Deal structuring
This is a very attractive investment opportunity. The development itself is unique due to the aforementioned panoramic views and superb on-site amenities. But the developer has also given careful consideration to the financial details, and has structured the deal so that there are a variety of attractive add-ons available.
Financing
Unusually for Morocco, there are mortgages available for Salama Valley investors. Viva Costa are able to source mortgages from Société Générale, BMCE, Credit Agricole and other local lenders.
The leveraging effect using a mortgage can help you make the most of your investment. Although you will be paying a deposit of only 30%, you will be Fearning 7% of the full value of the house – offering a superb rate of return. So assuming a conservative 10% capital appreciation rate, paying a 30% deposit – just €44,700 – and mortgaging the rest would give an annual return of 17% for
eight years.
Rental guarantee
All houses come with a nine-year rental guarantee from the management company, at 7% per annum. This starts from completion (in the first quarter of 2009). It will be paid quarterly and currently translates to a 7% yield – or €10,430 per annum. This figure will increase by 2% each year. The guarantee allows for up to two weeks’ personal use a year for the duration of the guarantee.
Transferable guarantees
All terms of the contract and guarantee are fully transferable. This means that if you wish to sell your property before the nine-year rental guarantee is up, you can pass these on to the buyer. Other benefits, such as the free return flights and housekeeping service, will also be passed on. This will further enhance the already excellent potential for a strong onward sale.
Free flights
You and your partner will get a free annual return flight from Europe, including airport transfers, for three years after completion.
Prepaid payment card
You’ll also get a one-off prepaid Fedala Gold payment card charged with 10,000 dirhams (€900), to be spent at any of the facilities in any Gardens of Fedala developments you stay at.
Access to other Gardens of Fedala complexes
You may use your unit at Salama Valley for two weeks each year, without charge and without affecting your rental guarantee – or if you feel like a change, you can choose to stay in any of the other Gardens of Fedala complexes in Morocco, also without charge.
Free housekeeping
Your house will be cleaned and maintained free of charge during your annual stay for the first three years from completion.
Value for money
The development is unique in terms of its location and its sheer quality – it is the first of its kind in the area. This makes direct comparables difficult; normally to prove that the price is indeed a good one, we would compare the price against other nearby luxury off-plan complexes, but these are rare in this instance as we are in the exciting position of being the first to enter the market.
Local property market
The local property market is currently in its early stages of development. It is mainly dominated by riad and dar renovation projects in the old medina and small apartments in tower blocks in the new town – but brand new high-end resorts are unusual, and there are no properties of comparable quality. In fact, Salama Valley is only the third tourism project to be granted planning permission in all of Fez.
Indicators can, however, can be drawn from Marrakech. The Fez market is believed to be in a similar situation to that of Marrakech a few years ago. According to local property professionals, as with Marrakech there are increasing numbers of French, American and British buyers looking to buy property in Fez. Prices have doubled in just two years – as in Marrakech. This growth is expected to continue, but as there are few high-end complexes in the region, there is more demand than supply and therefore more potential for strong capital growth for developments such as Salama Valley.
What’s the market value?
Using comparables from Marrakech gives an indication of the prices people are willing to pay in Morocco. Currently the market value of high-end complexes in Marrakech is in the region of €1,862 per m2. However, unlike with our resort in Fez, this average price does not include pools or furniture – they cost extra. Furthermore, they are located on flat land, so there are no views to rival those of Salama Valley.
The purchase price of a 90m2, 2-bedroom house in Salama Valley includes the 65m2 of private land and the 14% VAT as well as additional features such as the private pool (worth €10,000), panoramic views, all furnishings (worth a further €10,000), the nine-year rental guarantee and nine-year price guarantee. Furthermore, as you only pay a 30% deposit, you are in effect leveraging your furniture and the pool too – meaning you don’t have to make a bulk payment of approximately €20,000 to cover these at the time of completion, as you would with an unfurnished property without a pool.
This truly is an all-inclusive turnkey deal. After your deposit and 5% notary fees, you can relax, leave the running of the project to the management company and watch your investment grow.
Finding a great deal in any market is difficult, but knowing that you’re the first one in Fez getting such a fabulous deal means that you’re in a very strong position as an investor.
Onward market
The onward market for houses in Salama Valley is likely to remain healthy in the future because of strong demand and extremely limited supply of high-quality projects in the vicinity.
Increasing demand
Demand for high-end accommodation in the region has tended historically to be driven by affluent buyers from Morocco, France and southern Europe. The French and southern Europeans have traditionally enjoyed Fez due to its proximity, language and laid-back, relaxed pace of life. It has for decades also been popular with Americans fascinated by its history and cultural traditions. Now with the launch of a low-cost carrier route direct from London Luton, Britons are becoming increasingly interested in discovering the city.
Unique selling point
Salama Valley is only the third tourist development to be granted planning permission in the whole of Fez, and is currently the only one with views overlooking the old town. This is partly because local planning authorities wish to preserve the surrounding fertile green valleys to protect both agricultural production and the picturesque and authentic feel of the city. Attractions such as the medieval medina, artisan sites, golf courses (three new ones are planned as part of the city’s tourism drive) and hot springs should continue to draw visitors for years to come.
Booming tourism market
The city currently has 6,000 beds for tourists, and 10,000 more are planned. However, as local authorities intend to double visitor numbers to 1 million a year by 2010, the supply is not enough to meet an ever-increasing demand and this should keep prices strong. Growing tourism will also lead to continued economic growth in this already wealthy city, and increase capital appreciation figures too. This can be expected to keep rental incomes high, which will continue to attract future investors.
Investment scenario
We have prepared a scenario which highlights the investment option available to you.
This scenario assumes that the property market will carry on growing at a steady rate of between 10-20%, mirroring the capital appreciation rates Marrakech has witnessed during the last decade. We of course acknowledge the rates will vary during the course of your investment, but we believe it to be prudent to forecast based on historical data.
Mortgages
The mortgage market is in its infancy in Morocco – indeed, we are actually in a fortunate and unusual position to be able to offer financing with this deal. It is unusual to get a mortgage in Morocco if you are not a Moroccan citizen.
This adds yet another layer of security to this deal, as the banks will lend money only in accordance with the value of what has been built. When each part of the development is completed, the bank sends a surveyor to make an independent valuation and the next portion of funds is then released. So it is in the developer’s interest to build correctly and to schedule, and meanwhile you can feel confident knowing that the bank will be overseeing everything to ensure that all funds are spent appropriately and correctly.
Other costs
Annual property taxes, maintenance fees and utility costs are all paid for by the management company. Stamp duty is covered by the notary fees.
Legal fees
As with the French system, all property deals in Morocco must be overseen by a notary. This is a public officer working under the jurisdiction of the government to give authenticity to legal documents. They are specialists in property and contracts. You do not need a lawyer to proceed with your investment.
Notary fees
The fee for a notary’s services is 5% of the purchase price. In the case of these houses costing €149,000 the fee will therefore be €7,450, of which 2% (€2,980) is
payable on signing of the preliminary contract and the remaining 3% (€4,470) is payable on completion. That fee covers everything, including stamp duty and all fees.
To set up the Power of Attorney arrangement (saving you multiple trips to Morocco), there will be other minor legal costs to pay in the UK, such as having your power of attorney apostilled. This is estimated to be in the region of €250.
The appointed notary for this development also works with the other Gardens of Fedala projects. The notary therefore has excellent knowledge of the deal and the development, meaning the legal side of the purchase should be very efficient.
Technical specifications
Masonry
Inside partition walls separating the living quarters have a double thickness of bricks. Exterior facade is lined with thermally insulated brick, also double thickness. Inside partition walls are brick. Levelled areas waterproofed to avoid damp.
Woodwork
Solid wood front door is in traditional beldi style, or is a three-point prefabricated door. Wood-framed French windows open out, with shade provided by internal wooden shutters. They have bolts fitted and an ‘espagnolette’ locking system.
Flooring
Flooring is traditional Fez Zellige glazed tiles, 10cm x 10cm with matching skirting. The patio flooring is in natural coloured matt and glazed decorative tiles.
Wet-room walls
Shower and bath surrounds are tiled in glazed tiles, 2 metres up the wall from the floor. The walls of the rest of the room are in traditional style.
Kitchen inside walls
Glazed tiles 60cm above the work surfaces and kitchen sink.
Internal walls
All walls are finished in traditional style.
Ceilings
In the living area there is a lowered or plaster board ceiling to allow air conditioning conduits to be inserted. Plaster cornices can be found throughout the living area. Roughcast plaster or matt paint on all other ceilings.
Fireplace
Lined with heat-resistant bricks with a clay chimney stack.
Kitchen equipment
Four gas burners (bottled gas) plus oven and hood, washing machine and dishwasher, fridge and freezer, stainless steel sink with draining board and mixer tap, kitchen cabinets and cupboards. The cupboards have Mamoun wooden doors. Granite or traditional stone work surfaces.
Electrical installation
All sockets are earthed. Each house has its own standard electrical panel with trip switch and appropriate fuses. Installation is a Legrand or equivalent.
Air conditioning/heating
Reception area on the ground floor has a reversible control panel, providing air-conditioning/heating in the rooms. The bathroom has a convector.
Television and telephone
A communal aerial gives access to national and the main international TV stations at no extra cost. There is one TV aerial socket per room including all bedrooms, and a phone socket in the living room and all bedrooms. To connect to the internet an internal socket (paid for separately) may be used.
Plumbing
Cold water pipes are embedded under the floor tiles. Hot water is provided by accumulated electric heating; capacity is dependant on the type of villa. English-style bathroom suite in white enamel, with a white porcelain cistern flush system.
Outside facilities
Roads are made of brushed cement for vehicles and pedestrians, or smooth flattened earth with limited parking facilities. There are ‘golf-buggies’ to transport residents around the site. The garden will have palm trees and assorted foliage. They and the entire site are illuminated at night.
Furniture
Living room/dining room
Plain wooden dining table with six chairs, a double-seated sofa with two armchairs, a plain wooden coffee table, a two-door, single drawer cabinet, Moroccan mirror, wall-lights, other lighting and pictures.
Bedrooms
Double bed, bedside cabinets, lighting, a mirror, with wardrobe and cupboards either fitted or as furniture.
Kitchen
Crockery, cutlery and kitchen utensils for six people.
Miscellaneous
Gardening tools, barbecue, broom and vacuum cleaner.
N.B: These details are taken from other Gardens of Fedala resorts. The architect reserves the right to alter details where appropriate for technical reasons or as an improvement.
Tax in Morocco
As with all tax systems, the rules in Morocco are complex and you are strongly advised to seek professional advice from a tax specialist. However, here is a guide as to what you can expect as a UK investor purchasing a property for investment purposes. Due to the nature of this deal, most costs are covered by the management company.
Property Tax
Similar to UK council tax, property owners in Morocco are required to pay an annual property tax. However, the management company of Salama Valley bears all of these costs for the duration of the rental guarantee and the buyback guarantee.
Property Rental Tax
If you don’t live in your property, tax due on rental monies is set at 13.5%. This is payable from purchase. However, this tax has already been deducted from the guaranteed net rental income at Salama Valley.
Capital Gains Tax
If the property is sold within 5 years from purchase then the capital gains tax is set at 20% of profit, subject to minimum of 3% of the sales price of the property.
If the property is sold between 5 and 10 years from purchase then capital gains is charged at 10%. If the property is held for over 10 years then no capital gains tax is due.
Inheritance Tax
If you organise a Moroccan will then there is 0% inheritance tax to family members.
Dual Tax Treaty
A dual tax treaty exists between the UK and Morocco which means that you do not have to pay capital gains twice.
UK Tax Specialist
If you would like to speak with a UK accountant with regards to your tax position, we use Drew Hazell at Tayler Bradshaw and find him highly knowledgeable. His number
is 01799 525 407.
The Ready2invest fee
The Ready2invest fee for a house in Salama Valley residence is £2,500 payable for every individual reservation made.
What our fee covers:
Finding the Deal
Finding the deals through our network
of international finders.
Personally visiting all developments for
face-to-face meetings with key personnel and viewing the sites.
Negotiating the discount using R2i reputation and buying power.
Financially structuring the deal for maximum returns.
Completing extensive research and due diligence on:
• Title
• Planning
• Legals
• Country and town
• The development
• The developer
Securing protection for your investment.
Sourcing reputable local English-speaking lawyers in every country wherever possible.
Negotiating favourable fee structure
with lawyers.
Service
Our Investor Relations staff help you through your entire investing process.
Their roles incorporate:
Answering any questions you may have during your investment process.
Guiding you through the contract and payment process.
Helping arrange a Power of Attorney if necessary.
Help organise and liaise with mortgage companies where necessary.
Arranging site visits (1 week’s notice needed).
Help source and organise furniture packs where appropriate.
Help source local letting agents
where appropriate.
Update you on the progress of
your investment.
Provide a friendly ear for any worries
or queries you may have regarding
your investment.
What we don’t do:
We don’t arrange mortgages
We don’t convert currency
We don’t manage finished property
We don’t advise on tax
About Ready2invest
When Jonty and Alise Crossick sold their retail business and moved into property in August 2003, they invested just £300,000. Twelve months later they were sitting on a property portfolio worth over £7 million with equity of over £3.5 million.
In October 2003, Jonty and Alise set up Ready2invest Limited to share their property strategy with others and deliver a professional investment brokering solution in a fragmented market. The company has become well known for its thorough research and due diligence, and for negotiating and engineering exceptional deals in the marketplace.
“We think like investors, we behave like investors and we personally invest in the developments we launch. Ready2invest grew out of a need to group together with other like minded investors in order to create the buying power to get great deals.”
Over the past two years, the company has built up a customer base of over 20,000 investors, and has achieved over €300 million of off-plan sales in many countries across Europe, each with its own administrative and legal procedures.
“Our job is to build trust with the developer and trust with you. If you know that the properties we offer are well researched, superbly priced, judiciously selected and located in prime spots, then we believe you will buy through us. If the developer is confident that we can sell a lot of properties quickly and efficiently, thereby taking some of the pain out of his transaction process, we can negotiate unbeatable deals with him. The result? You, the investor, wins. The developer wins. And we win.”
Next steps
To reserve a house in Salama Valley without delay, please complete and sign the Reservation Form and return it to us with a reservation cheque for £2,500. This cheque is refundable should you apply for a mortgage and fail to qualify for one.
If you are as excited as we are about investing in Morocco, then call us now on +44 (0)1273 627 900 and speak to one of our property consultants.
For full registration details including the Registration Form and a list of Reservation Terms and Conditions, please download the full brochure as a PDF below.