QUALITY OVER QUANTITY

Morocco 2020/21 | REAL ESTATE & CONSTRUCTION | INTERVIEW

CBRE Morocco's current strategy is to consolidate its position and strengthen Casablanca's role as the hub of North and West Africa.

Tarik El Harraqui
BIOGRAPHY

Tarik El Harraqui is the General Manager of CBRE Morocco and in charge of the company's operations in North and West Africa. He is responsible for valuation, consulting, investment, sales, property management, and project management. His experience includes exposure in different types of asset classes, such as residential, offices, hotels, large-scale developments, urban mixed-use, tourism resorts, and PPPs. He is also a member of the Royal Institute of Chartered Surveyors.

When did CBRE enter the Moroccan market?
CBRE is the global leader in real estate services, with 480 offices worldwide. The goal behind the company's expansion into Morocco in 2005 was to strengthen its large geographic coverage and support global corporate clients in their investment strategy. CBRE started by offering its core services, such as valuation, advisory, and transaction, but it soon introduced other complementary services such as property and project management.

What is CBRE's main strategy in Morocco?
We are focused on quality over quantity, as the revenue of CBRE Morocco is limited compared to its global revenue. In terms of valuation, we observe the rules of the Royal Institute of Chartered Surveys, and for every report and valuation we undertake the same processes one would find in the UK or elsewhere in Europe. Sometimes, this is not required by local regulation, but we do it because we follow international valuation standards.

Are you expanding in other regional countries?
Our current strategy is to consolidate our position in Morocco by focusing on the quality of our services and standards. Our standards and service quality are key to everything. The second step is growth, as Casablanca is currently the hub of North and West Africa. Our goal is to continue to increase our exposure in other regional markets.

Is Morocco attractive for international investors interested in real estate?
International investors looking to expand in an emerging market will look mainly at offices and retail. The property yields of these markets need to be attractive enough to compensate for the investment risk. Over the past few years, we have seen a fall in property yields in Europe, North America, and Asia. Therefore, investors are starting to look at emerging markets, searching for better returns. When looking for investment-grade countries in Africa, they will only find five or six, with Morocco being in the top two. When you buy a prime fully let office building in Casablanca, you can get a yield of 8-8.5%. In Western Europe, the highest office yields are around 4.25% which is normal given the expected return and risk in emerging countries. Morocco offers an incredible opportunity to international investors. They just need to the assistance of professional advisors with strong local knowledge. Morocco has promulgated the legal framework for real estate investment trusts (OPCI). This new regulated investment vehicle will help increase market liquidity and attract capital flow from institutional investors and individuals.

How has the residential real estate market evolved since CBRE's arrival in Morocco?
Before 2008, we had boom years with multiple projects and strong sales. Then, we faced the global economic turmoil of 2008, which had an indirect impact on the real estate sector. In fact, demand for high-grade properties, mainly in Marrakesh and Tangier, declined. This was not necessarily a bad thing as it helped the market mature. As a result, only professionally structured players are able to compete. Therefore, this was not a crisis as such, but a restructuring of the sector. At present, we are facing the challenges of oversupply in some residential areas and strong competition among developers.

What could be done to increase attractiveness for international investors?
Numerous adjustments such as tax incentives and the easing of dividend repatriation were made over the past year to ease the route of international investors to Morocco. We still need to ease the experience for investors by having a clear path to investment, where they can access consolidated and up-to-date market-related data. For example, in the absence of data on office transactions in Casablanca, we had to gather market information to consolidate market data. These are the initiatives we have been taking to facilitate access to market knowledge.