Anyone who visited Marrakesh ten years ago might not recognise it today. Beyond the winding streets and colourful spices of the medina, a modern city has grown up, surrounded by the famously red terrain and, beyond, the Atlas mountains.

According to Karim Beqqali, managing director of the CB Richard Ellis (CBRE) Morocco branch, property prices have soared in the past few years, climbing, on average, by about 20 per cent a year until 2008. “Morocco is hot, cheap and, although it is not much farther for Europeans than Spain, it feels a world away.

“Before the downturn this made it attractive to international investors and second-home buyers,” he says.

In the past year, many international property buyers have retreated, forcing the owners of unfinished high-density complexes intended for foreign holidaymakers to lower their prices by between 20 and 30 per cent. Agents say this has not been enough to tempt buyers. But in the city’s leafier suburbs, there are bargain villas more likely to attract investors.

In La Palmeraie, a popular conservation area lined with palm trees and five-star resorts, two villas are on sale together for €3 million (£2.7 million). Dar Liqama and Dar Louisa have been on the market for eight months and, because of a complicated deed structure, cannot be sold separately. Between them they offer 3,000sq ft, with eight en suite bedrooms in one, four in the other and the potential for extra basement bedrooms, as well as two swimming pools, two whirlpool baths and a tennis court.

When the owner, who runs a cookery school at the villas twice a year and rents them out in between, started to think of selling two years ago, the price tag was closer to €4.5 million. The manager, Rafik Kilardu,who imagines the property will be bought by an investor, says that despite Morocco’s French colonial heritage, British and Americans make up 75 per cent of buyers in the area. “There is fewer of everybody at the moment, but then most owners in this area don’t desperately need to sell. Prices aren’t likely to fall any farther.”

A little farther out is the five-bedroom Villa Jereca, which has has been reduced from €3.5 million to €2.9 million with Aylesford International, after being on the market for a year. This grand property is owned by Jimmy Boyle, the Scottish sculptor and former gangster. He built it eight years ago in traditional style — with a pink exterior (compulsory by law within eight miles of Marrakesh), high ceilings and heavy wooden doors with a brass inlay — and there is a pool and hammam.

Elisabeth Ober, of Aylesford International, says that price drops are unlikely to mirror those of the new-build holiday flats. “But the overall market correction is a good thing. Some Marrakesh prices were hugely inflated,” she says.

Jonathan Seale, of CBRE, compares parts of Morocco to the Costa del Sol, where over-building and over-valuing has left developers unable to finish projects and owners unable to sell. “In some Marrakesh suburbs, as well as many coastal resorts, too much holiday resort property has been built. You have to check that the developers have their ear to the ground, which many foreign developers don’t, and that the infrastructure, such as roads, is in place.”

Seale’s recommendation for investors is somewhere with a strong local market. Morocco has an acute housing shortage, and in cities such as the capital, Rabat, and Casablanca, flats rented out to local residents offer a stable yield and the prospect of good capital gains in years to come.

Dar Liqama and Dar Louisa, 00 212 667 789 302, darliqama.com; Villa Jereca, 020-7351 2383; aylesford.com

Is this the start of a beautiful friendship?

Local agents say that in cities such as Rabat and Casablanca property prices have not fallen at all, and are, in some cases, rising. “In prime central Casablanca you may double your money within ten years. These properties are much less dependant on foreign buyers than Marrakesh,” says Jonathan Seale of CBRE.

Casablanca’s profile as an investment opportunity has been raised by the interest of Foster & Co, the Norman Foster-led architecture team, whose Anfa Place project on the Casablanca coastline has sold 40 per cent of its apartments since it launched off-plan a year ago. It is a luxury mixed-use development, carved into La Croisette, the corniche below the city. Prices start at €170,000 (£157,000) for a studio (with sea view) to €1 million for a three-bedroom penthouse.

With its big highways, crumbling Art Deco buildings and mountains of rubbish, central Casablanca may not be everybody’s cup of tea for a holiday, but La Croisette is cleaner and more glamorous.

Anfa Place was due to complete in November 2011, but the date has been brought forward to February that year, a sign that not all developers are struggling. For some, things may even be looking up.

Anfa Place: 00 212 522 946 946; anfaplace.com

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