Hi. I'm surprised ther has been no discussions on this forum regarding the ongoing issues with rental in Saidia.

Here is an extracts from another forums highlighting the situation.

I would welcome your views.

Extract - I need your advice on a situation which I just got to know by chance. I bought my property In Jardin de la fleur in Saidia, Morocco. The appartment is a touristic unit, which means that I will have only limited access to the property during the year. As I found out, Moroccan law places a lot of restrictions in terms of use on touristic property.

I appointed a solicitor firm in the UK that claims expertise of the Moroccan law. They sent me a first report but without mentioning that it was a touristic property and its implications for my use of it. I already paid the developper and can not undo the contract. The problem is that I bought my property to enjoy it throughout the year, not in order to let it to tourists and access it only for limited period of times. I doubt that I would have chosen Saidia to buy property if my intention was to buy in order to let, because, according to my understanding, the tourism market in Saidia is unpopular. I just recently learned through my own investigation that the place is relatively empty and that there is only a limited tourism market there, therefore I would have invested in a touristically unattractive region. I went to Saidia and found the town rather deserted, which would be fine for me if my property was just for me, but now that I am bound to letting it out, I find myself in a problematic situation. It also looks as if the property is not attractive enough to sell it to someone else without me losing considerable amounts of money.

As an investor I see this very much as a positive feature.

The Government want to establish year round tourism centres hence the requirement for property in these these zones to be available for let for much of the year. The Government will therefore put resource into marketing these sites to tourists.

As for the comment about 'nothing to do', well the site is'nt built yet. For people like me who relish peace and nature and empty beaches there would be plenty to do in the area anyway. For those that need to be spoonfed with Human entertainmnet then yes right now there isnt much for them but they can always go to Butlins for such on e dimensional trivia.

Well, one can always spin any new which does not seem good.

As I had the impression from the beggining, Moroccan first wanted people's money and then started the impose conditions.

Bit early to start doing a 'victory dance' catara!

Before we all get carried away these restrictions are exactly the same as the Portugese Government put in place on the Bom Succeso resort on Silver Coast. They are a sensible response to ensuring that Saidia is a vibrant resort.

To be very honest, I would be disapointed if the Moroccans become greedy and scare the investors away. This would only show that they are not ready.

Dogbox I can't see how this is positive. If your investment is being restricted then this makes it less appealing. Most owners want to rent and use at their convenience with no restrictions. I don't know how realistic this situation is and how it is unfolding (does anyone?) but it will reduce the appeal and the secondary market. In my opinion, the effect will be substantial.

Hey Dogbox dont knock Butlins man!!!!!!!!!!

Im in this for long term income which I think will be more robust as a result of Government oversight.
Bare in mind I got in very early and cheaply so my yield against capital should be decent.

People correctly state the rental return is unknown and others are quite pessimistic in thier expectations but I still think the yield will be good. Property in good locations with this array of facilities in one site can command impressive rents and again I think Saidia will be a year round resort.

The fact these properties are focused by Government intervention on the rental market can only assist.

I dont know whether owners will get to chose to reserve peak season weeks for themselves.

THE SECOND HAND MARKET;

I hear you on this, but often in life the opposite happens to what we expect - for example we were told email would be only beneficial to business but now many voices clain email actually reduces and slows work output!. It is surely the case that income focused investors will perhaps be more drawn than they otherwise would have. So you lose one audience but gain another. Very often I see posts where the poster makes clear the income form an investment is his main concern as he needs to cover a mortgage.

i agree.

I think that this will really subdue the resale values.

Something like 70% of all coastal properties in spain are sold to ex pat brits seeking a new life in the sun. without this sort of market, i can't see prices rising significantly solely on the back of holiday lets.

However, i think once the tourist market develops, this restriction will be lifted. I am sure this is in place so the authorities can easily meet their 2010 plan azur objectives of attracting 10million tourists and therefore don't want these places bought up and then not available for tourists.

Yawn

boomorbust, dogbox, you are juggling with ifs and buts and waxing lyrical with the symantecs. What ever type of property you buy into it will be the new and returning tourists that will make it successful. Condo, apartment, villa, riad, its the location that matters, this is why I am avoiding Saidia, the resorts around Tangier are a much safer bet. Having said that I wish Saidia the best of luck, Port lixus looks good and is in a great location.

Jesus

You presumably state the resorts around Tangier are 'MUCH' safer because the area will have a fair density of different attractions and its likely to be a booming commercial hub?

The problem is you will have masses of competition as we now see in Spain which restrains capital growth and rentals on touristic property.

I like the uniqueness of Saidia.


ANYWAY BACK TO THE THREAD MAIN ISSUE;

This is my understanding of the property useage restrictions.

1) Freehold title is a certainty on each property

2) 70% of the properties must join the localy run rental pool on a 9 yr renewable contract

3) The developer predicts yields between 7 - 11%, obviuosly its impossible to be accurate right now

4) c10 weeks per year may be set aside for owners use


Do people think this will restrain capital growth?

I can see that some buyers will be deterred as they dont want 'strangers' in thier property - some people dont want to be forced to let.

On the other hand I envisage another group of buyers will be MORE not less attracted - ie those liking secuity of income and a hands off hassle free income producing asset.

The Government have done this so as to maximise rentals - surely this is of some benefit.

CAPITAL GROWTH;

Some say the rental pool enforcement will restrain capital growth. Given the relatively safe income, hassle free well maintained developments will appeal to a great many buyers, why do some think this will restrict capital growth?

Hi guys, haven't posted in a long time but think that this is a very interesting and important post. I am afraid I have to disagree with you here Dogbox (despite having invested in LJDF myself) - the guarenteed rental scheme was always going to be made available (although the restrictions to the scheme were never made clear from the outset), and I fail to see how restricting use could ever increase the attractiveness to any investor. I like to keep my options open, and the fewer restrictions the better as far as I am concerned as this gives you numerous exit opportunities. Buying offplan I believe is a profitable way of buying into a development at a discounted rate because you are willing to take the risk that you are not sure exactly how the finished product will look, it is then holiday home purchasers who provide an exit to the likes of offplan investors by being able to see the final products, and ultimately paying a premium for being able to buy a built property. My fear would be that this layer of buyers may effectively be removed by these restrictions, affecting resale opportunity, and forcing people to invest for the long term, or at least change investment strategy. Also Should a houseprice correction occur (and im just thinking out loud here), is it not restrictions like these that would prevent people from buying in Saidia (as the proportion of investor to home purchasers swings heavily away from investor?)

I would like to pose a question to all investors in Le Jardin De Fleur - given what we now know about these restrictions, given villas etc coming back the market at similar prices to a year ago, and given video evidence of how the site is progressing how many people would turn the clock back to when you purchased and decide against going ahead, and how many people are still excited and happy they have purchased... I ask this question only because I am unsure myself. I open the floor to debate.

Its not until this place is completed that people will realise what a unique investment this is. It occupies a unique investment space.

Look at the alternative '10 a penny' golf resorts in Spain. Similarly priced to Saidia yet no beach, far far less facilities and leisure components, no marinas, no where near the number of on - site hotels, not 'the' showcase resorts for Spain whereas Saidia is the showcase for Morocco, no massive shopping centre (ok a bit vulgar but still a unique offering).

Sure its a massive building site right now but that was to be expected. Im also not deterred by the Fadesa 'noddy' homes. The LJDF products will be a different entity all together and I bet much in demand form groups of businessmen using the exibition centre.

I would prefer not to have ownership use restrictions but every cloud has a silver lining and I suspect the silver lining will be robust rental returns and Tax concesions.

Again whilst one sector of the buying public will be deterred for sure, the other sector will be more inclined to invest so the net effect is about zero. They will be encouraged by the rental focus underpinned by strict covenants on useage. Ive seen such instruments in place all over the world.

YOU WONT SEE SIGNIFICANT CAPITAL GROWTH UNTIL THIS PLACE IS COMPLETED and the real spurts wont come until the site has been used for a few years.

I always keep in mind that there is only one Plan Azure site on the N coast as opposed to what will be hundreds if not thousands of non Plan Azure sites.

Looks like Im in a minority which is fine by me.

What are the alternatives out there?

Now it is time to be a man Dogbox! You carried the masses into the depths, it is your resposability.

But I agree with you, if one wants to buy in MOrocco the Plan Azure sitesare the ones to go as they will offer some kind of guarantee. Saidia might be OK but Port Linux looks better.

Firstly, let me qualify my answer below by pointing out that I am not up on all the facts here.

On the rental side, it appears that the government is writing the rules as they go along or the lawyers have not been doing a great job for buyers or the developers held back a key issue at point of sale. In fairness, these things happen and it is all part of the risk of investing in a new market with (in the case of LJDF) a new developer.

Dogbox, I see this as the government acting in their own interests to maximize usage. This well help to support tourist figures and commercial enterprises connected with Saidia. But it will not necessarily maximize individual investor rentals as it will create a lot of supply and choice for holidaymakers. Without the restrictions, many properties would not have been made available. I believe that the yields will be low in the early years anyway (as this is an unknown resort) and this will not help investors with a large mortgage. Also, it will be interesting to see how the rental is worked out, how it is allocated between properties in the pool and the management costs which will probably take 25%+ from the gross rental on top of the usual running costs.

Tax
When I was considering Saidia last June, there was a big sell on tax breaks – no rental tax for 5 years and no CGT after 10 years. Now the message seems to be that there will be tax breaks for those that sign up to the rental scheme for 9 years. Does that mean that the original tax breaks on offer are being restricted? Is Morocco going down the French-style sale and leaseback route and will there be a VAT refund?

Phatpawz, good question. If you don’t mind, I’ll answer as someone who nearly bought.

I pulled out for various reasons. If there had been a rental restriction from the outset, I would not have been interested as I was buying primarily for family usage. I keep track of Saidia on this forum as it was a major decision at the time. Prices have not moved in 11 months so that has helped me justify my decision but, to be fair, when I pulled out I thought I was walking away from a good investment.

Your “video evidence” question makes me think of the “coming soon” comment on the LJDF website. I must say that the lack of up-to-date info on the LJDF website and the permanent “coming soon” of the video is not a big confidence booster.

I still think that there is a good chance that Saidia will be a success as a resort in the long run but, for me, the prices are too high for the uncertainties. Dogbox, I agree that there will be little if any capital appreciation in the next few years. I would say 5 years. Also, if the Spanish market does have a sizeable correction, the Spain to Morocco pricing comparisons that some people like using may need rethinking.

Dogbox, if you expect limited capital appreciation in next few years, why invest now while risks are high and your deposits are not earning interest?
The answer must be the yield.

You say that the developers are predicting yields between 7% and 11%.
Let us assume, for the sake of argument, that developers are being optimistic in order to sell properties.

Using the 7% prediction, that would be about 5% after management costs. After the usual running costs you would get less than 4%.

So, are you excited about no returns for, say, 3 years with a view to eventually getting, hopefully, rentals returns of 4%?

Remember that the invest-to-live buyers are being disincentivised by the new restrictions so the secondary market will be made up of income investors. If they can only get 4% net (using the original purchase price), they will not be interested. Having said that, if you are prepared to drop your original purchase price by a third, then a 6% yield might be OK for the level of risk involved. After legal fees, 5% sales costs and FX margins, you wouldn't want to have a 60% ltv mortgage.

Capital growth when it comes will quite possibly come in quick spurts. Market timing I have learned over many years is impossible and a fools notion. Warren Buffett himself gives short shrift to the perpetual market timers of this world.

Take the last few months in London - I have seen very significant growth. It would have been impossible to predict this in say summer last year, so all you can do is get in fairly cheaply then await the growth Tsunamis.


I think the market value in 2012 will be around £400,000 for a typical beach & golf villa here despite useage restrictions. A detatched own pool villa in Menorca in a cul de sac set way back from the coast (no beach to speak of where I go) is £400000.

I see no reason why someone that wants a unique facility laden experieince of this extent would not think a villa in LJDF will not be worth this sum to them, afterall it will be set right into a golf fairway.

Sure I could wait until say 2010 but by then there may be no villas available and in any event all Ive lost is interest on the first 20% for 12 months and on 40% for a further 2 years say at 4.5% gross thats £7728, and net of 40% is £4636. So my 'loss' is £4636 + aquisition costs in return for potentially high rewards - I can live with that.

Whats the alternative - a modest (very modest at £168k) villa in a 'ten a penny' golf resort inland in Spain with no particular USP, no marina, no beach, few facilities?

I dont buy the argument that only investors want this type of product. Absolutely not the case, there are plenty of people who want some personal use but maximised hassle free safe rentals.

Bombs might cause a temporary lull in tourism but going but other experiences it wont last long, the great Brit public have very short memories.

Anyway we can all only estimate returns, time will tell. I have'nt found an investment yet without many downsides - thats life.

Please revisit this forum in 2012 and lets see what the rentals / growth ends up like.

Dogbox/Sean thanks for your replies. I can see both sides of the argument, and it is informative to have both someone who has bought and someone who decided to pull out. I understand that it is unlikely that the resort experiences much capital growth until built and established, but if I look back to the reasons why I purchased, one of the reasons I believed it to be a good investment at the time was because there was the opportunity for rapid capital growth due to early entry. Therefore (as I am sure most buyers will admit) I bought with the view that should this occur I would reasses a year down the line and decide whether to 'cash out' (I can hear all those 'anti investors' sighing as I write this), or whether to keep until completion and use for rental and personal.

I still believe that Saidia can be a great success, a 'one stop shop' for holiday makers, but would I buy now given what I know?? Still not sure...I am leaning to Sean's opinion that risks at the moment are probably higher than short/medium term rewards, but agree with Dogbox that Saidia and especially LJDF could offer great long term investment. Anyone else??

Yes me fatpaws dude. He you are with no analysis(crap), I bet you anything you like that the Tangier resorts i.e. paradise, tinja, al houara, tanjah assilah beach, assilah marina, port lixus etc........ will be an instant success and with there smaller outlay than Saidia will give greater return pound for pound because all of the plebs will love this side of Morocco, you know the old saying "everything counts in large amounts", its the safer bet. For re-sales people(you average punter) will be falling over themselves to purchase when these resorts become popular, just like in Spain several years ago and this is what will drive the prices up.
Saidia is too unique to know with any certainty what is going to happen to it.

Yeah, right. Morocco will be in a few years at the level of Spain.

Phatpawz, you are right to point out that the two strong views on here (Dogbox and Sean) are from people who have made different decisions. I am aware that I am clouded in my opinion but feel justified (so far) by the lack of capital growth to date and the new rental restrictions.

Dogbox, I enjoy your posts and, god willing, will take up your offer to "revisit this forum in 2012 and lets see what the rentals / growth ends up like." For sake of comparison, I was going to invest around £200k cash and purchase £500k of property at Saidia. I was going to use the property a lot personally as I often work from home and did not think the rental would be great anyway. On pulling out, I invested the cash in a 2-bed flat in France, a studio in Corsica and a hotel room in London. This came to around £150k (of deposits) and the remaining cash is going toward an extention to my home. Two of the three investments are already producing income and my extention will increase my home value by a lot more than the cost (and provide everyday enjoyment). So far, the decision to pull out of Saidia has created diversification, rent and capital growth but, equally importantly, I sleep better as I no longer worry about losing the deposits. By 2012, I will probably have achieved a pleasant but not spectacular return. I believe your total return will be lower than mine but the huge risk and standard deviation around your investment means that you will either be way behind me or trounce me. If you trounce me then that is fine because it is just reward for the risk you are taking. Having said that, I have no idea of your other investments and if Saidia is, say, only 5% of your portfolio, then that may well be your little bit of diversification and quite sensible.

Dogbox, do you not have a hidden agenda in promoting Saidia?? Have you not received introducer fees for introducing clients??? Would these fees have to be paid back to the developer if the purchasers pull out???

Hmm.............

Sean - makes a lot of sence to switch to safe and steady investments as you have, its just that I like some spice in the mix.

I already have steady Eddie investments, Saidia is something more exotic and yes more worrying for sure.

Im particularly with you on the 'at least I can sleep at night'. Having said that I worry about a UK property crash just as much as my Moroccan adventure.

Ill tell you why Im intending to tough it out;

In the past Ive found exotic investments like this and each time didnt go ahead and each time have regretted it, so this time I determined at the outset to stick with it. As long as the developer doesnt go bust I wont lose money, howver the upside potential could be pretty good. Bombs would cause a short term lull in rent but overall the effect would be limited especially in the longer run.

Nitrox - the developer (late on) did offer me a commision if I were to introduce someone. This occured as a result of my early days enthusiam which rubbed off on freinds and aquaintences - I could have made a small fortune but in my naeivity just sent them along to various agents none of which offered any money apart from latterly one who sent me a little something - but I had no idea I was due for this little gift and it would have made no difference anyway - I just thought it was a great opportunity.

One aquiantence later was interested in a property which I advised the developer directly about. As such he would have given me a commision which I would have shared 50% with the buyer - why not if its on offer. The buyer did not proceed - he thought the wall on the Penthouse was too high - no one else has ever mentioned this on any forum so my guess is it was just too risky for him which is fair enough.


I really couldnt give to stuffs what people invest in. If people pull out, these properties will still sell and even this morning I was sent an unsolicited email from Churchill property about leaseback villas in Cape Verde for 300,000 euros with a 4% leaseback yield, no facilities, nothing unique, no golf, no marina, long flights.

That explains everything. Nobody in their right mind would have spent so much time ramping a specific property for free.

Of course this also takes away any credibility you might have had before...

Catara I promise you no one from HPC has bought a property via me - I thought you would jump on this.

You will note Im also active on other non Morocco property threads - I suppose Im agent for these!

I have my own business which keeps me happy thanks although I would set up an agency (hands - off) with someone of the right ability to sell foreign property but such a pesron I have yet to meet. How about you Catara?

Now Im looking at some ski property - what cunning method shall I use to suck in poor unsuspecting HPCers, whu ha ha ha ha ha

What do you mean by "someone of the right ability to sell foreign property"? Anybody can do research on specific countries, get the idea on what the best deals are and then offer the information to interested persons. What is so difficult about this?

Catara. Finding a salesperson with more than the gift of the gab is a tricky thing. I don't rate most of the sales people I've had dealings with, be it for property or otherwise. Those that have that blend of sales and substance tend to be directors or co-owners of small to medium size companies - which would make luring them away from their existing jobs that bit trickier.

I've listened to both Sean and Dogbox giving their views on where thing are going. I'm probably half way between the two.

Sean. Interesting to here where you have invested. Clearly safe long term investments with France / Corsica. (Costs associated with sellig in short term are extremely high.) Extension probably helps keep the other half happy too!

Ok, fair cop Dogbox. You just don't know who and what to believe in this game........I've been in it for 16 years and am still learning!

I am sticking with my Saidia purchase.....well two purchases in fact. Had reservations however like yourself, am determined to see this one through. I don't beleive we shall see alot, if any, capital growth in the next year or so, but am certain this one will come to fruit.

phatpawz, now you have had time to take stock and think about recent developments, what's your thoughts? Are you still unsure? There's a poll on the Saidia forum, and I am surprised as to how few people have voted on the rental situation. Does that mean that those who have purchased aren't duly concerned??

I recieved an email from the Financial director at the developer confirming freehold status will apply to our properties and that the rental pool is OPTIONAL (this point is stressed). Furthermore no penalties will be levied against those not wanting to enter the rental pool.

Government 'conventions' are the instruments used to frame the rules here. The convention includes templates which ensure freehold transfer is implemented.

Example proof is cited as plots in RT1 (Magnum) are due for delivery in summer together with freehold title deeds.

MANAGEMENT COMPANIES - although developers MUST put in place such entities to run the rentals (which was a key reason I bought here btw as I dislike 'lose ends'), it is entirely optional as to whether owners join the rental pool or not.

Note; 'severe restrictions' are imposed by the Government upon developers which for example provide MINIMUM RENT GUARANTEES for owners.
Again this underpins the investment case - developers will seek to maximise thier chances of complying with these guarantees so it is reasonable to assume the developers will deliver the best possible resort to further this aim.

I'm really confident this will prove to be the superb investment Ive always spouted about.
Watching Thomas Cook TV I noticed people cite facilities again and again as the reason they like certain resorts yet none of the featured resorts Ive seen on the programme in the last few weeks comes anywhere close to Saidia, it really is a one off. As Ive always said once these places are sold out I suspect there will be a long waiting list for second hand property.

It wont be everyones cup of tea but it will have mass appeal. For people who want an inland golf resort in Spain there are plenty of resorts. For those that want the amount of facilities Saidia will have, there are very very few alternatives.

I was'nt unduly concerned for the reason that I was pretty sure 'common sense' would prevail.

Again, this is the Kings / Governments showcase to the world - there is no way they are going to jeapordise the project with petty burecracy.

I am really impressed with the methodical longterm planning that the Moroccan Govt have put into this, a process which began in 1999 and is due for full implementation by 2010.

What other nation comes up with such a carefuly crafted plan? In Bulgaria and Turkey we just got an adhoc free for all, throw em up as quick as you can.
As I've always said Saidia is unique (the Plan Azure plan is also) its just peoples UNDERSTANDABLE negativity and sceptiscism can blurr the picture. Go buy in Portugal if your a worryier but be prepared to pay a lot more for like for like long season resort property by the beach.

Even bombs dont bother me very much. Egypt is booming despite many terrorist outrages. Again, people on the whole dont think about that when presented with nice holiday brochure piccies. Not only that, people get used to terrorism as we saw with London and the IRA in the 1970s and 80s.

This is the really important factor that many seem to be missing. It looks as though Spain will be (is?) undergoing a substantial correction.

I can understand the 'Morocco is cheaper than Spain' argument.

I can't see how, as Spanish property falls, people will be willing to pay more for a place in Africa than they will in Europe.

Showcase to the world?? the only showcase to the world was the price that Saidia offered as compared to Spain. And this argument was exploited by people like you to entice other to buy in Saidia. If the Spanish market crashes then there will no showcase left.

Egypt booming?? In your dream buddy.

I admire your optimism, but this sounds like a fool drunk on greed talking.

Even his optimism is faked. He was paid last year to make people purchase in Saidia. What do you expect from somebody with Vested Interest?

Its the facilities that set it apart. Without leaving the site, Mum gets the pick of 3 designer golf courses whilst the kids play on the beach or in the very large water and theme parks, whilst Dad gets to browse the 500 or so shops and Grandad gets to park his yatch in the onsite marina. When its wet they have the indoor sports complexes, cinemas bowling etc. And the 30,000 or so guests per week, mostly from the 11 hotels get exposed to the 3000 or so private properties.

South Africa's nicer parts attract premium prices, so there is nothing intrinsic about Africa that should mean Europe will always be more pricey. It takes time but I think people will come to think of the Moroccan Plan Azure resorts as first class valuable assets. Remember many Caribbean islands are dirt poor with no infrastructure but that doesnt stop shed loads of properties selling for millions each.

Here dogbox hits the nail on the head. It is the planning and thought that sets this resort apart.

All this talk of Spain crashing and Saidia overpriced are well shy of the mark. The market for these apartments/villas in terms of rental is the very people who would never be on this website. The thought of a holidaying in a five star resort in Morocco, where the celebs from Heat go, which they can afford, and tell their friends about will bowl them over.

TUI and the like will fill their boots. It is tailor-made for the mass market sunseekers who will feel that they are being adventuorous.

First year a package tour, next year a flight to Oudja and rent an apartment, third year shall we buy?

Huh? Ive never made a penny. More fool me, as quite a few people bought as a result of my earlt enthusiasm.

Recently in talking to the developer directly about an aquintance wanting to buy a property (I wanted to know which location was best in thier opinion) the developer then told me I might as well have a sum equal to the commision that an agent would have been paid (afterall the developer was saving this cost). I told the aquaintance this and we thought we may as well take the dosh if on offer and split it 50/50. Wouldnt you?

The chap then didnt buy anyway, but if dosh is on offer for a buyer and me Ill take it!

My enthusiasm for the project is longstanding and dosh or no dosh that will continue.

Nice talking with you as ever Rondy