The Casablanca Real Estate Market
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JLL Research Report The Casablanca Real Estate Market A Year In Review 2019 Casablanca The Casablanca Real Estate Market A Year In Review 2019 03 Market Summary Real estate market activity remained weak during the second half of 2019, with reduced transactions across all asset classes. Only a few deliveries occurred largely within the office sector, with further completions expected in the short and medium term. The growing number of quality large-scale projects demonstrates the increasing maturity of the office market. The retail sector is showing signs of saturation in the city, driving retail facilities to the outskirts. Despite the weak performance of the hotel market, the sector continues its expansion with the development of new projects. The next 12-24 months are likely to see further downward pressure on rents and prices, as supply across all asset classes increases. One of the major highlights during the second half of 2019 was the issuance of the first approval of the draft regulations for the management of the CDG Premium Immo managed by Ajarinvest, a locally registered Moroccan REIT (OPCI). This authorisation granted by the Financial Market Authority (AMMC) is paving the way for a new investment vehicle that has proven to be very popular in other markets. Casablanca - Prime Rental Clock Retail Office Retail Office Industrial Rental Rents Rental Rents Growth Falling Growth Falling Slowing Slowing Rental Rents Rental Rents Growth Bottoming Growth Bottoming Accelerating Out Accelerating Out Hotel* Hotel* Industrial H2 2018 H2 2019 * Hotel clock reflects the movement of RevPAR (Revenue per available room: ADR * occupancy rate) Casablanca Note: The property clock is a graphical tool developed by JLL to illustrate where a market sits within its individual rental cycle. These positions are not necessarily representative of investment or development market prospects. It is important to recognize that markets move at different speeds depending on their maturity, size and economic conditions. Markets will not always move in a clockwise direction, they might move backwards or remain at the same point in their cycle for extended periods. Source: JLL 04 The Casablanca Real Estate Market A Year In Review 2019 The Casablanca Real Estate Market A Year In Review 2019 05 Office Retail Supply Supply 2.10 0.05 89 More than 100,000 sq m of quality office space was 0.07 0.03 Total mall-based retail stock reached approximately 350 completed in 2019, bringing the total office stock to about 190,000 sq m by the end of 2019, with the completion 1.88 million sq m. Major completions in H2 2019 include of Le Mercato d’Anfa in Dar Bouazza and the partial 280 Capital Office in the CBD (Abdelmoumen Boulevard), an opening of Sela Plaza by Aradei Capital in the same 66 office building within the Florida Centre Park development area. More retail facilities are shifting to the city in the business district of Sidi Maarouf and Yasmine outskirts as a result of the growing population and Signature Business Center (Tour Jasmin) in Casa Anfa. the migration flows from the city centre to the fast- 210 1.05 growing suburbs. More deliveries are expected over the coming years, 140 thereby enhancing the city office space supply and The expected future supply will add around 155,000 GLA (sq m million) increasing competition. Major projects scheduled for sq m of retail GLA to the market by the end of 2022, GLA (sq m thousand) completion in 2020 include a 13,000 sq m GLA office with notable projects including the expansion of 70 building in the CBD (Bir Anzarane Boulevard), Parcel “R” in 1.69 1.72 1.77 1.88 1.88 1.95 1.98 Marjane Californie, Aeria Mall in Casa Anfa and Zenata 138 138 143 190 190 256 256 Casanearshore, and two office buildings within the Florida Shopping Centre which accounts for more than 40% Center Park Development. 0 of the expected future supply. 0 2016 2017 2018 2019 2020F 2021F 2022F 2016 2017 2018 2019 2020F 2021F 2022F The introduction of OPCIs is expected to stimulate capital Although some shopping malls may experience market activity after the relatively weak performance Current Supply Future Supply completion delays, the total mall-based retail stock is Current Supply Future supply achieved in 2019. The outlook remains generally positive expected to reach approximately 345,000 sq m of GLA for the coming years, with investment activity expected by the end of 2022. Source: JLL Source: JLL in the real estate market and growth in business activity driving demand for the office sector. Performance Vacancy Performance Vacancy Rate 7% 7% Take-up of office space remained weak in the second 8% 10% Average rents of mall-based retail remained stable half of 2019, mainly due to the limited supply of in H2 2019 while vacancies declined to 7% from 9% quality office buildings. Average rents remained stable recorded in H1 2019. Significant retail space has been at approximately MAD 150 per sq m while vacancies absorbed in Anfa Place shopping Center as a result of increased slightly in H2 2019 to reach 10% compared H2 2018 H2 2019 major renovation works and the improvement of the H2 2018 H2 2019 to the 9% recorded in H1 2019. New office space retail mix of the mall. offer in prime locations such as Casa Anfa is being 12 month 12 month absorbed rapidly following project completions, with outlook Despite the low vacancies observed in the market, the outlook demand for further space in this area. business model of some shopping malls starts to show its limits and several retailers express their concern about declining sales. Weaker than expected GDP The market remained in favour of landlords in the Rents (MAD / sq m) Average Rents (% change) second half of 2019 where tenants were not inclined growth, combined with the growth of online shopping to relocate quickly. This trend may reverse in the and the intense competition from street retail lowers years to come with the delivery of new projects in growth prospects for shopping malls. the pipeline offering more attractive terms of lease, Shopping competitive lease rates, and alternative locations. 150 150 If traditional hypermarket chains have long been Malls considered as drivers of footfall, changes in consumer H2 2018 H2 2019 purchasing trends are forcing developers and 0% 0% operators of shopping malls to rethink their business Y-o-Y Y-o-Y 12 month models and find alternative differentiating concepts. 12 month outlook More focus needs to be placed on enriching visitors’ outlook experience with more space allocated to dining and entertainment. Source: JLL Source: JLL 06 The Casablanca Real Estate Market A Year In Review 2019 The Casablanca Real Estate Market A Year In Review 2019 07 Hotel Industrial Supply Supply 0.6 10.5 Around 700 keys were added to the market during 0.6 While no significant additions were recorded in 2019, several Name of Industrial Area Total Area (hectares) 2019, bringing the total hotel accommodation capacity 0.5 structured industrial zones are currently under development in Casablanca to around 8,700 keys. Major projects in Casablanca and its surrounding. Major projects under ZI Ain Sebâa-Hay Mohammadi 600 completed in 2019 include Radisson Blu Hotel in development include Oulad Hadda industrial zone (840 ha) in the ZI Bernoussi – Zenata 513 the city centre and three Onomo hotels in various Province of Mediouna, and Ahl Loughlam industrial zone in Sidi 7.0 ZI Mohammedia 58 locations throughout the city. Bernoussi (10 ha). Other projects in the pipeline include Sahel- Lakhayayta industrial park (140 ha) carried out by the Moroccan PI Bled Solb – Chellalate 130 About 1,100 keys are expected to enter the market government and the Millennium Challenge Cooperation (MCA- ZI Moulay Rachid 29 Morocco) and financed by the Sustainable Industrial Zones Fund in the coming 12 to 24 months, with major projects ZI Mediouna - Tit Mellil 135 including Hilton Garden Inn in Sidi Maarouf and Ibis (thousand) Keys (FONZID). The delivery of the first phase of Soft Group industrial 3.5 Hotel by Accor in the CBD. Other notable projects park (SOFTPark) in Sidi Bernoussi has experienced some delays ZI Had Soualem – Lakhyayta 26 in the pipeline include Canopy by Hilton on Anfa and has been pushed back to the first half of 2020. ZI Dar Bouazza 10 7.3 7.4 8.0 8.7 8.7 9.2 9.8 Boulevard and three hotel developments in Casa Anfa, PI Bouskoura 28 resulting from a partnership between Groupe Mfadel The limited availability of industrial land at a competitive price and Realites Afrique. 0 has long plagued industrial developments in Casablanca. In Aéropole de Nouaceur 210 2016 2017 2018 2019 2020F 2021F 2022F fact, a large portion of urban areas zoned for industrial use has PI Sapino 262 Casablanca hotel market will continue to expand, with never been developed, creating vehicles for land speculation. P2I Midparc 125 (Phase 1& 2) more than 20 hotels (1,700 keys) due to be added to Current Supply Future supply Through various programmes and public/private partnerships, the market over the next 3 years, most of which are the Moroccan Government has undertaken to facilitate access PI Ouled Saleh 32 urban mid-scale four-star developments. to land and provide functional infrastructure and services to Source: JLL Total 2,158 enhance sustainable industrial development and encourage more investments in the industrial sector. Performance Occupancy Performance Average Rent of Industrial units / warehouses (MAD / sq m) 65% 58% The Casablanca hotel market continued to record Average industrial rents remained stable in 2019. We expect decreases in performance in YT November 2019.