HOW MOROCCO REAL ESTATE MARKET IS SLOWING DOWN DUE TO LACK OF DEMAND

At the end of the fourth quarter of 2022, Morocco’s real estate index dropped by 0.7% compared to the previous quarter, according to a new report from Morocco’s central bank, Bank Al-Maghrib (BAM). 

The country’s real estate market has been taking a downward trajectory since 2017. 

The drop in the real estate index is primarily the cause of a 1.3% price decrease in housing assets and a 1.7% decrease in the price of commercial real estate, the BAM report explains.

Echoing the sliding prices, the number of real estate transactions took a hit, dropping by an annual 16% for commercial real estate at the end of 2022.

The trend, however, seems to be affecting some Moroccan cities more than others. Real estate transactions sunk by 18%, 15%, and 7% for Kintera, Fez, and El Jadida respectively, while prices stagnated, or decreased for all other major Moroccan cities. 

The drop in real estate-related transactions reflects slowing demand, which is largely attributed to the economic hardships the country is facing while trying to recover in the post-pandemic era.

Morocco’s central bank had on several occasions expressed concerns over the state of the real estate market in the country. In early 2022, the bank avoided raising central bank interest rates to control inflation citing the condition of the real estate market, as rising interest rates mean more expensive loans, which would naturally discourage consumers from buying new real estate assets.

However, as inflation persisted, the bank hiked interest rates twice, from 1.5% to 2% and then to 2.5%.