A flurry of activity has woken up the Jordanian residential property scene as investment has poured in from highly liquid Gulf states and King Abdullah II’s government pursues an aggressive agenda to transform the country into a regional hotspot for tourists and residents alike.
Demand for housing has continued in 2007 as many local residents are being driven out of Amman’s overcrowded and overpriced city centre, looking to outer suburbs for more affordable options. Land and property prices have surged dramatically recently, pushed up by growth in demand, particularly in prime areas in Amman, coupled with speculative trading and the rising cost of raw construction materials, such as cement and steel. According to a report by Arab Banking Corporation Investments (ABC Investments), in the past three years property prices have risen by more than 350%, and during Q1/07 prices of apartments are said to have increased by 10%.
Apartment sales in Q1/07 declined by 8% compared with the same period in 2006 due to rising prices, which have left local middle class Jordanians out of the buyer’s market. Land sales also followed a similar decline in the capital.
Buyers have sniffed out opportunities elsewhere – noticeable as sales of apartments and land in the outer suburbs of Zarqa, Marfaq, Irbid and Salt grew, driven by anticipation of major developments and the expected appreciation of prices. Much emphasis is being placed on catering for mid-to-low income housing; although the government maintains that demand for “prestigious” housing has still not been met.
Akram Abu Hamdan, director-general of state-owned property developer National Resources Investment and Development Corporation (Mawared), says the market for ‘prestigious’ housing – by which he means suitable for the owners of foreign companies – is yet to be satisfied. “What will happen is that people who provide this and do it first will obviously get the dividend. There may be saturation later on,” he predicts.
Both income brackets present huge opportunities to develop Jordan’s mortgage market. Total investment in the real estate sector since 2002 is estimated to have reached more than Jd15bn ($21bn), and the ministry of public works and housing is targeting Jd30bn by 2012. Demand for housing is estimated to be 33,000 units per year.
A place to call home
Jordan makes an effort to treat foreign investors fairly. Foreigners are permitted to own or lease property in Jordan for both investment and personal use, providing their home country allows the same for Jordanians.
Foreign ownership must be approved by the department of land and surveys, its director-general, the finance minister or the Cabinet. In most cases, property obtained for investment must be developed within five years of approval.
Iraqis who are still looking to Jordan as a safe haven have made significant purchases of residential property. According to ABC Investments, Iraqis ranked first place for sale of land to non-Jordanians during the first quarter of 2007, making up 50.6% of foreign purchases with a market value of Jd19.34m. The next highest country for investing in Jordan was Saudi Arabia with an investment of Jd2.34m, followed by Kuwait.
ABC Investments believes the tendency of Iraqis has been to buy property in Amman for personal residential purposes. Due to the higher prices of real estate in the capital than in other urban areas, Iraqis made up 60% of total foreign investment in real estate.
To counter this trend, the government has restricted the registration of property in the names of Iraqis to those who are granted full residency permits, in an effort to control the rising price of real estate. This is expected to reduce the demand for housing because many Iraqis retain temporary permits or none at all.
Transforming the capital
In an effort to reduce congestion, the government has relocated Amman’s downtown military facilities to make space for the Jd1bn Abdali Urban Regeneration Project. Developed on 3,76 million square feet (sq ft) of land and providing a built up area in excess of 10 million sq ft, the project will border the Palace of Justice, parliament building and King Abdullah mosque. It will contain high-rise towers, luxury apartments, hotels, retail outlets and better road networks.
It is being developed in a 50/50 partnership between Mawared and Saudi Oger, former Lebanese prime minister Rafiq Hariri’s construction conglomerate.
South of the Queen Alia International Airport, Taameer Jordan, a Jordanian public real estate development company, is developing a Jd637 Al Jiza residential city to offer 15,000 affordable housing units of varying size between 1076 sq ft and 2152 sq ft to accommodate more than 80,000 people.
Testimony to the strong relations between Saudi Arabia and Jordan, King Abdullah Bin Abdelaziz Al Saud donated Jd460m earlier this year to complete the development of the Madinat Al Sharq (City of the Orient) project in Zarqa. The project covers a total area of 25 million sq ft, of which 10% was complete in phase one prior to the donation. Its aim is to build affordable housing for low-income families, and will include 70,000 housing units ranging between 1076 sq ft and 1721 sq ft in size for more than 350,000 people.
The government has dubbed Madinat Al Sharq “the biggest development project in the history of Jordan”, and started by relocating Zarqa’s military facilities in a bid to tackle the congestion in the city’s busy commercial district.
Phase one included building the infrastructure, and developing the site for residential and commercial use. All plots of land for residential units have been sold and only 50% of commercial units remain. Although land is being sold to foreigners and locals, Mawared is operating a strict policy. A spokesperson comments: “If the purchaser does not start developing the land within one year, the licence will be lost.”
The remaining phases (two to six) would have taken another 10 years to develop, but with Saudi Arabia’s generous hand the project’s new completion date is 2012.
King Abdullah has been determined not to restrict Jordan’s real estate development to the obvious draws of Amman, Aqaba and the Dead Sea, insisting that other areas, such as Marfaq, Irbid and Maan, should also be built up. New zoning regulations in unoccupied areas allow for the construction of residential blocks up to six storeys high to create more space at a lower price.
Drawing in a crowd
Building on the country’s natural attractions – including the Dead Sea’s healing properties; Petra, one of the ‘new’ seven wonders of the world; and Aqaba’s marine life-rich Red Sea – southern Jordan is being developed as a tourist magnet to draw investors from abroad and Jordanian elites looking to buy a second holiday home, commonly viewed as a long-term investment opportunity.
Much like its Israeli counterpart, Jordan’s Dead Sea coast will soon be lined with five-star hotels and spas. The Samara Dead Sea Golf & Beach Resort is a Jd354m mixed-use project being developed by the Dead Sea Touristic and Real Estate Investment Company, a joint venture between the United Arab Emirate’s property developer giant Emaar and a group of regional and Jordanian investors. The resort’s 900 residences, including luxury apartments and villas, went on sale on August 18, offering properties with two to three bedrooms ranging from 3378 sq ft to 4347 sq ft in size.
Roll on 2009
A number of property developers are eagerly awaiting 2009, when the real estate market is expected to boom as a number of major projects reach their completion dates. A spokesman at state-owned Aqaba Development Corporation (ADC) says: “In 2009, Aqaba will increase the number of hotel rooms available from 2000 to 9000.”
ADC is a private sector-run company, aimed at accelerating the development of Aqaba’s special economic zone by maximising public-private sector partnerships and investment.
The Jd425m Saraya Aqaba project will contribute to that goal. It is being developed by Rafiq Hariri’s son, Sheikh Saad Hariri, through his Saraya Holdings company. It is a mixed-use project offering apartments, hotels, retail and recreational facilities.
Tala Bay and Ayla Oasis are also both mixed-use developments in Aqaba. Developed by Saudi and Bahraini investors, Ayla is expected to provide about 3000 residential units, in addition to 1700 rooms in four-star and five-star hotels to be constructed over a period of nine years. The total cost is estimated at Jd990m with the project using a total area of 46.27 million sq ft on the northern shore.