated that the British equity in overseas property now stands at a staggering £52 billion, with an average of 500 Britons leaving UK shores every day to start a new life or take up a job overseas. In the last five years, the number of people buying overseas has risen by 60% from 129,000 in 2000/2001 to 211,000 in 2006.
It wasn’t until the advent of the package holiday and the mass development of the Spanish property market in the 1970s and 1980s that the idea of owning a home in the sun became a popular option, soon developing into a feasible prospect as international estate agents and mortgage lenders came on the scene. Today, thousands of us – 68% of British adults, that’s 29 million people – want to buy a home abroad, and thanks to the increased freedom of movement courtesy of EU regulations (which allow us to move around with only the need for a passport rather than reams of paperwork), budget airlines and an opening of the overseas mortgage markets, this dream can now become a reality.
Once deterred by the cost, hassle and uncertainty of the overseas property market, people used to shy away from relocating and buying a home abroad, with this occupation being left to the rich or rootless. Today, property has become the cornerstone of our investment portfolio as we have seen our faith in the pensions and stock market undercut by the increasing volatility in the equity markets. What’s more, as the British housing market has continued to boom, many buyers – especially first-time buyers – have been priced out of the UK market, but have seen their money go further, with greater returns, if buying abroad.
The lure of living abroad has traditionally been the desire for better weather and an improved and cheaper lifestyle. However, many have also begun to cite reasons such as rising crime, stealth taxes and political correctness gone wrong as reasons for leaving the UK and relocating their family overseas, and the figures show that long-term migration from Britain has hit an all-time high, reaching 385,000 from January to July 2006.
A new but significant trend has seen many people looking away from the traditional markets of Spain, France and Italy, and to the more emerging, new and culturally unspoilt markets, such as Morocco and many countries in Eastern Europe and South America. Keen to buy abroad in order to secure themselves a new and exciting lifestyle – as well as a nest egg for the future – buyers have become more adventurous, as investing the pound overseas has become a common, and relatively easy, occurrence. Eager to explore different cultures, away from the security of an expat development, emerging markets such as Morocco have benefited from the desire people have to live a ‘foreign’ lifestyle and learn about new cultures, rather than choosing to place themselves smack in the middle of a ‘Little Britain’.
Finally, there’s the financial benefits to be reaped from buying overseas. Research by MRI Overseas Property suggests that six in ten Brits (63%) would now consider moving abroad, with 5% – one in 20 – of these considering moving for tax reasons. Most notably, nearly one in five (17%) of people considering buying a property abroad would purchase overseas purely as an investment for the future.
Many question the logic behind risking your hard-earned cash in an emerging market, when you can invest it ‘safely’ in the UK. However, the difference between buying in the ‘safe’ UK market and an emerging destination such as Morocco is the market growth and potential for higher returns from your investment. For example, UK capital growth currently sits at around 5%, meaning if you went out tomorrow and bought a property in the UK, hung on to it for one year and then sold it, your profit would be less than 10% of the property value. Compare this with the Moroccan market where annual appreciation rates regularly hit 20% to 30%, and it’s easy to see which scenario offers the best investment potential. What’s more, it has been reported that 2008 will see a stalling of the UK property market, and while this may be good news for those looking to climb onto the property ladder for the first time, for current homeowners it can be a worrying period.
WHY BUY IN MOROCCO?
Throughout the 1960s and 1970s Morocco was frequented by backpackers and was a favoured haunt of hippies. Today this has all changed. Morocco is becoming one of the fastest growing destinations among holidaymakers and overseas property buyers alike, attracting increasing numbers of visitors and rising levels ofinvestment into the country. Only three hours flight from the UK, Morocco has the advantage of being a more exotic location than nearby southern Spain, while it has a much more developed industry, economy and infrastructure than the African continent it belongs to. Economically, the country is being rapidly modernised thanks to forward-thinking monarch King Mohammed VI, who shares many of the aims and ambitions of Dubai’s ruler Sheikh Mohammed bin Rashid Al Maktoum. If he’s anywhere near as successful in his ambitions as that of Duabi’s leader, then it is clear that Morocco has a big future. In 2001 King Mohammed unveiled his ambitious Plan Azur which aims to double tourist figures by 2010, construct 1,000 kilometres of new roads, introduce more budget flights through its Open Skies policy and expand the airports – and all of this equates to a e2.2 billion government investment. The most notable development for property buyers is the plan to create six new coastal resorts complete with residential properties and stacks of leisure facilities and amenities.
Thanks to the efforts of King Mohammed and his government, Morocco is on the verge of a property boom, with prices continuing to rise at levels of up to 50% in some areas. Despite these price hikes, property still remains incredibly affordable in UK terms, with housing retailing at one-third to a half that of Spanish and French levels. You can buy a ruined hovel for as little as £10,000 or an expansive villa for £300,000, making this an affordable country to buy in. However, if you’re looking for something more luxurious, then there are also plenty of high-end properties.
There are no restrictions on foreigners buying in the country and in return for their investment, buyers benefit from a low cost of living and the rescinding of capital gains tax after ten years of ownership, as well as no inheritance tax.
The appeal of the country is obvious and this has helped to burgeon the blossoming tourism market and in turn impact positively upon investment prospects. Aside from being on the budget flight trail and within three hours of the UK, it has a mystique and mystery epitomised by its souks, mosques and medieval medinas, yet also boasts a modern, cosmopolitan side, highlighted by the metropolises of Marrakesh and Casablanca. Lush gardens, olive groves and palm trees contrast with the arid expanse of the western Sahara in the south, while the developing ski resorts of the central Atlas mountains are only a couple of hours from the western coastline and its beaches. Year-round sunshine, purpose-built tourist facilities and some wonderful beaches all combine to make this the ultimate tourist destination, with Morocco’s Mediterranean coast stretching for 450 km and its Atlantic Coast – which has some of the best surfing and windsurfing conditions in the world – for 3,000 km. Politically, the country remains stable and the economy is blossoming, experiencing growth of around 6.7%. With such a positive future ahead of it, it is unsurprising that Morocco has become such a popular location for holidaymakers and buyers alike.
Adam Cornwell, Managing Director of GEM Estates, takes a look at the popularity of Morocco and what it can offer investors.
Morocco is exceedingly popular with the Brits – just pick up any of the lifestyle, travel, women’s interest or property magazines out there and you’re bound to see some mention of it. GEM Estates initially began recommending and selling property in Morocco almost three years ago, but at that time it was just the die-hard Morocco fans who already knew and understood the country’s charms. However, over the last three years we’ve seen Morocco’s popularity grow, with the country beginning to appeal to a wide audience. All-purpose resorts such as Mediterrania Saïdia give people a balance of old and new Morocco and an easy introduction to life there, with golf courses, marinas and shopping malls all on site, and this has attracted a new breed of buyers. Meanwhile, investors, who may not necessarily be fans of Morocco but can see the obvious appeal of prices which are much lower than Spain, are also getting involved. What people also need to realise is that we’re still at the thin end of wedge, with other Plan Azur resorts, EMAAR (Dubai developers) and Middle Eastern developers yet to start their projects, so ultimately prices are going to continue to rise.
A BRIEF HISTORY OF MOROCCO
Morocco’s Arabic name is Al-Maghrib Al-Aqsa, which means ‘extreme west’ and highlights Morocco’s geographical and social position in the Arabic world. Shaped by the many cultures who have invaded and conquered the country over the years, Morocco has a long and illustrious history. Inhabited since Neolithic times, with evidence of occupation as far back as 15,000 bc, the earliest indigenous settlers were known as the Berbers, which literally means ‘non-Arabs’ or ‘barbarians’. Split into various tribes, they lived – and in some cases still do live – in the inhospitable desert and mountain terrain of the country.
Part of the Maghreb – the name applied to the modern area of Morocco, Algeria, Tunisia and Libya – the origins of the country remain a mystery, as does that of the Berber tribes. In ancient times Morocco was developed by the Phoenicians, and later the Carthaginians, as a trading outpost, and the latter introduced a number of ports, towns and cities, with Tangiers being the most important. Consequently, when Carthage was sacked, Morocco became part of the Roman Empire, and following that civilisation’s collapse, passed in quick succession to the Vandals, Visigoths, and then the Byzantine Greeks. Throughout this period, the Berbers held onto the mountainous, inhospitable lands of Morocco, which were simply regarded as hostile territory by the occupiers.
By the 7th century, following the death of the prophet Mohammed, the Islamic expansion began. The first Islamic attempt to occupy Morocco began in ad 669 but was quashed by the Berbers. However, towards the end of the 7th century, the Islamic invaders were more successful, and many Berbers converted to Islam. Nevertheless, the instilling of a new faith into the local populace backfired on the Islamic occupiers when the Berbers ousted them in the 8th century. This move marked the end of direct Arabic rule over Morocco.
The Berber dynasties
From the ousting of the Arab invaders, right through until the modern day, Morocco has been successfully ruled by a variety of Berber dynasties, starting with the Idrissids in the 8th century. This dynasty was founded by Moulay Idriss, a political exile from Mecca and a direct descendent of the prophet Mohammed. Eventually poisoned by one of his many enemies, he was succeeded by his son, Idriss II, who built Fès and turned it into the state capital. He was also responsible for transforming Morocco into the first Arab kingdom, introducing currency, administration and an army into the country’s north. However, despite his many achievements he never managed to unite the whole country, and on his death, infighting among his sons tore the dynasty apart.
Next came the Almoravids in the 11th century, a military confederation of Berber tribes who united and ruled the south under a strict form of Islam. Known as ‘the veiled ones’ due to the turbans they wore to protect their faces from the sands of the Sahara, their reign only lasted for 85 years, with their legacy being the transformation of Marrakesh into the Almoravid capital.
In the mid 12th century, the Almoravids were overthrown by the fervent religious group the Almohades (meaning ‘believers in the unity of God’), who were angered by the lax rule Morocco had fallen under. They set up a dynasty which became known as the golden age of the Maghreb. Wrenching control of Spain from the Christians, and Tunisia back from Norman hands, leader Yacoub al-Mansour introduced an age of cultural and economic resurgence. However, with their forces spread so thinly, this power was not to last, and the Almohades dynasty fell in the 13th century to the patriotic Merenids, who left a fine architectural legacy in Fès.
The 16th century saw Morocco split into two and ruled by two competing dynasties, the Wattasids in Fès, who usurped the Merenids, and the Arabic Saadian dynasty who were based in Marrakesh. The Saadians ultimately prevailed, bringing an end to the rule of the Moroccan Berbers and the start of the Arab dynasties, which remains to the present day.
There has been much mystery surrounding the origination of the Berber people, although we do know that the Berbers have lived in the North African area – between western Egypt and the Atlantic Ocean – for as long as written records have been kept in the region. The earliest references to the Berbers are found in Saharan cave art, and there have also been references to them in the writings of the ancient Egyptians, Greeks and Romans. Morocco is home to the largest proportion of the Berbers, with nearly 19 million (30%) of the total population living there. Between 8% to 15% of Berbers live in Algeria, and many in France, Niger and Spain. Most are Sunni Muslims. There have been tensions between Moroccan Berbers and the government, much of which relates to the banning of Berber names being given to children – they must be Arabic.