All aboard the Marrakech Express

Peppered with Kasbahs and bustling bazaars, Morocco is the latest holiday hotspot to add spice to the Mediterranean residential tourism market. The Morocco National Tourist Office reported a 25 per cent increase in the number of UK tourists last year, with Mick Jagger and Richard Branson raising the country's profile. The country also fully liberalised its airports in 2004, with an "open skies" agreement allowing low-cost airlines to operate. Passenger traffic has risen dramatically since, with current estimates predicting 16.5 million by 2011 and flights expected to double to more than 1,000 per week as more players enter the market.

With a fusion of Spanish and African influences, Morocco has a coastline that embraces Atlantic and Mediterranean waters, merchant cities and mountain areas offering a fascinating mix that takes many visitors by surprise. "The country has as much to offer as neighbouring Spain, but at a fraction of the price," says Rachael Cousins of Prestige Properties. "It's just a three-hour flight from the UK and the warm weather allows for a year-round tourist market."

There is also a degree of economic confidence, the country boasting a well-managed monetary policy and free trade agreements with both the US and Europe, while lack of restrictions on property ownership, familiar conveyancing laws, mortgage availability and annual capital growth at 15 per cent are attracting a high percentage of first-time buyers.

Setting a tourism target of ten million visitors by 2010, the government has earmarked £135 million to revitalise cities such as Marrakech and Casablanca, in addition to creating six new coastal resorts, an airport in the Teutan region and a port in Tangiers; all integral parts of the government's Plan Azur Vision. "The country offers good investment potential," adds Cousins. "Prices per square metre have doubled in Tangiers in the past two years, with coastal property to renovate being snapped up for as little as £30,000 in up-and-coming places such as Ksar Sghir and Martil." Riads (traditional townhouses with courtyards) in La Palmerai, the Beverley Hills of Marrakech, start at around £250,000, with a healthy stock of renovation opportunities in the chic districts of Ksour and Mouassine available from £80,000. "You may spend the same again on restoration - but you get to inject your personality into a period property," explains property investor Richard Mynott.

Bolstering the tourist Meccas of Marrakech, Fez and Essaouira, investment opportunities are also mushrooming along the Mediterranean coast near the historic eastern capital of Oujda. "Prices are about 50-70 per cent below the equivalent property spec in the Costa del Sol," confirms Cousins. "The quality of the developments and facilities are high and build density is low." Rental demand is also strong with established resorts reporting 75 per cent plus occupancy rates, as owners exploit relatively low inventories. Rates vary widely, from £40 per night for a basic studio to over £2,000 for a luxury villa on the coast.

Sandwiched between Tetouan and the Spanish enclave of Ceuta on the northern coast is Marina Smir, an upmarket leisure port modelled on the exclusive Puerto Banus. Local infrastructure is comparable too, with facilities including water sports, golf and restaurants. Properties range from one-bedroom apartments to luxurious villas on huge plots. Palmera Properties has two-bed, two-bath apartments in the Marina Beach resort from £40,000.

Marrakech, with its open-air cafés and flamboyant restaurants, and the charming port city of Essaouira remain firm favourites for urban investments, the heritage-status Medinas (old town centres) typically filled with rambling structures and markets. Entry-level prices for traditional riads vary dramatically from £40,000 for a semi-renovated residence to upwards of £500,000 for a five-bed property in prime condition with sea views. "Buyers can expect to pay a premium in Essaouira, because it's a sought-after city and close to the sea," adds Shaw, "but Marrakech is also attracting buyers at the top end of the market, seeking exclusivity on smaller complexes."

Fez is arguably Morocco's most beautiful imperial city - the former capital for over 400 years and spiritual centre of the country. Billed as a Moroccan Florence and priding itself on elegant residences and palaces, its property market has opened up following BA's decision to extend flights to the city. Harlon Overseas Property is selling a range of turnkey options including a stunning two-bed luxury apartment with marble flooring and 24-hour concierge for £40,000. A close second in popularity to the capital with European second-homers is Essaouira. Fully renovated three-bed riads with roof terraces are fetching upwards of £150,000.

So how do investment options fare in the long-term? Low-cost airline easyJet announced daily direct flights from Gatwick to Marrakech from July this year, joining Thomson Fly from Manchester and Luton, with other airlines expected to follow. "Ryanair starts flying to Fez from October this year," confirms Shaw, "with a five-year plan announced to establish 20 new routes, which will give a massive boost to tourism."

Still in its infancy, the property masterplan will not fully take shape until 2010, with just one of six government approved resorts underway. "Current new-build options are well priced," adds Shaw, "but it will take a lot to beat the facilities and security of government-backed resorts such as Mediterranea Saidia, all of which will offer first-rate facilities in a community with a steady rental 'foot-flow'.

Those considering an older property need to be wary of recent renovations that could mask building flaws. Not all older properties have title deeds, and inheritance laws require everybody with a claim to a property to agree to the sale - so employing the services of an experienced lawyer to trace title-holders is essential. Caveats aside, Morocco is adopting a measured approach to the property boom-times, with a secure land registration system and a working blueprint for sustainable coastal development.

Agency contacts

www.propertyfrontiers.com; www.moroccoproperties.net; www.harlon.co.uk; www.hamptons-int.com; www.prestigepropertiesoverseas.com; www.karimo.net; www.saffronvillas.com; www.aylesford.com; www.palmeraproperties.com; www.laluzproperty.co.uk; www.fadesa.co.uk

Buying in Morocco

• There are no restrictions on buying property in Morocco. Buying land is a more complex process, as permission must be sought from the government.

• There is no formal survey system - employing a qualified surveyor to look over older properties is advisable.

• The buying process mirrors that of France - using a notary who represents both the buyer and the seller. Buyers should employ the services of an independent lawyer to check deeds and contract before signing.

• Freehold property has to be registered with the Land Registry.

• Property buying costs amount to around 8 per cent of the purchase price.

• There is an initial five-year "tax holiday" when letting out your home.

• CGT is currently set at 20 per cent for the first five years, reduced to 10 per cent for the following five year period, with a subsequent nil-band rating for 10+ years ownership.

• Mortgages are available for a maximum of 60 per cent of the purchase price. The usual mortgage period is 15 years.

This article: http://property.scotsman.com/news.cfm?id=1433402006

Last updated: 27-Sep-06 23:48 GMT