Morocco Big or Bust?

SmoothyG

Buying overseas property as an investment has become exteemly popular. The media plays a huge role in this, scare mongering by publising the few people that get stung, mostly by bad investments but sometimes by scams. when reviewing a property myself for investment i look for companies with standands certificates, ISO and AIPP are the two major standards organisations for the property market.

Morocco is targeted in the media as an emerging market, with a large capital apreciation so far and with lots of room for further growth. I have already invested in morocco and was hoping to start a thread where others who have already or are thinking about investing in morocco can discuss and share information found. putting heads together as such.

so far my investments have been solid, to early to tell on appreciation, any comments?

connundrum

Having been in the business for a while now, my own opinion is that Morocco has peaked prematurely (lol). It may have been a good option about 2 years ago when you could get property for a reasonable price (in comparrison to other options I see in Europe that is) but now my own feeling is that the prices are artificially inflated at the mo.

slave1

I have already invested in morocco and was hoping to start a thread where others who have already or are thinking about investing in morocco can discuss and share information found. putting heads together as such.

so far my investments have been solid, to early to tell on appreciation, any comments?

Interesting thread, would appreciate your inputs to get things going

dunkamania

whay about the currency risk?

SmoothyG

connundrum wrote:

my own opinion is that Morocco has peaked prematurely (lol). It may have been a good option about 2 years ago when you could get property for a reasonable price (in comparrison to other options I see in Europe that is) but now my own feeling is that the prices are artificially inflated at the mo.

so you dont think that the 2010 project will succeed? 10 million tourists per year is its objective.
so far the national football stadium has been moved to the newly built stadium in tangiers, to allow easier access from spain.
the new motorway built stretches down the atlantic coast from tangiers to Asilah at the moment and due to extend all the way to Rabat. I have been on it and it is exteemly high quality.
The whole front line around tangiers bay is in the processs of refinnishing to improve the asthetics of the bay.
they are doing away with the shanty towns. and building proper estates for these people to live in.
The open skies agreement that was reached this year allow Moroccan ait space into the EU free air zone.
The declaration this summer from ryan air that the will be opening flights to Morocco in the near future.

all this would suggest to me that the market is still open and fresh, especially with the fact that the prices are still 50% of those in spain.

Which other countries around Europe do you know of with this potential?
We can start by ruling out Turkey and Bulgaria, as these countries are in a totally different risk bracket.

SmoothyG

dunkamania wrote:

whay about the currency risk?

Im not sure what you mean by the currency risk, for all the same reasons the investments are appealing, the currency should be stable. i see no reason for the Dirham to fall.

dunkamania

SmoothyG wrote:

Im not sure what you mean by the currency risk, for all the same reasons the investments are appealing, the currency should be stable. i see no reason for the Dirham to fall.

Currency is affected by International and National macroeconomic factors,everything from inflation and Interest rates to oil prices.
Additionally,the success of the Moroccan Goverment's efforts to boost tourism,will be indirectly correlated to their currency.(If the currency appreciates than tourists are less likely to come because they get less for their money)

Riviera

SmoothyG wrote:

so you dont think that the 2010 project will succeed? 10 million tourists per year is its objective.
so far the national football stadium has been moved to the newly built stadium in tangiers, to allow easier access from spain.
the new motorway built stretches down the atlantic coast from tangiers to Asilah at the moment and due to extend all the way to Rabat. I have been on it and it is exteemly high quality.
The whole front line around tangiers bay is in the processs of refinnishing to improve the asthetics of the bay.
they are doing away with the shanty towns. and building proper estates for these people to live in.
The open skies agreement that was reached this year allow Moroccan ait space into the EU free air zone.
The declaration this summer from ryan air that the will be opening flights to Morocco in the near future.

all this would suggest to me that the market is still open and fresh, especially with the fact that the prices are still 50% of those in spain.

Which other countries around Europe do you know of with this potential?
We can start by ruling out Turkey and Bulgaria, as these countries are in a totally different risk bracket.

Wikipedia:

"Morocco's largest industry is the mining of phosphates. Its second largest source of income is from nationals living abroad who transfer money to relatives living in Morocco. The country's third largest source of revenue is tourism.

Morocco ranks among the world’s largest producers and exporters of cannabis, and its cultivation and sale provide the economic base for much of the population of northern Morocco. The cannabis is typically processed into hashish. This activity represents 0.57 per cent of Morocco's Gross Domestic Product (GDP)

Though working towards change, Morocco historically has utilized child labor on a large scale. In 1999 the Moroccan Government stated that over 500,000 children under the age of 15 were in the labor force"

Nice place to visit, I assume. I wouldn't buy there though. Its a third world country.

hmmm

If I was "investing" in someplace like Morocco, I would expect a large risk premium in terms of return on my investment before I'd even consider it. And even then I probably wouldn't touch it.

SmoothyG

dunkamania wrote:

Currency is affected by International and National macroeconomic factors,everything from inflation and Interest rates to oil prices.
Additionally,the success of the Moroccan Goverment's efforts to boost tourism,will be indirectly correlated to their currency.(If the currency appreciates than tourists are less likely to come because they get less for their money)

So again i ask why and where you think there is a risk with the Dirham? and why this would put you off investing. If the tourism continues to rise at the current rate then the capital appreciation of an investment will have been made. If the currency appreciates then it is signs that all is going well.

SmoothyG

Riviera wrote:

Though working towards change, Morocco historically has utilized child labor on a large scale. In 1999 the Moroccan Government stated that over 500,000 children under the age of 15 were in the labor force"

Nice place to visit, I assume. I wouldn't buy there though. Its a third world country.

So please tell me where you would buy, as an investment.

about Morocco being a third world country, this was true, but now it is developing at an alrming rate, i was there in 2002 and again this year and the difference is amazing. And on a moral standing should we not be supporting the development of countries wishing to move forward into the 21stC. and surely the fact that there was so much child labour and the efforts to move towards a more european standard is a good thing, an admittance of error and a willingness to improve.

However should the 15% a year appreciation continue i will be happy.
Check out Vision 2010 for the atitude of the government, very inspiring and how they and the king have taken a population from depression to unwavering patriotism.

SmoothyG

hmmm wrote:

If I was "investing" in someplace like Morocco, I would expect a large risk premium in terms of return on my investment before I'd even consider it. And even then I probably wouldn't touch it.

that is exactly what you get, high risk = high premium.

please elaborate on why you wouldn't touch it

hmmm

SmoothyG wrote:

please elaborate on why you wouldn't touch it

1. I don't know the place
2. Political/religious risk
3. Legal infrastructure
4. Economy is still third world
5. If Ryanair stop flying there god knows how we'd get there
6. Don't speak the language
7. If a market is efficient, future predictions will already be priced in
8. Currency risk

I probably could go on. But they're all in the "risk" column, as you know you'll just have to balance this with the investment return you expect to get.

slave1

7. If a market is efficient, future predictions will already be priced in

Sorry, come on, if this is a negative risk to you then all property investment is negative everywhere, efficient market is a hypothesis and does not belong in the logical decision making real world process
The legal system is quite French and if you speak French you will get on fine anywhere. Third world economy! not anywhere I've been and I've been there a lot. Re Ryanair not going there anymore, how do you think folk have been going there for all these years without Ryanair?

1. I don't know the place

Really.

SmoothyG

hmmm wrote:

1. I don't know the place
2. Political/religious risk
3. Legal infrastructure
4. Economy is still third world
5. If Ryanair stop flying there god knows how we'd get there
6. Don't speak the language
7. If a market is efficient, future predictions will already be priced in
8. Currency risk

I probably could go on. But they're all in the "risk" column, as you know you'll just have to balance this with the investment return you expect to get.

1. this is easily remedied.
2. politcal risk is minor, especially since 25billion has been invested into the infrastucture of the coast line from the Monarchys own pocket. the religious risk is present but is the same everwhere there is a high muslim population, including and probably more so, England.
3. Legal infrsastruture is black and white in morocco, almost an exact copy of the french.
4. you obviously know nothing about the economy, its unrealistic to expect it to be a contender on the world market but that is why is called an emerging market. it has the drive and potential to be very strong in the coming years. The main drive has been for tourism, which is why im investing.
5. Air Maroc, Iberia and the ferrys.
6. French and Maroc are the national languages, most speak english in the cities and if the concern is with the legal side then find an international law firm that deals with Morocco.
7. so you think the developer is going to charge you a price he predicts will be accurate in 5 years? be realistic.
8. you are right, they dont have the euro, but that is the same everywhere outside the euro zone. i dont see any strong reason for the Dirham to have problems.

and i think you can go on and on with hollow negative points like these. are you an investor? where have you invested and what factors did you consider to make you purchase?

hmmm

SmoothyG wrote:

and i think you can go on and on with hollow negative points like these. are you an investor? where have you invested and what factors did you consider to make you purchase?

Why are you being so defensive? All my points are reasonable and could be applied to most overseas property investments - look at the centre of Budapest on fire last night to see that even the supposed "safe" countries can change quickly. Are you simply an individual investor or are you trying to sell Moroccon property to other Irish investors?

dunkamania

At the overseas property show in the RDS over the weekend,Morocco was being touted (sp?) as the next big thing.Few of the sales reps seem to have traveled there and none that I talked to had bought there.

SmoothyG

hmmm wrote:

Why are you being so defensive? All my points are reasonable and could be applied to most overseas property investments - look at the centre of Budapest on fire last night to see that even the supposed "safe" countries can change quickly. Are you simply an individual investor or are you trying to sell Moroccon property to other Irish investors?

Im not being defensive, but points like "i dont know the place" are not exactly productive.

I have individual investments and also a few joint ventures.

I spent a lot of time investigating morocco and concluded it is a great place to invest. The purpose of my thread was to share information, ideas and experiences, hopefully with others in the same game.
Your posts so far have just been argumentative, seemingly just for the sake of it. Of course there is risks involved in overseas property, but that is exactly why there is very high returns.

Are we to conclude from you points that any risk at all is too much? if not then what in your opinion is reasonable risk?

are you an investor? where and have you been succesful? or is your motives just to put people off.
If you were to say you bought in morocco and experience problems then fair enough, but you dont seem to know what you are talking about.

hmmm

SmoothyG wrote:

Your posts so far have just been argumentative, seemingly just for the sake of it. Of course there is risks involved in overseas property, but that is exactly why there is very high returns.

Fair enough, I realised after you said "politcal risk is minor" that you didn't intend this thread to be about realistically appraising Morocco but more about congratulating you on your investing skills. Best of luck.

The fact that the latest cell to be broken up contained military personnel set alarm bells ringing in the kingdom, whose late king twice came close to assassination in the 1970s in attempted coups by military officers.

Morocco was jolted into action against Islamic terrorism in 2003 after suicide bombers killed 33 people and themselves in Casablanca, the country's boisterous commercial capital.

American authorities believed that Moroccan security services had thwarted several suicide bombings recently.

Whatever it yields, US disclosure will pressure the Moroccan state to acknowledge more fully the torture, political arrests and disappearances it carried out in the past

The country had been an active ally in the US-led war on terror since the September 11 attacks, holding terror suspects at a detention centre in Temara, near the Moroccan capital, Rabat.

The government said on August 7 it had broken up a "terrorist network" that was planning to declare a holy war in the northeast of the country and had recruited five members of the armed forces able to handle explosives.

Yup, minor political risk.

hmmm

Apologies, there's lots more.

The Madrid train bombers came from Morocco

European investigators worry in particular about North Africa, source of a diaspora of millions of immigrants in Europe. Most of the train bombers lived divided existences, shuttling between Madrid and their native Morocco, particularly Tangiers and Tetuan. Those northern cities are capitals of thriving criminal mafias and of a fundamentalist movement that has also bred ideologues and soldiers linked to the Sept. 11 attacks and to last year's suicide bombings in Casablanca.

Maybe it will become the Colombia of North Africa?

Morocco is the world's largest hashish exporter.

Driving east from Tangier along the Mediterranean coast, the signs of drug power are obvious: heavily guarded villas with strangely stylized pagodas, frequent roadblocks with police looking for the next payoff and an endless supply of young men going about their workdays in the drug business. Here in northern Morocco lurks a key challenge to the Moroccan state: a potent mix of discontent, drugs, organized political opposition and religion. Morocco's drug barons have steadily made themselves into a serious crime problem and security threat, and also major players in the Moroccan political system.

Switzerland is a "low political risk". An Islamic country where some of its citizens have recently blown themselves up in suicide bombings, where they are a major drug exporters and where some of its residents want to declare a Jihad against Westerners does not fit my description of low political risk.

Diarmuid

SmoothyG wrote:

Im not being defensive, but points like "i dont know the place" are not exactly productive.

you asked him why he wouldn't buy there, and he gave a perfectly reasonable answer.

Personally I wouldn't buy in any country in which I don't or haven't lived. You don't know a country well enough until you have.

SmoothyG

some good points hmmm, eventually. but if you replace export with import for drugs and you have a great description of England too. they have all the same problems and a lot more bombings.
Morocco is a Muslim country, 97%.

i guess as a property invester i should go live everywhere i want to invest Diarmuid? that would be very difficult. especially since a portfolio is best spread to reduce the overall risk.

I'm delighted i didnt put any money into hungary. what a political mess.

We will just have to wait and see. in 2010 one of us will be laughing

hmmm

SmoothyG wrote:

We will just have to wait and see. in 2010 one of us will be laughing

It's not a zero sum game with one person losing and one winning, it's about making sure that when you invest in anything that your return on investment adequately compensates you for the risk you take on. Considering I can get 4% in the bank with little or no risk, perhaps 10% on average (over long periods) in the stock market with varying levels of risk, I would want to see a large return for investing in overseas property depending on the country. Morocco to me would be in the medium-high risk category of investments.

SmoothyG

you are right, i expect 50-75% return in 4 years, and expect to see a 15% capital appreciation after xmas. in my experience high risk is not nesessary with property, its about being ahead of the game.

by the last comment i intended it to be such that if i make my expected returns, i assume you will have wished you had invested there.

And if If i make less than 15% in 4 years I will be wishing i had taken your advice.

slave1

Hi SmoothyG, where did you invest in Morocco

SmoothyG

In Asilah, its 25mins from Tangiers down the new motor way on the atlantic coast. the development is called Asilah Marina Golf.

I am looking at the Mediterrania Saidia as well, but initially went for the other based on price.

slave1

Had a look at there, good value but went for the more expensive Siadia myself, the overall picture for that "resort" just looks so strong it swayed me, also the winters have higher temperatures so greater potential for rental I imagine, with 3 golf courses ( one from Seve ) I think all year rental is a real possibility.
Best of louck with Asilah.
If I were not interested in rental income just a holiday home then I would go for Tangiers myself, something about the place and some good value homes with 3 beds+ and harbour views for 150 asking

SmoothyG

Hopefully when the holiday market there really takes off both ends will reap the rewards, tangiers having the new national stadium and tangiers airport and ferry port so close were the leading factors for Asilah. giving good rental, although im sure the boating comunity will be more likely to go with Saidia because of the size of the marina and it is in the med. where as the east coast will be more popular with water sports.
But decidedly was the price, 120k for a 2 bed penthouse and 130k for a 3 bed penthouse right on the promenade, i just couldnt pass up the value.

cant knock Siadia though,
there is good golf on the east coast but siadia has it more condensed,

I intend to sell them on in a few years when the holiday market kicks off, and probably as a holiday home so Asilah suited better on the short term.