MOROCCO:

A MARKET

REVIEW

ABOUT THE EVENT

dmg events Middle East, Asia and Africa, have strategically aligned with Elan Expo, a leading event

organiser in emerging markets, to transform their existing event, Madecor into INDEX and workspace

North Africa, the region’s leading platform for interior suppliers to the retail, residential and

commercial sectors.

Visitors to INDEX North Africa can expect a plethora of products under one roof and they will also gain free-

access to Design Talks, a knowledge bank and conference that provides the tools needed to ensure North Africa

remains one of the most relevant and creative emerging design markets on the planet.

The first edition will be held on 5 – 7 December, 2016 – CIEC, Casablanca, Morocco.

FOREWORD INDEX North Africa

Samantha Kane-Macdonald EXHIBITION DIRECTOR

INDEX NORTH AFRICA

On behalf of dmg events Middle East, Asia & Africa, and Elan Expo, we are

delighted to celebrate with you the launch of INDEX North Africa- the

International Design Exhibition for the North African market: 5-7 December

2016, Casablanca, Morocco.

INDEX North Africa, very much like INDEX Dubai, is committed to providing an

international business bridge between regional and international interior design

professionals to meet, network and create lasting business alliances.

Morocco was the logical choice for INDEX North Africa to be held in ; this report

provides you with an overview of Morocco’s macro-economic landscape and

key sectors. With its stable political environment and excellent geographical

location, Morocco has emerged as a catalyst for the region. Supported by

strategic policies and existing infrastructures, Morocco has also signed

numerous trade agreements which today place the country as a regional hub for

the sub Saharan and North African markets.

The hospitality and retail sectors are leading the growth of the design industry

and carry on presenting exciting opportunities for interior contracting and fit out

companies. However in parallel, the government’s incentives and policies are

providing a growing income to the middle class which impacts positively of the

demand from the residential market. As a region, North Africa has a GDP in

excess of $1.1tr annually; a population of just under 200m people and a

consumer spend on household furniture, furnishings and goods in excess of

$450m annually.

As an export market, North Africa remains a relatively untapped market for

many international interiors and fit-out companies.

We look forward to welcoming you to INDEX North Africa held in Casablanca!

Regards

MOROCCO: AN OVERVIEW

Morocco is home to a population of over 33.92m people and has a GDP of $110bn as of 2014. The

Moroccan economy is resilient and GDP has grown at a steady rate of 4.4% between 2008 – 2013 and

should steadily rise in the medium term, reaching about 5.4% per year by 2020. The population of

Morocco is fairly young, with 64% under the age of 34.

1

Morocco benefits from a range of diverse free-trade agreement’s, Morocco offers investors free duty

access to a market of 55 countries and 60% of world GDP through a variety of Free Trade Agreements

(FTA) and treaties. One such FTA is with the United States of America (Morocco’s 6th largest trade

partner), Turkey (annual volume of $900m in 2009), plus the Agadir Treaty that came into effect in

April 2007 offers Free Trade between Morocco and Egypt, Jordan.

1 IMF Economic Outlook, April 2014

0

20

40

60

80

100

120

Morocco GDP Evolution (Billion, USD)

Morocco GDP Evolution (Billion,USD)

0

1

2

3

4

5

Average GDP Growth 2008 - 2013 (%)

Average GDP Growth 2008 -2013 (%)

2

Its geostrategic location at the crossroads of the main international exchange routes means Morocco

needs to work hard to preserve its macroeconomic stability, and thanks to several structural reforms

by the Moroccan Government, these have put the country onto a path of strong and sustainable

growth.

3

Morocco largely avoided turmoil in the aftermath of the Arab Spring. As a result, the growth of the

middle class has continued unabated. The growing number of younger urban households has created

increased demand for modern retail, although the large group of lower-income rural consumers

continues to drive demand for traditional products and services. In particular, government efforts to

provide more affordable housing are expected to boost spending on household-related products in

coming years.4

In 2030, the population of Morocco will reach 37.5 million, an increase of 15.0% from 2012. The

median age is increasing and although the birth and fertility rates are both decreasing, the working age

population (15-64) will increase between 2012 and 2030. Net migration has been negative since 1984.

The largest city in 2012 was Casablanca and this will remain so in 2030 when 16.2% of the urban

population will reside there.5

2 IMF Economic Outlook, April 2014 3 IMF Economic Outlook, April 2014 4 Euromonitor, Consumer Lifestyles in Morocco

5 Euromonitor, Morocco in 2030: The Future Demographic

0

2

4

6

8

10

12

Morocco World Tunisia Algeria Jordan Turkey Egypt

Average Inflation Rate 2004 - 2013 (%)

Average Inflation Rate 2004 -2013 (%)

TRADE AGREEMENTS SUMMARY: THE DETAILS

Morocco/European Union:

Morocco is the first country in the southern

side of the Mediterranean to benefit from the

advanced status in its relations with the

European Union.

Morocco/USA

The Free Trade Agreement with the United

States is part of the overall strategy of the

Moroccan economy.

Morocco/Agadir Treaty

Signed in February 2004 and came into effect

in April 2007, the Agadir free trade agreement

provides for the immediate lifting of Non-Tariff

Barriers and the gradual establishment of a

free trade area.

Morocco /Turkey

The Free Trade Agreement signed with Turkey

supports trade between the two countries that

continues to grow, as it reached in 2009 an

annual volume of USD 900 million against 260

million in 2003.

Morocco/WAEMU(underway)

The upcoming signature of trade and

investment agreement between Morocco and

the he West African Economic and Monetary

Union will lay the ground for sustained regional

cooperation and contribute to making the

kingdom a gateway to the West African

market.

CASABLANCA

The economic heart of Morocco, Casablanca covers an area of 1,615km2 and is home to a population of

over 3.8m inhabitants. The “white city” offers infrastructure in accordance with international

standards and is connected via a motorway network to Marrakech, Fes and Tangier. It’s main airport,

Mohammed V International Airport has helped towards Morocco achieving in excess of 15m inbound

and outbound tourists in 2015 and large investments in improving public buildings and works sectors,

the automotive industries and offshoring have created a population that is 60% urbanized.

THE TOURISM & RETAIL

INDUSTRY

Tourism & Hospitality

Morocco is a tourist designation with many strengths and vast potential, and is a top 20 global

destination for travellers. Thanks to 3,500km of coastline, mountains and deserts, Morocco is a diverse

country that is only 2 ½ hours from many major European destinations and has seen its tourism

numbers almost double in 5 years from 5.8m to 9.3m visitors per year. In 2016, almost 15m inbound

and outbound trips are expected to be made to Morocco and last calculated figures in 2011 showed

tourism revenues of 58.7bn DH. Tourism accounted for 8% of Morocco’s GDP in 2014, generating

important revenues, enhancing the employment rate and supporting more investment. These results

have led to Morocco being ranked as the 31st most popular tourist destination in the world and the

third most popular within Africa.6

Foreign Direct Investment in Morocco’s tourism industry has amounted to over 30b euros in the same

period and is now the only country within the Mediterranean to have increased tourism figures beyond

6% whilst the world market dropped 5% overall.

The future for tourism in Morocco is very promising. Efforts to develop the industry under the Vision

2020 Program generated worldwide recognition in 2014, including: the Madrid Award 2014 for the

best tourism and golf destination; selected as the first-choice destination for the Dutch; ranked the

world’s third friendliest country for tourists; Marrakech, Fez, and Casablanca selected as the host cities

for the World Travel Awards Grand Final event for the period 2014-2016; and the Skytrax Award

2014 given to Royal Air Maroc SA as the best airline company in Africa. Tourism is expected to

continue to grow over the forecast period. However, unforeseen events might negatively impact the

success of the industry, such as the French response towards African destinations following the Charlie

Hebdo attack in 2014, after which Morocco sat up an action plan, with 100 million dirhams, to

strengthen the promotion of Morocco as a destination. Therefore, Morocco is already prepared for a

possible future crisis by diversifying its targets and attracting new markets like Asia and the Middle

East. 7

Morocco has a number of financial initiatives that are seen to further boost the value proposition of the

country as a tourism destination of choice. These include various exceptions of import duty or VAT for

all capital equipment, goods, machinery needed to promote and develop projects or business from the

date of commencement plus the banking sector is willing to mobilise a budget of 24m DH to support

the implementation of Vision 2020.

Tourism investment in Morocco reached Dh18 million in 2014. These investments are aimed at the

development of different cities, helping them to become worldwide, prestigious destinations, such as

the coastline resorts in Saidia, and Port Lixus at Larache, which was expected to be finished by 2015. In

addition there is the Taghazout resort, which includes several 5-star hotels, the Casablanca Congress

and Marina project, with JW Marriott expected to be operational by 2017, and the Bab Al Bahr resort

in Rabat, where several luxury units are under construction. Transportation is also benefiting from the

development programme in both urban and rural areas, including the extension of roads and the

6 Euromonitor, Travel in Morocco 7 Euromonitor, Travel in Morocco

railway system. There have been developments from Moroccans Living Abroad (MLA) as well, such as

the MDM Invest project, which aims to partially finance new projects run by MLA.8

Heavy investment subsidies are also available through the Azur 2020 program to make Morocco’s

seasides internationally competitive, to further attract families to the key cities and destinations

across the country and the Niche Program that is seeking to further develop Morocco as a business and

health destination of the future.

Retail

Retail contributed to 11% of GDP and employs over 1.2m people (or 12.8% of the labour force). In

2015, retailing is expected to perform better and this is driven by higher household consumption and

business investments. Between 2004 and 2013, household consumption grew by an average of 7% per

year to reachUS$65bn .

Shopping centres have become a symbol of the changing lifestyles of Moroccans. In contrast to the first

generation of these, such as Twin Center and O’Gallery in Casablanca, which did not have the expected

success, the new generation of shopping centres strongly attract the population thanks to a more

diverse offer and a wider range of brands. The change started in 2011, with the opening of Morocco

Mall. Since then, shopping centres have become more numerous, exceeding the expected annual

number of visitors, with 17 million people visiting Morocco Mall in Casablanca, five million visiting Borj

Fez, five million visiting Al Mazar and three million visiting Eden Square in Marrakech in 2015.

Furthermore, the occupancy rate stands at at least 95% in all these shopping centres. This trend is

expected to continue to 2020, responding to the objectives set by the programme Rawaj Vision 2020,

which was developed by the department of Trade and Industry in Morocco in order to support

domestic trade activities. 9

Internet retailing is expected to increase by a value CAGR of 14% at constant 2015 prices in the

forecast period. The main reason behind this growth is the ongoing increase in the banked population,

which is strongly impacting online shopping, in addition to the increasing number of internet users in

Morocco, plus the increase in online payments made by customers, thanks to the growth of security

systems such as 3D Secure and Attijari-PayPal, which ensure the safety of users’ online payments. 10

Home and garden specialist retailers is expected to record a value CAGR of 4% at constant 2015 prices

over the forecast period. The main reason behind this growth is that independent stores will lead sales

of home improvement and gardening stores, which is likely to slow down the sales of the chained

players in Morocco.

With a 1% value share, Mobilia led home and garden specialist retailers in Morocco in 2015, thanks to

the strong brand equity that the company has built from the long presence of the brand in the country.

Kitea also held a 1% value share in 2015, because of the large number of outlets it has in Morocco,

especially the new concept of Kitea Géant in Casablanca. However, the expected opening of the giant

Ikea by the fourth quarter of 2015 is likely to negatively impact sales of the two leading players,

8 Euromonitor, Travel in Morocco 9 (Source, Euromonitor) 10 Euromonitor, Internet Retailing in Morocco

Mobilia and Kitea. 11

Mixed retailers is expected to increase by a value CAGR of 7% at constant 2015 prices over the

forecast period. This growth is expected to be driven by sales of strong international brands. In

addition, the Moroccan market still offers interesting opportunities and attracts many international

investors, especially from Gulf countries, which have, in addition to financial means, greater experience

in the field of department stores.

Galeries Lafayette led mixed retailers with a value share of 7% in 2015. It joined the market in 2011

through Morocco Mall, and thus opened its first outlet, which benefits from the large traffic of high-

income consumers and the higher socio-professional group, who are ready to pay for expensive

products for their quality.12

11 Euromonitor, Home & Garden Specialist retailers in Morocco 12 Euromonitor, Mixed Retailers in Morocco