DevelopmentsReal Estate & Construction market

Morocco

www.meys.eu

Presentation byMEYS Emerging Markets Research

www.meys.eu

Profile Construction & Real Estate sector Morocco

▪ Construction & Public Works (excluding Real Estate) is 6.5% of GDP (2016)

▪ Total Value Added of Construction & Public Works (excluding Real Estate) is 58.2 billiondirhams (2016)

▪ Approximately 60.000 companies (formal)

▪ 90% are SMEs (turnover < 75 million dirham)

▪ With a turnover of 7.1 billion dirhams (2016) conglomerate Addoha is the largestMoroccan real estate company in Morocco

▪ The largest Moroccan construction company is SGTM with a turnover of around 3.9 billion dirhams (2016)

www.meys.eu

Sub-sector Market size (2016)

Steel and Aluminium construction works 8 billion dirhams

Steel and Aluminium production 21 billion dirhams

Building materials (cement, concrete, bricks, ceramics, marble) 25 billion dirhams

Real estate developers and construction companies (incl. infrastructure):

Private 84 billion dirhams

Public 17 billion dirhams

Market size formal 155 billion dirhams

Market size informal 35 billion dirhams

Total market size 190 billion dirhams

Total market size Real Estate & Contruction sector is estimated byMEYS at 190 billion dirhams (17 billion euros)

Source: HCP, Ministry of Finance, Maroc1000.net, annual reports, business associations

www.meys.eu

960.000

980.000

1.000.000

1.020.000

1.040.000

1.060.000

1.080.000

2012 2013 2014 2015 2016 2017

Total (formal) employment in Construction*

Total employment in Construction is around one millionpeople (10% of total formal employment)

Note: (*) informal sector provides over 210,000 jobsSource: Ministry of Housing and Urban Planning

www.meys.eu

-4,0%

-2,0%

0,0%

2,0%

4,0%

6,0%

8,0%

Growth rate y/y Construction Industry Growth rate y/y GDP

Growth rate construction industry lagging behindnational economy

Source: HCP; compiled by MEYS

www.meys.eu

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

2011

Q1

2011

Q2

2011

Q3

2011

Q4

2012

Q1

2012

Q2

2012

Q3

2012

Q4

2013

Q1

2013

Q3

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

2018

Q1

Annual growth rate local cement consumption (%)

Slow recovery growth rate cement consumption in 2017Overcapacity in the market leads to downward pressure on cement prices

Source: APC, Ministry of Housing and Urban Planning; compiled by MEYS

15,116,2

19,120,4 20,6 21 21 21 21 21

14 14,5 14,616,1 15,9

14,914,1 14,2 14,2 13,8

0

5

10

15

20

25

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Cement market Morocco

Production capacity cement (Mt)

Consumption cement (Mt)

Source: APC, BMCE Capital

www.meys.eu

Size of the current Moroccan housing market7 .1 million housing units occupied, of which 65% in urban areas

Urban % Rural % Total %

Housing units occupied 4 627 110 74,8 2 444 008 91,3 7 071 118 79,8

Housing units vacant 986 441 15,9 100 705 3,8 1 087 146 12,3

Housing units seasonal occupied 574 833 9,3 131 288 4,9 706 121 8,0

Total housing units 6 188 384 69,8 2 676 001 30,2 8 864 385 100

Source: HCP Maroc

www.meys.eu

0,4%

1,1%

1,3%

3,9%

6,6%

7,3%

8,3%

11,0%

12,5%

12,8%

13,9%

20,9%

0,0% 5,0% 10,0% 15,0% 20,0% 25,0%

Dakhla-Oued Ed Dahab

Laâyoune-Sakia El Hamra

Guelmim-Oued Noun

Drâa-Tafilalet

Oriental

Béni Mellal-Khénifra

Souss-Massa

Tanger-Tétouan-Al Hoceïma

Fès-Meknès

Marrakech-Safi

Rabat-Salé-Kénitra

Grand Casablanca-Settat

Number of current housing units occupied per region (% of total)

Largest number of housing units occupied in Morocco’s four main citiesCasablanca, Rabat, Marrakech, and Fes

Source: HCP Maroc

www.meys.eu

Total demand for housing is estimated at 1.6 million units1.4 million in urban areas, 0.2 million units in rural areas

Source: Ministry of Housing and Urban Planning

Regional Main cities

Higher volumes in residential sales since 2010More than 80% of residential property sales consist of appartments

www.meys.eu

35.000

45.000

55.000

65.000

75.000

85.000

95.000

2010 2011 2012 2013 2014 2015 2016 2017

Sales residential property (number of transactions)

Source: ANFCC, BAM

Market size commercial real estateGrand Casablanca is dominating the national market of real estate property

www.meys.eu

• Total constructed floor space commercial real estate in 2016: 1.85 million m2

• Since 2009 annual average constructed floor space real estate is around 1.7 – 1.8 million m2, with exception of 2014

• Grand Casablanca largest real estate market with a share of 15% in national volume

• Total (expected) value of construction projects commercial real estate in 2016: 4.2 billiondirhams (approx. 380 million euros)

1.000

1.500

2.000

2.500

3.000

2009 2010 2011 2012 2013 2014 2015 2016

Constructed floor space commercial property Morocco (1,000 m2)

Source: HCP Maroc

www.meys.eu

8.000

10.000

12.000

14.000

16.000

18.000

20.000

2009 2010 2011 2012 2013 2014 2015 2016

Constructed floor space

(1,000 m2)

Residential Other

Lower volumes constructed floor space since 2013On average 80% is for construction of residential property

Source: HCP Maroc

100.000

150.000

200.000

250.000

300.000

350.000

400.000

450.000

500.000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Total number started newly built houses

Social Market

Lower volume new social housing projectsBetween 2018 – 2022 Government objective to build 800,000 new social housingunits, mainly appartments

Source: FNPI, Ministry of Housing and Urban Planningwww.meys.eu

www.meys.eu

6.500

7.000

7.500

8.000

8.500

9.000

9.500

10.000

10.500

2008 2009 2010 2011 2012 2013 2014 2015 2016

Government investments in real estate activities*

(million dirham)

Government investments in real estate increases since 2011Social housing programs important benificiary public investment funds

Note: (*) include investments in public real estate companies and tax advantages for social housing programsSource: Ministry of Finance; compiled by MEYS

www.meys.eu

Two types of social housing programs initiated since 2008 as part of reducing the nationalhousing deficit:- 250,000 dirham social housing program; objective to build 300,000 houses between 2010 - 2020- 140,000 dirham social housing program; primarily aimed at reducing the number of

‘bidonvilles’ or city slums in Morocco; objective to build 130,000 houses between 2008 - 2020

Main results ‘250,000 dirham program’ by theend of 2017:- 595,794 housing

units receivedauthorisation forconstruction

- 221,660 housingunits are still underconstruction

- 366,462 housingunits have been completed

- 70% of the realisedconstruction projectsare in three regionsCasablanca (45%), Tanger (13%), Rabat (12%)

- 96% developed byprivate sector

www.meys.eu

Main results ‘140,000 dirham housing program’ by end 2017:- 44,239 housing units received authorisation for construction- 9,838 housing units are still under construction- 28,549 housing units have been completed- 91% of the realised housing projects are in the five regions Fes/Meknes (27%), Souss Massa (22%),

Casablanca (17%), Marrakech (16%), Oriental (9%)- 60% developed by private sector

www.meys.eu

50.000

100.000

150.000

200.000

250.000

300.000

2010 2011 2012 2013 2014 2015 2016 2017

Volume real estate loans in Morocco*

(million dirhams)

Total Households Developers

Total volume in real estate loans has increased with more than30% since 2010 to almost 260 billion dirhamsReal estate loans to households has highest share (75%)

Note: (*) level in DecemberSource: BAM

www.meys.eu

5.000

6.000

7.000

8.000

9.000

10.000

11.000

12.000

2008 2009 2010 2011 2012 2013 2014 2015 2016

Direct foreign investments in Moroccan real estate

(million dirham)

Source: Office des Changes, Ministry of Housing and Urban Planning

Strong increase FDI in Moroccan real estate since 2013Average % of real estate in FDI 2008 – 2017 27.1%; 2000 – 2007 12.6%

Mojor investors Moroccan real estate market

High volume money transfers Moroccan migrants85% is invested in real estate (primarily housing)

www.meys.eu

50.000

52.000

54.000

56.000

58.000

60.000

62.000

64.000

66.000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Total money transfers MRE (million dirhams)

Source: Office des Changes

www.meys.eu

100

109

105

110

104

102

108

95

97

99

101

103

105

107

109

111

113

115

2010 2011 2012 2013 2014 2015 2016

Turnover Construction & Real Estate market*

(2010 = 100)

10098

85

89

61

54 53

40

50

60

70

80

90

100

110

2010 2011 2012 2013 2014 2015 2016

Net results Construction & Real Estate market*

(2010 = 100)

Increase turnover Real Estate & Construction companiesLower market prices reduces net results

Note: (*) turnover largest construction & real estate companies in MoroccoSource: Annual reports companies; compiled by MEYS

Note: (*) Net result largest construction & real estate companies in MoroccoSource: Annual reports companies; compiled by MEYS

www.meys.eu

MarrakechRedevelopment inner city (570 million euro):▪ Infrastructure▪ Touristic sites

CasablancaCasablanca Port (570 million euro):▪ Shipyard▪ Fishing port▪ Marina▪ Commercial▪ Restaurants▪ Residential

TangerTanger Metropole (730 million euro):▪ Marina▪ Cruise terminal▪ Commercial▪ Leisure▪ Hotels▪ Residential

Major real estate projects 2014 - 2020

Rabat – SaléBouregreg Valley (820 million euro):▪ Theatre▪ Residential▪ Museum▪ Marina▪ Leisure▪ Hotels▪ Commercial

www.meys.eu

Large social housing projects

Tamansourt (near Marrakech):• 2004 - 2015• 90.000 new units• 450.000 inhabitants• Total costs: 39.5 billion dh

Tamesna (near Rabat):• 2004 – 2020• 50.000 new units• 250.000 inhabitants• Total costs: 23 billion dh

Sahel Lakhyayta (near Casablanca):• 58.000 units• 300.000 inhabitants• Total costs: 25 billion dh

Chrafat (near Tanger):▪ 2009 - 2016▪ 30.000 units▪ 150.000 inhabitants▪ Total costs: 24 billion dh

www.meys.eu

Thank you for your attention

MEYS Emerging Markets Research

E-mail: info@meys.euWebsite: www.meys.eu