94 PERSPECTIVES ON BUSINESS AND ECONOMICS | VOL 42 | 2024 estate markets can be developed to a greater extent. This would serve to accomplish both individual capital mobilization (greater returns for individuals) and increased development of the country’s real estate. Although easing certain regulatory stipulations may be helpful in incentivizing initial transition or creation of these structured instruments, the goals of growing Morocco and mobilizing individual savings should be preserved. A reduced holding period without stipulations surrounding the completion of development projects could lead to OPCIs merely keeping land for appreciation, with little gain to the country’s overall growth. Furthermore, minimum distributions to investors and stipulations for the deployment of capital within the OPCI must be maintained to avoid funds amassing large amounts of wealth, with little benefit for Moroccans seeking to mobilize their savings. The role of banks in bolstering OPCI financing Macro interest rate environments and the rates at which banks loan money to individuals for the purpose of acquiring land or real estate have a significant effect on OPCI formation. One strategy that would encompass both interest rate risk and incentivization for enacting more formal, regulated means of conducting property dealings through OPCIs (as opposed to traditional Moroccan informality, which often circumvents proper tax reporting) is the incorporation of regulations surrounding lending requirements and opportunities for OPCI structures. Because the OPCI is built on a foundation of immense regulation and auditing by the AMMC, there is room for OPCIs to gain popularity in the terms of financing they can secure from banks. The AMMC should approach interest rate challenges in two ways. First, their approach should center around promoting the benefits of the rigorous auditing requirements OPCIs undergo. Second, the Moroccan government can work with banks to offer preferential interest rates on loans used to finance OPCI acquisitions. Through a promotion of the strict regulatory framework applying to OPCIs, banks, if not already aware of the benefits, would become informed about the lesser risk of issuing debt to OPCI firms as opposed to informal property developers. Another benefit would include greater assurance over the cash flows from properties and a lesser chance of default on loans issued. Together with direct promotion of the benefits of bank financing of OPCIs, the government should offer to back OPCI firm loans, including offering preferential rates. The government could back these types of financing by either directly purchasing loans that banks originate or by securing bank loans issued to OPCIs up to a certain threshold. In terms of the rates, they could range from 50 to 100 basis points lower than those currently issued on mortgage loans, which as of Q4 of 2023 was around 4.91% (Bank Al-Maghrib, 2024). These adjustments would stimulate not only the adoption of such vehicles but also the growth of commercial real estate development within the country. By offering preferential rates, profitability forecasts presumably will show greater incentive to undertake real estate development projects under OPCI structures. That said, the actions of the government must take into account the objectives of the financial instrument. There is no intent of substituting privately owned land or individual property developers for collective investment vehicles such as the OPCI. As such, there is a fine line between the promotion of OPCIs and any unfair biases given to them. The government also must acknowledge the leverage risk associated with OPCIs and the debt covenants in place for the structures. Although offering financing with lower rates is helpful, these limitations would still be a major consideration for the firms attempting to add leverage to their balance sheets. Conclusion The OPCI structure offers great promise for modernizing the Moroccan financial system, bringing formality to a sector in need of it. As the country continues to move into the global sphere, this structure will serve as a cornerstone for future developments in the REIT ecosystem, holding great potential for institutions and individuals alike as a means of increasing access to the capital markets both domestically and abroad. Benefits associated with the structure create value for the country, but the growth of the OPCI landscape will also highly depend on the navigation of country-specific factors relating to real estate markets. Such growth provides an impetus for continued research surrounding these instruments and their various policy implications. The government should consider opportunities to circumvent the associated challenges while maintaining a fair ecosystem for real estate sales in Morocco. References Baker McKenzie. (n.d.). Real estate law: Global corporate real estate guide: Morocco. Bank Al-Maghrib. (2023). Real estate price index. Bank Al-Maghrib. (2024). Lending rates.
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