African dream

Despite some of the most iconic cities in North Africa, Morocco has long remained an untapped investment destination. Today, the country’s ambitious tourist development plans are welcoming investors and look set to transform Morocco into a globally competitive nation, complete with comprehensive infrastructure, luxury mega-projects and affordable housing.

Long outshone by its regional neighbours in terms of economic power, infrastructure and energy wealth, Morocco in recent years has looked set to emerge as one of North Africa's most promising destinations for development. As 2010 drew to a close so too did Morocco's economic and tourism strategic development programme, the Plan Azur and Vision 2010, marking the end of a decade of growth in the tourism sector, both in terms of foot traffic and economic figures. Established in 2001, the Vision outlined a strategy to increase tourist traffic by 15 percent each year so as to reach 10 million visitors by 2010, incorporating plans to boost transport and logistics infrastructure as well as build major tourist resorts at prime coastal locations. Though narrowly missing out on this ambitious target, reports have circulated that in 2010 Morocco reached 9.4 million tourists, more than double the number of tourists (4.4 million) that visited in the year the plan was laid out. Still, as 2010 drew to a close, the Moroccan government was keen to outline plans for further development in the tourist sector. Following the successful implementation of Vision 2010, the 2020 plan aims to invest some US$17.55 billion a year to double tourist traffic again, increase revenue from the industry and create one million jobs in the sector.

Still, implementing this strategy will not be as simple as carrying out more of the same. Unlike many of its regional neighbours, Morocco has not remained immune from the effects of the global financial downturn. Steady growth figures for tourist traffic in the boom years of the last decade predictably slowed, and more worryingly the lucrative real estate market has all but ground to a halt. "If you go back three or four years," says Philip Camble, Director of Hospitality for EMEA at Cushman & Wakefield analysts, "there was quite a lot of new development in the pipeline with companies like Qatari Diar, Emaar, Sama Dubai, French investors, a few UK investors all looking at projects near Tangiers and Marrakech." Indeed, when Europe and the MENA region were enjoying a property boom, with high levels of property development and a successful real estate market, Morocco presented some encouraging investment opportunities. In addition to its steadily rising tourism figures, heavy investment in infrastructure, including roads, ports, airports, railways, from the government looked set to create an ideal environment for the economy to flourish, and a number of large scale, mixed used development projects appeared on the horizon for Morocco.

But in the wake of the financial downturn Morocco's bright future appeared littered with problems. Funding from both European and Gulf based investors began to dry up in the latter years of the decade. Morocco's Tourism Minister told reporters in May that Sama Dubai had pulled back from the US$3 billion Amwaj development between Rabat and Sale. Tourism growth figures slowed and the demand for the residential supply in the pipeline quickly diminished. "It's the fact that the second home and holiday home market has dried up," explains Camble. "Because of that a lot of these schemes don't have the necessary cash flow to drive forward all of the development." He highlights the Samanah development, a major mixed use leisure, tourism and residential complex outside Marrakech, as one such scheme that has fallen at he hurdles posed by the financial crisis. "All the later phases [of the project] have been suspended," he says. "The hotel is suspended and waiting for the buyers to return."

Positive outlook

Despite a difficult couple of years however, there are plenty of signs of a positive future for the African nation. Not suffering from huge levels of speculative over development, as some states of the wealthier GCC are, Morocco is expected to see demand return in the imminent future for the supply of developments currently on hold.  And though many mega-projects have seen development slow, smaller projects are beginning to come on line, contributing to the hotel room supply and keeping investment interest in the destination alight. "A lot of individual, hotel-only units have come out of the ground," says Camble, "and most of these are developed by local investors, be they institutions or special purpose funds that put together."

And there have been further signs that things are on the up for Morocco. The country's biggest property developer, Addoha, reported in September an impressive 25 percent rise in net profit for the first half of 2010. Its success attributed by analyst Mohamed Slaoui to its diversified business strategy, which included developing for the low and middle income markets as well as the luxury sector, Addoha has seen profits exceeding US$88 million in the first half of 2010.

More recently, Morocco has seen the support of three Gulf sovereign wealth funds and UAE property developer Al Maabar, who have raised a fund of US$1.77 billion for a tourism fund. The fund aims to attract US$11.6 billion (100 billion Moroccan Dirhams) in investments over the next ten years, which will be put towards resort developments in the country as part of the latest strategy to double tourist traffic by 2020.

But Camble believes that Morocco should be concerned with quality rather than quantity. "What I think Morocco shouldn't do is what Egypt has done. Egypt has developed at an incredible pace and has developed massive resorts. If you look at the Hurghada region alone there are something like 8,000 or 10,000 plus resorts. They're monsters and a lot of them are run by international tour operators. Morocco, in my view, shouldn't go in that direction. It should try and be selective, and it does at the moment have a relatively up-scale image. It should try and preserve that reputation rather than developing lots and lots of mass-market hotels because it will only drive down the average rates."

However the country decides to achieve its impressive tourism targets, one thing is for sure: Morocco will be ready and waiting for the visitors to come flocking. The last decade saw a surge of infrastructure development, in order to boost the country's capacity. "I think Morocco's got a pretty good balance," says Camble. "On the back of the Plan Azur and the Vision 2010 they put in a lot of new infrastructure, like the new airport facilities in Casablanca, Tangiers and Marrakech." In February 2010 Morocco's Transport Ministry announced plans to begin work on a US$2.5 billion high-speed rail line between Tangiers and Casablanca, with an aim to have the service on line by Q4 2015. Likewise, as Camble points out, numerous new roads and ports are in the pipeline or have reached completion. "A lot of transportation infrastructure has been put in place, which allows new tourism development to be developed and to have the lists - or at least the infrastructure for new lists - to be in place already." Camble goes on to highlight the capacity of Morocco's ports, and the benefits they can bring to the country's tourism sector. In particular, he says, the Tanger Med port in Tangiers looks set to have a huge impact upon the tourist traffic into Morocco. "[Tanger Med] will come on line shortly for ferries," he says, "so that a lot of Europeans will literally be able to drive across and get into a purpose built ferry terminal. And from there, all the new motorways will take them not only to Tangiers, but also further inland towards Fes and Meknes and those sorts of cities."

And, as Camble points out, the infrastructure development does not stop at the transport sector. Perhaps learning from its Gulf counterparts, Morocco has carefully ensured an adequate water supply for the range of golf courses in the pipeline for development in the near future. "In Marrakech there must be four golf courses up and running now," says Camble, "and there are 22 news ones in the pipeline. The city is saying that the water for all those golf courses, the treatment works, are all pretty much already set aside and ready to be tapped.

"So in terms of infrastructure, there's quite a holistic approach to tourism with infrastructure coming online, facilitating a new investment in new projects. I think they've done a good job of setting out their stall for new tourism projects. They haven't just said, 'Yes, come.' They've said, 'Come, and we have all these facilities readymade and ready to go. We have thought about this. It's all part of a holistic plan.'"

While undoubtedly hampered by the effects of the financial downturn, Morocco remains a prime destination for investment. Ambitious growth targets pave the way for mammoth opportunities for foreign investors, as well as domestic firms. The latest strategic plan for tourism development outlines aims to push accommodation capacity to 470,000 hotel rooms - twice its current capacity - and create one million jobs for its workforce. Speaking at the launch of the plan in November, Morocco's Tourism Minister Yassir Znagui said that the plan will bring hope and opportunities for a better life to the country's youth. "The good thing is that Morocco is a relatively open and transparent country," Camble points out  "The government is pro tourism, pro expansion and pro-diversification. They don't just say it but they actually do it with all these new airports, new rail, new roads and so on. That makes any investment decision that little bit easier." 

The projects that weathered the downturn...

Bab Al Bahr

Al Maabar's development on the banks of the Bouregreg River, the Bab Al Bahr mega-project will include residential units, two four star hotels and guest houses, office units, luxury shopping venues, parks, museums, art galleries and a world class marina.

Cost: US$750 million

Completion date: 2012-2013

Tinja

From Emaar's portfolio of projects in Morocco, Tinja is an integrated community mega-project, integrating residential and commercial space. Ideally located in a popular investment destination, the resort is easily accessible to Tangiers airport, Marina and high-speed train line between Tangiers and Casablanca.

Cost: total cost of all Emaar investments in Morocco is around US$700 million

Al Houara

Luxury mega-project from Qatari Diar, Al Houara combines a five-star hotel resort, residential units and recreational facilities. Situated in Tangier, this resort aims to maintain sustainable principles in its building and boost the local economy.

Cost: US$660 million

Completion date: 2011

Those that have not...

Amwaj

A major real estate project being developed by Sama Duabi that lies astride the Bouregreg River, has been put on hold after Sama Dubai suffered in the crash of the UAE's property market.

Cost: US$3 billion

Samanah

A major residential, retail and leisure project, the Samana development near Marrakech has suffered from funding drying up in various aspects of the development. Though the golf course is up and running, unsold residential units remain unfinished and the hotel has been suspended for the foreseeable future.