Detailed explanation
DCF is recommended by RICS for complex multi-tenant assets with varied lease terms, offices, hotels and hospitality, and asset-specific growth profiles. The method projects year-by-year cash flows (rental income with indexation, vacancy, CAPEX, non-recoverable expenses), then adds a terminal value in year N+10 (often by capitalising year 11 NOI at an exit cap rate). All cash flows are discounted at a real estate WACC reflecting risk-free rate + real estate premium + equity premium. Prime Moroccan office WACC in 2026: 8.5-9.5%.
Moroccan example
A Class A office building in Hay Riad, Rabat, is valued via 10-year DCF: sum of discounted NOI = 60 M MAD, discounted terminal value = 61 M MAD, total Market Value ≈ 121 M MAD.
Related terms
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