The Good State of Real Estate

Lamudi’s Khaled Anabtawi believes 2015 is shaping up to be another strong year for Jordan’s real estate sector.

 By Elisa Oddone

Jordan’s real estate market, which makes up around 5 percent of the Kingdom’s GDP, seems to be in good health. Property sales and rentals have been showing signs of steady growth over recent years. Khaled Anabtawi, who manages the Jordanian operations of the global online property website Lamudi, sees this positive trend continuing throughout 2015.

What are your market forecasts for 2015?

Prices will remain relatively stable as they have been on the rise for a really long time.

I don’t see risk of an eruption of a real estate bubble like the one witnessed in Dubai or Spain because prices are increasing at a steady pace and not skyrocketing over a short period of time. Also, salaries are gradually increasing. If there will be a drop in home prices it won’t be more than 10 percent, so it won’t be a crash.

How have home prices and renting varied over time?

Home prices kept increasing 10 percent annually over the past few years. In 2012 and 2013, and the first half of 2014, prices soared. From the end of 2014, prices have been rising at a slower pace. Renting has also shot up over the same period, especially due to the large influx of Syrian refugees, but it remained steady in the first quarter of 2014.

Buying properties has become more and more expensive in the capital as land lots are limited. But home prices and renting also rose in northern governorates. Cost of construction materials, like cement and steel, has increased 70 percent over the past 10 years, as well as labor costs, contributing to the overall price hike.

Where are the most expensive and cheapest areas to live in Amman?

Prices are most expensive in Abdoun, Jabal Amman, areas around the Third, Fourth, and Fifth Circles, and Dabouk, where the price of a square-meter is between JD1,200 and JD1,300. Buyers now also see good investment opportunities in properties located along the Airport road and the Eighth Circle. Renting costs are about JD60 per square-meter in Abdoun, while in cheaper areas like Khalda, it’s around JD40. In East Amman prices are either stable or slightly on the rise, but still much lower than in West Amman. In Jabal Alakhdar, Jabal Almareekh, or Wadi Seer, one can still buy a 70 to 80 square-meter property for between JD15,000 and JD20,000, with house prices costing around JD200 to JD300 per square-meter. Rental prices range from JD80 to JD200 per month.

How is the commercial market doing in Amman?

Prices for purchasing and renting commercial spaces are on the rise in Jordan because many new companies are opening in the country due to its stability and the very cheap, but highly skilled workforce available in the country. Prices are soaring, especially along Mecca Street, which has gradually become the main hub for the IT sector, Shmeisani, the city’s hub for banks, and King Hussein Business Park.

What are land prices like?

In Abdoun, a dunum costs aroundJD1.5 million. Around the Fifth and Fourth Circles, prices surpass the JD1million mark. Land price represents the main cost for developers, which keeps home prices high and makes owners hold on to the property rather than sell it at lower prices. This is a direct consequence of regulations preventing vertical expansion. With current laws restricting residential building higher than five floors, investors, developers, and construction workers are calling for amendments to regulations to allow sevento 10 story apartments to be built to cut land costs and create more housing units in urban areas.

Who isinvesting in the country’s real estate market?

In 2013, almost 90 percent of housing units were purchased by Jordanians, with a total of over 30,000 residential apartments selling over the course of the year. Over the same period, Iraqis bought properties worth $290 million, Saudis $83 million, and Syrians $34 million. Most foreign Arab investors see Jordan as the only safe haven left in a region in turmoil. The country’s legal framework also ensures the equal treatment of local and foreign investors, providing them with incentives, including tax exemption and unrestricted transfer of capital and profits.

What do buyers look for when buying a house?

Jordanians favor relatively small-sized residences, with almost two-thirds of all apartments sold in 2013 sized less than 150 square-meters as regulations exempt from registration fees and taxes the first 120 square meters of the property. With the population in the country currently estimated at 7.5 million and its average age of 22 years old, a large number of would-be buyers will soon be looking to purchase their first home, presenting thriving opportunities for the real estate market. Family members used to live together, sometimes expanding their houses to accommodate new families, but people have started changing. The developing mortgage finance market is also helping potential home buyers. Affordable housing is in particular demand, but many new projects favor instead high-income earners looking for luxurious properties.

Is Amman’s urbanization keeping up with modernity?

The face of Amman is changing, with multi-billion-dollar projects underway that will revamp its landscape. Developers are currently progressing with Jordan Gate Towers, a high-class, mixed use project in Amman, to create the tallest structures in the city. The project’s second phase will offer high-class, luxury housing. The Abdali project, valued at more than $5 billion and mostly funded by Gulf countries, is creating the capital’s new downtown. Mostly banks have rented units there, with rental prices around JD150 to JD200 per square-meter.