Morocco's drive to emulate Dubai by turning itself into a playground for rich Europeans is hurting lending at home as cash-strapped banks are hit by investments in holiday resorts that soured in the global financial crisis.
Loans to homebuyers and companies grew at the slowest pace in a decade last year through November, according to central bank data. In September, the North African kingdom's central bank allowed banks to reduce reserves to increase money in circulation.
Morocco, like Dubai, was in the midst of a major tourism expansion when the global financial crisis caused investment to tumble, saddling developers, banks and investors with soured property debt.
Lending for development surged in the two years before the market stalled in 2009, peaking at US$2.1 billion (Dh7.71bn) in 2007, said Gabriel Matar, the head of Middle East and North Africa hotels at Jones Lang LaSalle. He said much of the debt would mature this year, leading to property sales.
"Moroccan banks are working out their overexposure to commercial real estate, mainly tourism-related, which will limit the amount of their new engagements in 2013," said Mr Matar. "The Moroccan market isn't mature enough to recover all these projects, which are too big to be completed by just Moroccan players."
Mortgage growth peaked at 57 per cent in the first 11 months of 2007 and lending to developers jumped almost sixfold in that period, according to data compiled by the central bank. Like in Dubai, projects stalled as the housing slump in the United States morphed into a global banking crisis.
Mortgage lending slowed partly because cash-poor developers are struggling to get financing to build, said Zineb Masrour, a Casablanca-based senior capital manager at the property consultancy CBRE.
"Banks are obviously overexposed to the real-estate market and the priority is to complete the projects they're already involved in and slow financing to sensitive projects such as tourism or high-grade residential. These projects were mainly targeting foreigners, who were strongly investing a few years ago but they're not here any more."
Work on six mega-resorts, part of a €9bn (Dh44.11bn) development drive, ground to a halt, prompting foreign investors to exit. Among the largest was Taghazout, which was to include a hotel and villas under the Raffles brand, a polo club and a beach club in its first phase, said Mr Matar.
The Taghazout project is now being restarted, along with the bigger Azur Plan with a new goal to double tourists by 2020, said the government.
"The customers have changed, especially in Marrakech," said Younes Sebti, the finance director at the Moroccan developer Alliances Developpement Immobilier, which is involved with Taghazout, speaking in a December interview. "There are fewer foreigners buying with the euro crisis, but this is cyclical. The fundamentals are still the same and we remain confident."
Total private-sector lending grew by 2.8 per cent in the 11 months through November, the slowest pace since 2002 when the growth rate was 1 per cent, according to central bank data.
Loans for housing rose 6.8 per cent in the 11 months through November, the smallest increase since 2002, according to data compiled by the central bank.
Mortgages overall gained 6 per cent, also the slowest pace in a decade. Last September, Morocco cut its reserve ratio by 2 percentage points to 4 per cent, citing a "liquidity shortage".
The banking sector has adopted "a rather selective approach in the treatment of requests for funding" in property, said Samir Hadjioui, the deputy general manager at Credit Immobilier et Hotelier, the Moroccan government-run mortgage bank.
Over the course of the first nine months of last year, mortgage rates ranged from 5.5 per cent to 6.75 per cent, while those offered to developers had rates of 6.21 per cent to 7.75 per cent, he said.
Companies are now facing pressure to pay off or restructure their debts, either construction loans or financing for land purchases, as they come due, said Mr Matar.
"In 2013, through indirect pressure by banks, we will see some projects or land being offered for sale, since we will be hitting the normal duration of a loan where it would be negotiated," he added.
Property transactions dropped 12 per cent in the third quarter from a year earlier, according to government data. Residential sales fell 9.7 per cent by volume and prices dropped 0.4 per cent, led by a 6.3 per cent decline in villa prices.
The central bank estimated that residential transactions slumped by 10 per cent, land deals by 17.3 per cent and commercial transactions by 9.7 per cent.
Morocco's Vision 2010 tourism strategy sought to more than double the number of visitor beds to 230,000 in the decade to 2010.
About half of that amount was built by 2008, when the credit crisis starved the market of buyers and investors. The construction of six resorts, known as Azur Plan, was started in 2001 with the support of King Mohammed VI.
Tourist visits climbed to 9.3 million in 2011, close to the kingdom's target of 10 million, according to the tourism ministry's website. About 83 per cent of the visitors were from Europe.
The government "highlighted six resorts to be completed, and less than half" were built, said Mr Matar. "They are now in a situation where they have to relaunch the vision and make it 2020, or 2025 even, to meet the goal"
* Bloomberg News
Book%20Details
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Sustainable Development Goals
1. End poverty in all its forms everywhere
2. End hunger, achieve food security and improved nutrition and promote sustainable agriculture
3. Ensure healthy lives and promote well-being for all at all ages
4. Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
5. Achieve gender equality and empower all women and girls
6. Ensure availability and sustainable management of water and sanitation for all
7. Ensure access to affordable, reliable, sustainable and modern energy for all
8. Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
9. Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation
10. Reduce inequality within and among countries
11. Make cities and human settlements inclusive, safe, resilient and sustainable
12. Ensure sustainable consumption and production patterns
13. Take urgent action to combat climate change and its effects
14. Conserve and sustainably use the oceans, seas and marine resources for sustainable development
15. Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss
16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
17. Strengthen the means of implementation and revitalise the global partnership for sustainable development
Keep it fun and engaging
Stuart Ritchie, director of wealth advice at AES International, says children cannot learn something overnight, so it helps to have a fun routine that keeps them engaged and interested.
“I explain to my daughter that the money I draw from an ATM or the money on my bank card doesn’t just magically appear – it’s money I have earned from my job. I show her how this works by giving her little chores around the house so she can earn pocket money,” says Mr Ritchie.
His daughter is allowed to spend half of her pocket money, while the other half goes into a bank account. When this money hits a certain milestone, Mr Ritchie rewards his daughter with a small lump sum.
He also recommends books that teach the importance of money management for children, such as The Squirrel Manifesto by Ric Edelman and Jean Edelman.
Sholto Byrnes on Myanmar politics
A timeline of the Historical Dictionary of the Arabic Language
- 2018: Formal work begins
- November 2021: First 17 volumes launched
- November 2022: Additional 19 volumes released
- October 2023: Another 31 volumes released
- November 2024: All 127 volumes completed
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Nag%20Ashwin%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%20%3C%2Fstrong%3EPrabhas%2C%20Saswata%20Chatterjee%2C%20Deepika%20Padukone%2C%20Amitabh%20Bachchan%2C%20Shobhana%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E%E2%98%85%E2%98%85%E2%98%85%E2%98%85%3C%2Fp%3E%0A
Without Remorse
Directed by: Stefano Sollima
Starring: Michael B Jordan
4/5
Set-jetting on the Emerald Isle
Other shows filmed in Ireland include: Vikings (County Wicklow), The Fall (Belfast), Line of Duty (Belfast), Penny Dreadful (Dublin), Ripper Street (Dublin), Krypton (Belfast)
MATCH INFO
Chelsea 1 (Hudson-Odoi 90 1')
Manchester City 3 (Gundogan 18', Foden 21', De Bruyne 34')
Man of the match: Ilkay Gundogan (Man City)
Killing of Qassem Suleimani
Company%20Profile
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Squid Game season two
Director: Hwang Dong-hyuk
Stars: Lee Jung-jae, Wi Ha-joon and Lee Byung-hun
Rating: 4.5/5
Libya's Gold
UN Panel of Experts found regime secretly sold a fifth of the country's gold reserves.
The panel’s 2017 report followed a trail to West Africa where large sums of cash and gold were hidden by Abdullah Al Senussi, Qaddafi’s former intelligence chief, in 2011.
Cases filled with cash that was said to amount to $560m in 100 dollar notes, that was kept by a group of Libyans in Ouagadougou, Burkina Faso.
A second stash was said to have been held in Accra, Ghana, inside boxes at the local offices of an international human rights organisation based in France.
UAE currency: the story behind the money in your pockets
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TECH%20SPECS%3A%20APPLE%20WATCH%20SERIES%208
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Killing of Qassem Suleimani
Retirement funds heavily invested in equities at a risky time
Pension funds in growing economies in Asia, Latin America and the Middle East have a sharply higher percentage of assets parked in stocks, just at a time when trade tensions threaten to derail markets.
Retirement money managers in 14 geographies now allocate 40 per cent of their assets to equities, an 8 percentage-point climb over the past five years, according to a Mercer survey released last week that canvassed government, corporate and mandatory pension funds with almost $5 trillion in assets under management. That compares with about 25 per cent for pension funds in Europe.
The escalating trade spat between the US and China has heightened fears that stocks are ripe for a downturn. With tensions mounting and outcomes driven more by politics than economics, the S&P 500 Index will be on course for a “full-scale bear market” without Federal Reserve interest-rate cuts, Citigroup’s global macro strategy team said earlier this week.
The increased allocation to equities by growth-market pension funds has come at the expense of fixed-income investments, which declined 11 percentage points over the five years, according to the survey.
Hong Kong funds have the highest exposure to equities at 66 per cent, although that’s been relatively stable over the period. Japan’s equity allocation jumped 13 percentage points while South Korea’s increased 8 percentage points.
The money managers are also directing a higher portion of their funds to assets outside of their home countries. On average, foreign stocks now account for 49 per cent of respondents’ equity investments, 4 percentage points higher than five years ago, while foreign fixed-income exposure climbed 7 percentage points to 23 per cent. Funds in Japan, South Korea, Malaysia and Taiwan are among those seeking greater diversification in stocks and fixed income.
• Bloomberg
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The specs
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