Housing the Poor - the impact on Moroccan Property

Morocco’s housing deficit stood at roughly 608,000 units in 2011, with a significant shortfall in terms of the availability of government-sponsored accommodation, exacerbated in part by the Kingdom’s move to eliminate shantytowns and shift residents into proper housing.

Cities Without Slums

  The project, known as Cities Without Slums (Villes Sans Bidonvilles, VSB), was launched in 2004 with the aim of relocating families from poorer neighbourhoods and placing them into new houses in urban areas. The programme, which now impacts some 1.75m people, has seen remarkable progress towards achieving its objectives. 

Since the programme’s launch, an additional 400,000 people have been added to the government’s targets, and according to the Ministry of Housing, 70% of the scheme has been realised so far. Some 1.2m households have either been relocated or are currently awaiting the completion of their new home. As a result, 43 out of the 85 towns affected by the VSB scheme have been declared slum-free. 

In the 42 remaining towns, more than 60% of the work has been achieved. Casablanca, Marrakech, Kénitra, Rabat, Larache and Guercif are among the next 17 towns who will move all targeted households into new homes.

Moving families out of the slums is a priority

The VSB programme has been most successful so far in the Oriental Region, located in north-eastern Morocco, where 83% of the targeted households have been demolished and families relocated. The Al Omrane-Oujda group, a real estate company placed under the supervision of the Ministry of Housing, has been one of the main players in the region in helping eradicate slums.

 Also among the company’s main projects is that of the urban zone planned for the town of Al Aroui where 210 ha will be dedicated to housing. Some 36,000 housing units will be built in the area for about 180,000 inhabitants. Relocating families into the refurbished apartments planned by the government has been made possible thanks to a number of financing mechanisms. Fogarim, which has provided government-backed mortgages to people with low incomes since 2003, has enabled 81,000 people to obtain their own home. 

Among these, 15,200 households that have been relocated under the VSB scheme have benefitted from the Fogarim scheme. At the end of 2011, the credit distributed to these families accounted for around 11%, or Dh1.22bn (€109.3m), of total issued Fogarim credit.

New housing in Taza

Payment Defaults Cause Problems

  However, the Fogarim programme currently faces a major challenge as a number of payment defaults have been reported in towns such as Oujda, Azrou and Rabat, where some households have failed to pay off their monthly instalments of around Dh1500 (€134). Authorities have asked banks for more time before taking judicial action again the loanholders, and the Ministry of Economy and Finance has put in place a new loan, the Fogarim-VSB, that specifically targets this segment of the population and lowers their monthly payments to Dh1000 (€90).

  Morocco’s residential sector will continue to expand as the government pursues its objective of relocating people to newer, urban housing. Already some 4000 ha of land per year have been reclaimed for urban projects, with some 45% of this used for real estate, according to the Ministry of Agriculture. With the government planning to develop a further 70,000 ha, the sheer volume and scale of the government’s housing schemes should leave plenty of room for growth in real estate.

Steady Growth in Property Sector

  As evidenced by an increased demand for construction materials, including a dramatic 25% rise in cement sales, Morocco’s property sector is continuing to see steady growth thanks in large part to a strong emphasis on social housing – a segment that has consistently run a deficit of supply, thereby promising continued expansion in the years to come, Global Arab Network reports.

  Residential property remains the real estate sector’s main driving force, accounting for around 67% of total sales. In 2011, prices increased by 3.4% compared to 2010 and the number of units sold on the market was up by 13.6%. According to the latest statistics released by Bank Al Maghrib for the last quarter of 2011, the volume of transactions in the residential property sector rose by 22.8%, mainly due to the increase in middle-income and high-end apartment and villa sales. In the last quarter of 2011, villa prices saw a year-on-year (y-o-y) increase of 4.2% and sales rose by 11.3%.

  However, it was apartment sales that lead the sector, accounting for around 61% of total sales. Prices saw a y-o-y increase of 5.2%, while the volume of transactions rose by 25.7%. The majority of real estate activity comes from further along the socioeconomic spectrum, at the affordable housing end, which accounts for more than two-thirds of total residential demand.