Morocco
In the Morocco Core Inflation Rate is projected to trend around 4.00 percent in 2025 and 4.30 percent in 2026, according to Trading Economics. This coupled with a relatively low level of inflation (6.1% in 2023) (Bank Al-Maghrib), has spared the north African nation of the economic malaise prevalent elsewhere on the continent. This has meant that the Real Estate Price Index, the national barometer for all sectors in the real estate market maintained by the Central Bank (Bank Al-Maghrib), has remained fairly stable, growing by 1% over the last 12 months.
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Stability in the office market
Office rents remained steady in Casablanca during 2023, but rising demand has exerted upward pressure on rental rates. At the beginning of 2024, monthly prime rents touched US$ 21 psm, reflecting a 5% increase on H1 2023.
The growing demand is also driving a rise in development activity, particularly in Casablanca Finance City (CFC) where we expect to see new developments emerge across the 100 hectare CFC (including 50 hectares of green areas).
Subdued retail sector
The retail market remains subdued, with retailers encountering challenges linked to import regulations, including elevated import taxes. Despite this, there has been an increase in retail space within shopping malls, with Aeria Mall (25,000 sqmGLA) in Casa Anfa emerging as a significant addition to the market.
Nevertheless, there persists a preference among the local population for street-front retail, where rental rates can often surpass those within enclosed shopping malls. In general, rents vary significantly based on location and unit size.
The true performance of rents in the sector is further complicated by the prevalence of rent-free periods and other incentives, particularly in new malls, which are used to preserve high headline rents.
A robust warehousing market
The primary warehouse markets are centred in Casablanca and Tangier, catering predominantly to the needs of import-export businesses. Rental rates in these markets typically hinge on a calculated return on investment for both the land and the building.
A significant portion of new warehouse space has been developed within designated zones, often granted on long-term leases. However, in cases where the development is intended for owner occupation, the land may be sold outright.
A recent example of this is a new turnkey facility spanning 20,000 sqm in Tangier Automotive City. This facility was completed within 12-months and leased to TE Connectivity for 6-years.
Resilient residential sector
The residential leasing market remains resilient, particularly for high-end properties. In contrast, the mid-market and social housing sectors face challenges due to limited supply; however, this is putting upward pressure on rents.
In Casablanca, apartments dominate the market, with new high-end units priced around US$ 2,000 per month, which typically achieve rental yields ranging from 6.5-7%.
Villas are often self-developed, with pricing determined by development costs, including land and building expenses. Villa yields are typically 50 basis points lower than those of apartments.