Credit concerns cause Moroccan property stocks to fall

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CREDIT CONCERNS CAUSE MOROCCAN PROPERTY STOCKS TO FALL

Thursday, 18 Sep 2008

On Wednesday, the value of Morocco property shares dropped by as much as 6%, due to concerns that the worldwide credit crunch could have a negative impact on overseas investors in the North African kingdom’s burgeoning real estate sector. According to analysts, the stock market in Morocco has been growing stagnant for a while now because investors have been under the impression that the price of property in Morocco has increased beyond a reasonable rate for good returns on investment.

One analyst said, "It's been a long while that analysts have said the market is overvalued and a correction would be healthy." He added that Morocco property stocks have long been perceived as being overpriced, and are therefore one of the main sources of concern in the current international credit crunch. "People see there is a morose climate in real estate and they know these stocks are exposed to international markets that increasingly lack liquidity,” he remarked.

Property companies have been causing the inflated prices of property in Morocco, due to the foreign investors who have been seeking to benefit from the building boom currently going on there. The increasing demand has caused the rapid growth as lending rates have dropped, which has, in turn, fuelled the investments, and money has been pouring into the kingdom from tourism, overseas investors and Moroccans who live abroad.

A large proportion of the profit of real estate companies depends on the demand for major new Morocco accommodation developments on the coast, which target Europeans who want a second home or holiday house in a sunny country. The analyst, however, did not feel that there would be a credit crisis like the one going on in the U.S.A. He claimed, “Morocco is not at all exposed to the same products such as subprime.”