Booming Real Estate in Morocco
The Investment Commission, chaired by Driss Jettou, the prime minister of Morocco, announced on June 13 the setting up of three major cement factories for a total of Dh8.9bn ($1.1bn). These significant investments in the cement industry are designed to meet the increasing demand in the construction and real estate sector.
Though the cement industry still is dominated by foreign capital, two out of the three factories will be Moroccan. The first one is initiated by the Ynna group and will be built in the Settat region. The second one, to be established by the Addoha group, will have two units, one in the region of Béni Mellal and the other one in Settat.
The Ynna group is investing Dh3.3bn ($400m) and 500 jobs will be created. The Addoha group's factory, also know as « ciments de l'Atlas », will also require an investment of Dh3.6bn ($400m), with the creation of 1000 direct jobs for its two units.
Spanish firm Lubasa, specialised in construction, real estate development and environmental management for 50 years, will set up the third cement factory. To complete this project in the region of Sidi Kacem, Lubasa will invest Dh1.9bn ($228m) and create 170 direct jobs and 300 indirect jobs.
The Investment Commission has also studied many other projects. In total, some Dh25bn ($3bn) and the creation of 5500 jobs are at stake.
Among others, the Commission will soon assess the construction project of Loukos, a city planned by emirati firm Al Qudra and Moroccan firm Addoha. The investment for this new city amounts to Dh1.2bn ($144m) and will create 2024 jobs. The investment programme includes the construction of apartments, houses, public facilities and shopping malls.
According to a study conducted by the Centre Marocain de Conjoncture (CMC) published in March 2007, the construction and real estate sectors make up 7% of national production for an added value of 5% of Gross Domestic Product (GDP). The latest statistics on employment reveal that the construction and public works sector employs around 700,000 people directly, which represents 6.7% of the working population. The real estate sector generated Dh2.9bn in foreign direct investment (FDI) in 2006 up to the end of September, which represents 15% of all FDI flows.
"The real estate market is booming, as illustrated by domestic sales of cement at the end of Scaeptember, which rose by 10% compared to the same period in 2005. The construction and public works sector also created 61,000 jobs by the end of September and the number of mortgages contracted by banks by the end of November rose by more than 25%," Leila Haddaoui, project director at CDG Development, a development and construction firm for large-scale urban projects, told OBG.
In that sense, FDI development prospects in the real estate sector look very promising as illustrated by the real estate boom in high-end products - luxurious condominiums, office headquarters, five star hotels, tourist and port facilities.
Although many are those who bemoan the lack of maturity of the real estate sector in Morocco, notably the lack of reference prices, the lack of insurance tools and the threat of a speculative bubble, the construction sector is booming.
The housing shortage, combined with the development of tourism and the emergence of a new type of professional real estate service industry all point to a promising future for Morocco.