Jordan is set to become the latest in a long line of Middle Eastern countries to experience a boom in its real estate market, with the tourism, office and residential sectors all enjoying an unprecedented growth spurt.
Towards the end of 2006, a number of the region’s major investment and property development companies have announced new large-scale projects in Jordan, building on the sound foundations laid over the past few years as the country’s real estate market started to take off.
In early November, the Saudi Arabian construction firm Saudi Oger and rights holder Saraya Aqaba signed the final agreements for the second stage of development of Jordan’s single biggest property project.
The new tourism development, to be built at the Red Sea port of Aqaba, has a price tag of $995.7 million and will include shopping, dining, entertainment, freehold accommodation and cultural facilities, all built around a man-made lagoon.
At the same time, Jordanian developer Union Land Development announced plans for a 35-story mixed office and accommodation tower block in central Amman, with construction due to be completed within two years.
UAE comes to town
Not to be outdone, a day or so later UAE developer DAMAC Properties announced that it had already sold out two of its four projects in downtown Amman, one a 35-story tower and the other an eight-story residential complex, and was starting work on a third development, a nine-story residential tower.
Peter Riddoch, DAMAC Properties’ chief executive officer, said that the Amman developments were driven by his company’s belief that the Jordanian capital would become a true hub for business and tourism throughout the region and beyond. Having already invested $150 million in the Jordanian property market, Riddoch said there were more projects in the pipeline.
One of the reasons behind Jordan’s property boom has been the strong growth enjoyed by the country’s economy over the past three years. While figures for 2006 are down on the preceding two years, 6% compared to the 7.2% for 2005 and 8% for 2004, the Jordanian economy is continuing to expand at a healthy rate.
Another underlying cause is a general shortage of accommodation and office space, especially in the capital, Amman. This problem is compounded by a lack of land for development, with the shortage in the city center being particularly acute.
High-rises on the horizon
According to Omar Maani, the mayor of Amman, the only viable option is high-rise developments, a feature that is already beginning to appear on the capital’s skyline. He believes they are an essential component of thriving, modern cities and represent smart growth.
Encouraging investment in the construction of high-rise buildings will both address real and emerging market demands and meet the needs of investors, he said.
However, Maani believes that there will have to be an extensive overhaul of Amman’s planning regulations, which date from 25 years ago, with a modern master plan and real estate development guidelines drawn up before wholesale construction can begin.
It was necessary to modernize land planning and the regulatory regime, together with an upgrade in infrastructure to accommodate growth or else both Jordan’s citizens and investors would face serious consequences, he said.
The municipality is finalizing an interim growth strategy that Maani said will provide a necessary bridge to facilitate development in a controlled manner until the master plan is adopted in the next few months. This will streamline planning approval and clear the way for granting permission for the new generation of tower block investment projects, the mayor said.
Though Jordan’s real estate and construction boom is generally viewed in a positive light, there is something of a downside. Increasing demands for material and rising wages for construction workers were estimated to have risen by 15% in 2006; both are factors in pushing up real estate prices and inflation. While inflation hovered around the 3.5% mark for the past two years, and averaged 1.7% for the two years before that, the rise in Jordan’s consumer price index is expected to top 6% for 2006.
Despite the inflationary concerns, and some worries that lower-income Jordanians may be priced out of the market, the growing interest of international developers in the property sector is being seen as a sign the country is set to build on the economic stability and growth of previous years.
