MOROCCO - Real Estate & Construction
Chief Executive Officer, Asma Invest
Hicham Safir is CEO of Asma Invest, a $200 million investment JV between the Saudi and the Moroccan governments, since 2015. Hicham spent more than 15 years in investment banks in the UK and the UAE (Nomura, DTZ…). He also served as Chief Investment Officer at Ithmar, Morocco’s SWF, betweeen 2012 and 2015. Hicham Safir is a Mathematics and IT engineer (France “Grandes Ecoles”). He holds an Msc in Finance from Imperial College in London (UK), and is a Certified Director, certification obtained at INSEAD, France.
The major change since 2015 was an important capital increase of MAD1.2 billion (USD122.8 million) from its shareholders. We have almost tripled our capital. We are proud that our shareholders, the governments of Morocco and Saudi Arabia, still see us as an investment tool and a means to better connect the two countries. We are continuing our strategy of being a majority holder, if not a 100% owner, of our businesses. We are still in the process of exiting our minority shareholdings. The idea is to completely move to projects that we operate and to diversify the sectors we operate in. Today, real estate accounts for around 50% of our portfolio and agriculture is 15-20%. We want to continue growing in real estate and agriculture including agri-business, but also open up to other sectors to achieve a mixed portfolio, ideally with real estate investments of 30%-35% and agriculture/agri-business around 25%. We are trying to move into the education and health sectors where we are screening some opportunities. We are also trying to move further into the industrial sector and industrial zones where we already have a presence. We are currently shareholders in two industrial companies well-known in Morocco: Sapino, which prepares industrial zones, and Tanger Med Zones (TMZ), a subsidiary of the Port of Tangier.
We have a talented pool of people here and we are trying to raise them up to the best team in Morocco. We do not plan to become the largest real estate operator, but one of the best in terms of quality and targeting the middle-income segment in Morocco. Our real estate expertise is already great. We might also offer this opportunity to third-party investors either inside or outside of Morocco. We have been approached by some investors because we have excellent projects in Casablanca Finance City, where we are the biggest real estate operator so far. We also serve as a co-investment vehicle: we create projects, package them, and try to find investors to join us for these projects. This means we can do two or three projects with the same amount of money we would need to do one project on our own. And it is good for those investors, because Asma Invest knows the market, from investing to operating. The biggest project we are currently working on is a MAD1 billion (c.USD100 million) project in Casablanca. For this, we opened up 40% of the capital to investors from outside Morocco.
Definitely. I would not say there is a crisis, but there has been a change in focus. Our vision at Asma Invest is to adapt and listen to the market. The middle-income population has not been well-served to date, in terms of housing, which is why we want to bring value to them. There have been mistakes made by real estate operators in the past. But as with any sector, especially real estate, there are economic cycles. There was a bullish cycle in the early 2000s, when there was huge demand, pushing many people into the sector. Those operators provided too much real estate in the end, and it was a big mess. What is happening today is a correction, not a crisis. The major players are still there adapting to the market, but all those players who came into the market just to speculate are being evicted now.
A major challenge we face today is the price of land which skyrocketed because of speculation over the past 10-12 years. Everyone knows, even at the government level, that the target today is the middle-income population because they have been overlooked for the past few years in terms of housing, health, and education. The focus of today is to go back to this middle-income segment and to focus on SMEs because this is where consumption is happening. This is how all countries work. The challenge now is to provide properties for this middle-income population commensurate with their earnings. The previous property speculation makes this equation difficult to solve. This is where the government must intervene to find a solution.
I just received a certificate from MIT on strategies for sustainable business. Sustainability is dear to Asma Invest and I wanted to know how to put it in practice, especially in real estate. Building sustainable housing can cost the same as normal housing. This is one of the key lessons I learned. We are having serious discussions internally about how to operate in a more sustainable way. Something we already do is build properties that are energy-saving in terms of heating and cooling. For example, we use thermal and acoustic insulation, which is more energy efficient and reduces utility bills. We are thinking about solar energy use and many other environmentally sound practices we can adopt. The way you position a building, its doors, and its windows to capture and best use solar energy is interesting and scientifically proven.
In 2020, we are putting more effort into agriculture and agri-business where we want to grow more. In the real estate sector, we are diversifying into other cities, rather than just operating in Casablanca. We have been successful in Casablanca, so the idea is to replicate this business model in other Moroccan cities. Co-investment is also something we are continuing to encourage. We are trying to leverage our know-how while finding financial leverage from outside, such as from banks and investors.