Valuing an industrial asset in Morocco — RICS methodology

Before any method, set the Basis of Value per IVS 104 / RICS Red Book: Market Value for most sales and financings; IFRS 13 Fair Value for financial reporting; Existing Use Value / Value in Use for insurance; Insurance Reinstatement Value for damage policies. The basis conditions admissible methods and comparable nature.

For leased warehouses or lease-able assets, income approach is primary. Two variants: (a) direct capitalisation of NOI (NOI ÷ cap rate); (b) DCF projecting rents over 5-10 years plus terminal value capitalised at exit yield. For tenanted assets: Term & Reversion — Term DCFs the passing rent until lease expiry, Reversion DCFs the market rent (ERV) thereafter with a higher cap rate (re-letting risk premium). Morocco Grade A reference rent 2025 (MAD 186-232/sqm/month) is the ERV baseline.

The DRC (Depreciated Replacement Cost) method codified by RICS VPGA 5 is essential for bespoke assets rarely traded: specialised manufacturing factories, integrated process lines, high-density cold storage, data centers, heavy equipment. Computation: (i) new-build replacement cost at equivalent standard; (ii) less physical depreciation (age and operation wear); (iii) less functional depreciation (technical obsolescence); (iv) less economic external depreciation. Mandatory cross-check by capitalisation of economic rent.

For serviced industrial land and standard warehouses, comparable method applies. Transaction sample often limited in Morocco — broaden geographically (Tanger Med → Kenitra → Mohammedia) with line-by-line documented adjustments (surface, equipment, clear height, truck access, sprinklage, applicable tax regime). Listings (Mubawab, Avito) are NOT comparables — only market tension indicators.

For raw industrial land with strong constructible potential (I2/I3 zoning, known plot ratio): Land value = Value of theoretical buildable programme – serving and development costs – construction costs – developer margin. Adapted to peri-urban industrial land of Casa (Tit Mellil, Bouskoura, Berrechid), serviced zone extensions, industrial development operations.

An operating industrial asset combines three distinct values: walls (asset only) — bare real estate; business (operating) — industrial operation value (clientele, contracts, know-how, brand); equipment (plant & machinery) — process lines, presses, machine tools, refrigeration. A report mixing them is legally challengeable and bankably unusable.

Bank financing: Market Value → DCF (leased) / DRC (factory). Sale/acquisition: Market Value → DCF / Comparable. IFRS 13 reporting (OPCI, REIT): Fair Value → DCF + Direct cap. Damage insurance: Reinstatement → Cost approach (new). Judicial expertise (expropriation): Open Market Value → Comparable + DCF. Inheritance / wealth tax: Open Market Value → Comparable + DCF.

• Basis of value clearly stated (Market Value, Fair Value, Reinstatement, etc.)
• Primary method appropriate to asset family
• Cross-check by at least one other method
• Comparables sourced from closed transactions (not listings)
• DRC includes physical + functional + economic depreciation
• DCF documents discount rate, growth, exit yield
• Walls / business / equipment separated
• Tax regime (ZAI vs common law) modelled in cash flow

• Walls and business values mixed without distinction
• Comparables drawn from listings
• DRC without income approach cross-check
• Generic cap rate applied to specific site
• Tax regime ignored — Free Zone ZAI valued same as common law