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Khalil

“Morocco has grabbed Britons’ attention
in 2007, with Marrakech now a mainstream
city-break destination thanks to Easyjet’s
arrival and King Mohammed VI’s drive to turn
his country into a major tourism destination
by 2010. Prices have risen by 15-20% this
year and the tourism push is also seeing
secondary cities such as Fez and Tangier
benefit from big investment and fledgling
foreign interest.”
The Telegraph, December 2007

“Marrakech has long been the focal point of
most European property investors looking
to buy in Morocco – and for obvious reasons.
Aesthetes can hardly fail to be won over
by the city’s medieval-style layout and its
historic riads, often clustered around cool
little squares, sheltered from hot African sun.”
The Financial Times, June 2007

“In a nation with a wealth of fine cities,
Fez exudes magic and magnificence. The
birthplace of Imperial Morocco is the most
complete medieval city in North Africa, and
the most exotic place that you can reach
within three hours of Gatwick.”
The Independent, November 2007

Khalil

Why invest in Morocco?

Political reform
King Mohammed VI has introduced various
constitutional reforms and initiatives which include, for
the first time in Morocco’s history, a system resulting in
30 female MPs in Parliament. When a monarch starts
addressing women’s rights, you know a country is
serious about reform and taking its place in a modern
world. The change of a traditional mindset to more
liberal and progressive policies shows a willingness
to change on a fundamental level. It also means
foreigners will feel more comfortable living in that
society as opposed to just taking a holiday there.

Attractive retirement location
Morocco is an attractive place to retire to. Retirees
benefit from 80% tax exemption, provided that their
pension is still being transferred from the UK. In
Morocco, Western residents are free from double
taxation and have the right to own property without
complications. Foreign retirees in Morocco number
around 45,000 and this figure is set to grow.

Favourable tax structure
Morocco has adjusted its tax laws to make it a more
attractive place to buy property. These include: between
0% and 20% tax on any capital gains (20% if a property
is sold within 5 years, 10% if sold within 10 years and 0%
if sold after 10 years), 0% inheritance tax to family and
no annual property tax for first 5 years.

The Vision 2010 initiative and Plan Azur
King Mohammed VI came to the throne in 1999 and
since then has been keen to modernise Morocco, attract
investment and increase tourism. To this end, he devised
an initiative to attract 10 million visitors per year to the
country by the year 2010. In the Plan Azur phase six new
developments are to be built on the Mediterranean and
Atlantic coasts, with improved infrastructure to support
these resorts, including the upgrading of existing airports
and building of several new ones, creation and upgrading
of ports and marinas and improvements to the motorway
and high speed rail networks. These improvements will
benefit all parts of the country, not just the new resorts.

Investment-seeking government
In addition to the tourism initiatives introduced,
Morocco is keen to attract foreign investment
to the country. There are many different figures
speculating about Morocco and potential capital
growth gains with some quoting as much as 30%1,
but growth of approximately 15% is more realistic.
Companies like Nokia, IBM, Dell and Intel are
amongst many who have invested in the country.

Stable economy with strong EU links
Morocco and its economy have experienced some
excellent growth over the last few years. The Dirham,
Morocco’s unit of currency has experienced growth of
18% since 1990. In addition the economy is expected to
be boosted further if, as is expected, Morocco becomes
part of the Euro-Med free trade zone. This is part of the
Vision 2010 national development plan, which is also
designed to establish a close relationship with the EU.

Khalil

Booming tourism
Morocco has long been a popular holiday destination,
among the Spanish (thanks to its geographical
proximity), and the French (Morocco is a former
protectorate of France). It has also attracted intrepid
travellers from further afield, and the introduction of low
cost airlines will only increase this. Moroccan tourism is
expected to grow by a healthy 4% in 2007. Figures show
that arrivals in the first four months of 2006 were up
15-22 % on the previous year2. The solid tourism market
means strong demand for quality rental properties.

Raw beauty - Exotic culture
Morocco is full of stunning contrasts with laid-back
sandy beaches on the north and west, the busy cities of
Marrakech and Fez at its core and the Atlas Mountains,
where you can hike in summer and ski in winter, forming
the backbone of the country. Its cities are a riot of colour,
smells and people, full of traditional Moorish buildings
and riads – houses built around a central garden and
fountain. A truly exotic destination.

Low cost carriers put Morocco in easy reach of UK
Morocco signed an open skies policy, effective
from 1st January 2006, giving a clear signal of their
determination to open up the country to tourism.
This has put Morocco on the map as a weekend
getaway/short break destination from the UK and
pushed property prices up accordingly. Another option
is to use the low cost airlines to fly to the south of Spain
as a fast ferry service operates from Malaga which takes
only 35 minutes to Tangier.

Low cost of living
The cost of living in Morocco is far lower than most
European destinations. In a list of global cost of living
rankings compiled by Mercer in 2006 figures, the
only entry for Morocco was Casablanca at number 88
(London is currently number two). A beer costs
around €0.80.

Khalil

Political overview

Morocco is a Muslim country and a constitutional
monarchy. Until 1956, it was a protectorate of France.
On independence, the country’s ruling family returned
to the throne. Gradual constitutional reforms led to the
current bicameral system of government which first
convened in 1997. The current king, King Mohammed
VI, acceded to the throne in 1999 and is keen to
modernise Morocco. He has instigated major reforms
and improvements to the country’s economy and legal
structures, and has taken steps to address human
rights abuses during his father’s reign, which has been
recognised and acknowledged by Amnesty International
as being “the first truth commission in the Middle East
and North Africa.”1 Though much remains to be done to
redress and compensate former victims.

Morocco is a participant of the European neighbourhood
policy2, which it sees as a means of obtaining, “advanced
status,” in its relations with the EU, as expressed by the
king of Morocco. The country is also a major non-Nato
ally of the USA, as of June 2004.

The constitution guarantees a multi-party system.
Twenty-nine political parties are represented in the
lower house, the chamber of representatives. The Prime
Minister is the former minister of the interior, Mr Driss
Jettou. He heads a governing coalition made up of six
parties. Thanks to a special system of national lists, for
the first time in Morocco’s history, 30 women sit
in Parliament.

Khalil

Economic overview

King Mohammed VI is committed to boosting his
country’s economy. His ambitious tourism plan, Vision
20101, set goals to increase investment in the country’s
new resorts to €8-9 billion, increase tourist numbers
to 10 million and create €48 billion in foreign receipts.
These combined factors would mean that the tourism
sector could potentially contribute almost 20% to
Morocco’s GDP by the year 2010. The King is also intent
on addressing Morocco’s difficulties with poverty and
unemployment – Vision 2010 includes plans to create
over 600,000 jobs in the tourism sector.

Morocco has long-established links with the European
Union, with France, Spain, and the UK being the top
three export partners with the country2. Morocco has
also signed a free-trade agreement with the USA. The
King has introduced banking reforms and liberalised
trade to attract investment, the country is currently the
fourth largest recipient of foreign direct investment in
North Africa.

In order for the economy to continue to flourish,
Morocco’s government has embarked on a major
infrastructure improvement programme. Morocco’s
Prime Minister has invested over €4.4 billion in
upgrading the country’s infrastructure over the last five
years, and a high-speed train linking Tangiers and Agadir
costing €9 billion is planned for 20303.
Morocco’s reforms and forward-facing attitude is
reaping economic and worldwide dividends. The
International Monetary Fund had this to say in a
2007 report:
“Executive Directors. . . welcomed Morocco’s remarkable
economic progress in recent years, which demonstrates
the benefits of broad-based structural reforms. GDP
growth has moved onto a higher trajectory, inflation
has been contained, foreign direct investment has
increased, and poverty and unemployment have
been reduced significantly4.”

1. :: Royaume du Maroc : Tourism Administration
2. Morocco Information, Income Tax Morocco, Agriculture Morocco, Morocco Import, Morocco Export & Morocco Employment Information
3. Morocco announces nine-billion-euro high-speed train — EUbusiness.com - business, legal and economic news and information from the European Union
4. http://www.imf.org/external/pubs/ft/...07/cr07323.pdf (page 36)

Khalil

Tax in Morocco

As with all tax systems, rules
in Morocco are complex
and you are advised to seek
advice from a tax specialist.
However, here is a guide
to what you can expect as
a UK investor purchasing
a property for investment
purposes. With Salama Valley,
the management company
bears many of these costs.
Please see the document for
more information.

Property tax
Similar to UK council tax, property owners in Morocco
are required to pay an annual property tax. However, as
an investor the amount due is dependent on the total
annual rental income (see the table bottom left) and not
the value of the property. There is an exemption of this
tax for the first 5 years.
In addition there is also a maintenance tax (often called
the garbage collection tax) which is set to 10% of the
property’s annual rental income. Again this tax is exempt
for the first five years.

Property rental tax
Income tax due on rental monies is set at 13.5%. This is
payable from purchase.

Capital gains tax
If the property is sold within 5 years from purchase then
the capital gains tax is set at 20% of profit, subject to
minimum of 3% of the sales price of the property.
If the property is sold between 5 and 10 years from
purchase then capital gains is charged at 10%.
If the property is held for over 10 years then no capital
gains tax is due.

Inheritance tax
If you organize a Moroccan will, there is 0% inheritance
tax to family members.

Dual tax treaty
A dual tax treaty exists between the UK and Morocco
which means that you do not have to pay capital
gains twice.

UK tax specialist
If you would like to speak with a UK accountant with
regards to your tax position, we use Drew Hazell at
Tayler Bradshaw and find him highly knowledgeable.
His number is 01799 525 407.

Khalil

Why invest in Marrakech?

With a modern urban infrastructure, excellent international
air links and some world-class golf courses, Morocco is
developing into an investment destination of choice. Yet no
matter how developed the rest of Morocco gets, the Pink City
of Marrakech will always be a world away in its exoticism.

Historic sites to visit and stunning natural beauty
Marrakech and the surrounding area is awash with
cultural and historic sites. The medina in Marrakech is a
UNESCO World Heritage Site, one of eight in the country.
Marrakech is dotted with museums, palaces, mosques
and cool gardens, the most famous of which, Jardin
Majorelle, was restored to former glory by the designer
Yves Saint Laurent. The countryside around the city
is amazing too – the Atlas Mountains loom large and
provide breath-taking scenery as well as varied
outdoor activities.

70% mortgages available for off-plan
Many emerging markets offer far less flexibility than
the more established markets when it comes to finance
options, and often mortgages are not readily available.
However, it is possible in Morocco to borrow up to 70%
of the value of the property over 15 years at reasonable
interest rate (currently around 5.5%).

Beautiful exotic city
Known as the “Pink City” because of the local red stone
it is built from, Marrakech is invariably described as
exotic. Perhaps it’s the fabulous Moorish architecture,
the famed hospitality of the Moroccans or the sights and
sounds (and smells!) of the medina, Marrakech is a treat
for the visitor – different, unfamiliar, but bewitching, with
views of the impressive Atlas Mountains to the south.
However, it is also an important commercial centre, on
an ancient trade route between the north and the south
of the country, and is today the nexus of several major
motorways. It is also a thriving city with a population
of just under 1 million and a vibrant economy. Cities
generally have greater capital growth as the demand
for property is always strong – people move to cities
for work and need housing. Marrakech also has some
beautiful suburbs and boasts many million europlus
villas.

Khalil

Fantastic year-round climate
Marrakech boasts hot summers and mild winters with
an average of 320 days of sunshine per year. Average
temperature in summer is 35oC and in winter is 22 oC. If
the heat in the summer becomes too much, it is easy to
escape to either the freshness of the mountains, or to
the beach to cool down in the sea.

Knock-on effects and benefits of improvements
due to plan 2010
Morocco’s ambitious plan to increase tourism to the
country by 2010 will have benefits for the entire country,
not just the new coastal resorts. The huge volume of
visitors will create rental accommodation requirements
across the country, increasing demand in places like
Marrakech. The infrastructure improvements will
also benefit non-resort areas. Marrakech has always
attracted visitors and second home owners as it is a fully
functional, authentic city, offering a more sophisticated
cultural experience and so much more than sun, sea
and sand.

Khalil

Low cost carriers fly to Marrakech
Easyjet fly daily to Marrakech from London Luton,
flight time around three hours, fares from £65 return.
Other low-cost carriers are set to follow – Ryanair
and Thomsonfly will begin flights later this year, and
Atlas Blue already serves this route. Once these
carriers are all on board, there will be 99 flights per
week between London and Marrakech. This is now a
recognised phenomenon in property investment – when
a destination is targeted by low-cost airlines, property
prices rise accordingly.

Sophisticated destination
Marrakech has two luxury hotel developments within
easy reach of the city – the world renowned Aman resort
was the first of that group in Africa and Richard Branson
has recently opened his 6-star Kasbah Tamadot resort.
These kinds of developments establish Marrakech’s
reputation as a premium destination. They attract
a certain level of clientele who are happy to pay for
excellent accommodation. This is good news for those
investing in quality property in the area at this time as
they benefit from this reputation.

Excellent holiday rental market
Morocco has a solid tourism base and can boast 85%
rental occupancy in most cases over the high season.
It is possible to cover mortgage payments and bills
for the year through rental gains achieved in the
high season (June - September). With the number of
tourists set to grow faster than the amount of available
accommodation this figure is expected to grow, meaning
higher occupancy levels for investors and even potential
growth in rental prices as demand increases.

Khalil

Plenty to do – superb amenities
In Marrakech or within easy reach of it there are top
quality golf courses, tennis clubs, riding clubs, hunting,
hiking, camel treks, and skiing in the Atlas Mountains.
Marrakech is an hour and a half’s drive from the coast
where you can swim, water-ski, sail and scuba dive.

Fashionable overseas home location
Marrakech has long been a destination for the wealthy
and present day second-home owners include Yves
St. Laurent, Mick Jagger, Richard Branson and the
Beckhams. It has often been the case that where the
high-profile go, savvy investors follow, knowing that the
publicity that these people bring will increase general
interest from the buying public and influence their choice
of holiday destination.