The real estate asset price index (IPAI) appreciated in the second quarter of 2022 by 0.4%, year-on-year, according to Bank Al-Maghrib (BAM) and the National Land Conservation Agency of cadastre and cartography (ANCFCC), while the number of transactions fell by 22.5%. How are these mixed indicators explained?
In an interview with MAP, real estate expert and author of the “Répons’IMMO” guide, Amine Mernissi, comments on these uneven results and at the same time gives his point of view on the outlook for this sector.
1. What explains the slight increase in the index of real estate assets?
Can we really speak of an increase, when the latter evolves by a small 0.4% over one year for the price index and that transactions unscrew them by 22.5% over the same period! From one quarter to another, the IPAI for the second quarter of 2022 admittedly shows a timid increase in the prices of real estate assets of 0.2% compared to the 1st quarter of 2022 which is in reality a virtual stagnation and on the other side a rise of 4.6% for transactions.
Consequently, how not to see in these erratic indicators the expression of a sector that is looking for itself! Or I would say that on a year-over-year basis, the figures are not very bright despite a slight tremor during this second quarter of 2022, which however remains to be confirmed to constitute a real reason for hope in terms of projection for the sector.
2. This increase only concerned certain cities such as Casablanca, Rabat and Tangier? How is this disparity explained?
When we talk about Casablanca, Rabat or Tangier, we are talking about a metropolitan city on the scale of Morocco (and not only), and where real estate activity and by economic extension remains at a relatively high level due to several factors. : economic weight, administrative centrality, population, geographical position, attractions for investment, tourist potential, etc. Therefore, that the price index of real estate assets evolves in positive territory even if it remains all in all modest increases… Casablanca (0.6%), Rabat and Tangier (0.8%) between the 2nd and the 1st quarter 2022 reflects the strong impact of these cities on the national economic fabric, but also the presence of a captive demand for housing.
A pool of jobs, tourism, density of administrative services are all economic agents and ultimately households in need of housing! So, yes, if real estate prices are increasing in these cities, it is because they (still) currently benefit from a relatively stable demand for housing needs, notwithstanding the economic and social difficulties that Moroccan households may experience, including in these cities.
3. How can we interpret the fall in transactions for residential property and land, while there is an increase in those for property for professional use?
Year-on-year, the significant drop in transactions for residential property (-20.4%) and land (-37.7%) express great unease. The economic crisis resulting from the Covid crisis and then the global inflationary crisis since the beginning of 2022 which followed, have greatly reduced the purchasing power of Moroccans.
Even land, which in times of crisis is a safe haven, is having difficulty finding takers. And in times of economic uncertainty, the tightening of credit conditions and the solvency of households scrutinized also contribute to slowing down the appetite to become a homeowner… Finally, the shortage of so-called middle-class housing available on the real estate market national as a whole, and the absence of a new horizon for social housing at 250,000 DH, make the real estate sector a sector in need of new products, able to stimulate demand and meet new needs, yet expressed many times time.
As for the increase (7.2%) which concerned professional real estate, this reflects the post-covid economic recovery, moreover observed at the global level for this type of asset, and of which Morocco is not was no exception.
The covid parenthesis has created new economic conditions. New opportunities to be seized and but also movements of bankruptcy and creation of companies, when it is not extension or transfer of activities which animated the market of the commercial real estate.
4. What is the industry outlook for the rest of 2022?
If the 3rd and 4th quarter remained on an upward trend like the 2nd quarter, this would first reduce the losses recorded over a rolling year. Then, it remains to observe the behavior of MREs this summer and quantify it from the point of view of market dynamics. It is indeed a sufficiently powerful barometer which alone can magnify the features. By inserting or on the contrary correcting the digits of the sector. And those of the IPAI of the 3rd quarter will partly reveal what it is.
Finally, if the year 2022 is in its last quarter, today all eyes are on 2023. Indeed, hope is placed in what the Finance Law to come could hold. There is already talk of direct aid to households for access to property. And therefore support for purchasing power. It remains to know the modalities, the eligibility criteria, etc. In any case, this element is likely to relaunch the sector if it is accompanied by a tax overhaul aimed at reducing the cost of the acquisition as a whole.
Last thing: revitalize and renew the offer of real estate products to reach targets, which until now were little or badly served, and which can prove to be real engines of growth for the sector.