Marrakesh

[EM Concepts]

All,

I was in Marrakech last week looking at the market as a whole. I visited a number of sites mentioned on this thread and spoke to a number of local agents as well. Just so that you know my angle, I am an agent.

Marrakech is an interesting city - your choice of accomodation at the moment is either a large number of cheap 3* hotels in Guilez (the new town), expensive Riads in the Medina (old town) or very expensive 5* Resorts in the Palmeraie or Hivenage. So straight away it is obvious that there is a gap in the market, for something located fairly centrally and of a medium price range.

We have been selling Dreamworld's (developed by Jet Sakane) Oasis De Marrakech for a while and really were impressed with the investment potential of the city. The reason for my trip was to look for something else to offer clients, for we never like to look like we are purely promoting one resort - unless we have good reason to.

The resorts outside of Marrakech, Atlas Golf etc etc seem to be aimed at purely holiday makers - they are far enough outside of Marrakech to make you think you could be somewhere else and the people that eventually rent off you may never leave the resort. For me that relies on the holiday market too much and doesnt offer anything unique about the place. Its hot, luxurious and has a golf resort - but then so do a lot of places...

Les Jardins de Fadela, talked about in this forum does offer great incentives with the buy back, rental guarantee etc but again the location of it outside of Marrakech restricts its appeal. It price per square metre is €1783 which again seems a little expensive outside of the town.

El Oasis De Marrakech is located closer in, still you wouldnt walk to the Medina but I did it in a "Petit Taxi" in 6 minutes for 8MAD (50p).. We are selling it at €1550 per square metre and are also offering a rental guarantee of 10% per annum for 2,3,5 or 10 years. This is now underwritten by a large insurance company, the policy in the purchasers name.

This brings me to another point (and I apologise if this is getting long!) - rental. I spoke to a number of local agents, who have property on their books in all parts of Marrakech and they say that for a very well located, well furnished, exceptional quality apartment you may get 6-8% max rental return. The main market for renting is either directly through tour operators for package holidays or to the French. The main market for resale is to the French (a lot of retirees). To rent it out yourself could be tricky.

So anyway, I've come back from Marrakech with the view that we will continue to promote El Oasis De Marrakech but we will not be offering any other resorts at the moment, as they really dont offer what I and my clients are after (that is clear opportunity for high capital appreciation and high rental returns). We have formed a partnership with a local agent as a number of clients wish to get further involved with the city and delve into the "black money" resale market - something we will leave to people who have experience with this.

So, in summary, I really do believe Marrakech has great investment potential. There is a clear gap and demand for quality apartments which are close the the new and old town, which at the moment are in short supply. the Palmeraie and further out hosts a range of developments which I believe to be a little overpriced and over marketed. Good money is to be made in rennovating Riads however that is not for the faint hearted.

I will be continuing my search for more product in Marrakech to fit my requirements and we are in discussion with developers to see what they can come up with.

Paul Bartlett

EM Concepts

[Sunnyshores]

Paul,
Thanks for your insights, always interesting to hear form someone who has actually been to the areas in question.

I do agree with you that by 2010, there will be alot of developments, many 15 mins from the Medina. But I dont think you can discount all developments that are this far out just because they will only appeal to tourists. As I said in an earlier posting, the familiy market isnt catered to that much at present. And whilst I find the idea of never of leaving the resort just plain wierd, I know alot of families that are only interested in somwhere luxurious, all-inclusive and sunny. For this market a good international standard of luxury is needed and location not too important.

When you say "For me that relies on the holiday market too much and doesnt offer anything unique about the place". What other markets do you believe Oasis (or something nearer the Medina) appeals to ?

Can I also ask a stupid question - if average rentals will be about 6% how are developers offering higher guaranteed rates ? Will these guarantees come at a cost to say the maintenance of the site?

Thanks, SS

[EM Concepts]

SS,

Thanks for the reply, reading back over my post I think the comment I made wasnt that clear so I'll re phrase !

The large resorts outside of Marrakech are like you say aimed primarily at the all inclusive family holiday market. There is a market because a lot of people will hate the centre of Marrakech, with its snake charmers, busy haggling markets and motorbikes riding on the pavements. This is great and needs to be catered for, however, to stay popular you need something unique about the development. Why go there over another country ? You also need it to be affordable. Morocco after all is still seen as cheap market. I certainly wont discount these developments but they need to be realistic.

Last week I stayed in relatively cheap accomodation in Gueliz, the new town. It was busy, very busy. All the rooms were full and the whole city centre was bustling. I wanted to go and use a pool for a bit so I took a taxi out to one of these completed resorts in the Palmeraie. There were 3 people around the pool and I was charged 400MAD (£25) to use a sunbed. It was a beatiful infinity pool overlooking a golf course, however the whole place look deserted. I just dont think people want to pay the sort of price that these resorts are asking for.

In a roundabout answer to your question, El Oasis is offering a high quality of accomodation but the big pull is its location makes it much more accesible to get to the busy areas. The accomodation will be cheaper to rent out than the palmeraie resorts and has a higher chance of occupation, due to its location and costs. It has facilities (ok no infinity pool or golf course) to meet the requirements of families and the location to meet the requirements of city tourists, who are there for Marrakech and not just for 5* luxury.

The average rentals I talked about were for city apartments, rented out individually. The 10% rental being received on El Oasis is a little different. The company operating the rental (independant of Dreamworld and of the developer, Jet Sakane) make contracts with Tour Operators signed for periods of a minimum two years, then renewable for 3,5 or 10 years. The 10% is simply a reflection of the amount that tour operators are willing to pay for these units and cant really be compared to the yield from a individual let, as the market is completely different.

I hope that this answers your questions ?

I really dont want to come across too "pro El Oasis" and I have a completely open mind about the area and other resorts and would love to see some competition come in to this gap in the market.

Paul

[Sunnyshores]

Paul, thanks for the clarification on the tourism view. I do see what you mean about developments nearer the medina attracting 'cultural' tourists aswell as sun-seeking families. However, longer term I think all these developments will compete on their quality more than their nearby facilities.

Affordability is interesting - whilst I think £25 for a sunbed is outrageous!, I have noticed an equality of prices in destinations over the last few years, certainly Euro destinations.

For example, Egypt, Goa, Turkey were all low cost destinations say 5 years ago. For some reason now the price of a coke, sunbed, beer, meal out is now fairly standard. Perhaps its the fact that in the begining most tourists are from the region, most developers and hotel chains are national and they charge local prices. Then as a place becomes sucessful and multinationals move in ie Hilton, Meridien, coco-cola, McDonalds etc and they charge standard western type prices to western tourists who can pay them. I cant see Morocco eventaully being any different. Its a shame from the cultural and protectionism point of view, but globalisation is a powerful force. Anyway, off topic!

Thanks again for your input and dont worry, it came across as a balanced opinion.

SS

[Asim]

Originally Posted by EM Concepts

SS,

In a roundabout answer to your question, El Oasis is offering a high quality of accomodation but the big pull is its location makes it much more accesible to get to the busy areas. The accomodation will be cheaper to rent out than the palmeraie resorts and has a higher chance of occupation, due to its location and costs. It has facilities (ok no infinity pool or golf course) to meet the requirements of families and the location to meet the requirements of city tourists, who are there for Marrakech and not just for 5* luxury.

Paul

Hi Paul

Did you see construction at the El Oasis site. Supposed to be completed by mid next year.

[EM Concepts]

Asim,

Yes I did see the construction site and it is on course for completion. When you purchase a property you also sign a VEFA contract which allows you to fine the developer 1% per month if they are late completing. It also protects you against them rushing the job by making sure certain standards in build and finish are met.

I am happy to email the photos I took of the construction to you - just PM me your email. I'm not sure how to post them on the forum itself.

Paul

[The Soup Dragon]

EM Concepts. I agree with much of what you said, though I think there are a few developments of Oasis standard that are within striking distance of the Medina and main square.*

I do however agree that the more central apartments represent a better opportunity (from an investment perspective) as:
1) The resale market is established.
2) New builds are restricrted by available land (there are more out of town developments)
3) Resale market is to locals as well as those that like to holiday there.
That said, its horses for courses and we don't have a crystal ball to say what will appreciate more.

I'm aware that Oasis has had bad publicity in ther past. I'm not looking to knock it, its possible that diificulties it has had may mean now's a good time to get in. It presumably hasn't seen the appreciation that other developments have had in Marrakesh and now has incentives like the guaranteed rent you mention. Any information you can give as to the history of this development and publicity surrounding it coupled with stability of the companies involved will be apprecaited.

* I was to be viewing them in August, but had Gastroenteritis** and had to cancel my viewings. I did however have a look at them from the outside before I was bed ridden. I feel the build quality and area were generally very good.

** It will have been either the freshly squeezed orange juice in the main square or the pistachio nuts I had that will have led to the food poisoning.

[Sunnyshores]

Soup Dragon,

I'd be interested to hear which developments you think are of a good quality and "within striking distance of the medina".How do they compare pricewise to say Oasis?

Thanks, SS

PS Has anyone brought in Marrakesh yet ? There are lots of us here and looking for the past year or so. After a few false starts I've now brought on a Gardens of Fedela development in the NE, ready 2009.

[The Soup Dragon]

Not sure where my notes from my last trip to Morocco are, but the best value property is likely to be one that a friend may promote. Prices haven't been released, but location is good and build quality of a completed project I visited looked good. That completed property was sold at a price per square meter that was very attractive when compared to neighbouring new builds. I won't provide any further details just yet.

From memory there were a few boards for Menera Prefa on construction sites contained within triangle formed by Gueliz, Avenue de la Menera and the main square. I didn't meet with them & confess I don't know prices*, but it may be worth checking out if you haven't already.

*My trip was backloaded with appointments to meet developers (got developer details largely from covering the ground on foot in the first day or two and seeing who was constructing what.)

[lexie200]

Originally Posted by wanata

Hey All,
Does anybody knows of any moroccan developers in Marrakech or Fes? I would love to get in touch with some of them for business.

Thanks,
wanata

I know of a great spanish developer who do alot in Morocco if that's any help?