Unlike other countries in the Middle East whose economies are booming, Jordan’s property market has been ‘stagnant’ the past few years due to a number of factors, said Rami Adwan, Taameer’s Deputy CEO for Marketing and Sales.
Land transactions have dropped by 20% in the first half of this year, while housing starts in the first six months of 2008 were down over 30% as compared to the same period last year.
The slowdown in the kingdom’s real estate market cannot be blamed on the financial crisis that is gripping the US and Europe. ‘We have been slowed by our own devices,’ Adwan said.
One factor that has crippled the kingdom’s property market are tight limits that the government has put in place on the total amount that banks can allocate for real estate loans, which has resulted in a shortage of available financing for retail buyers.
Most banks in the kingdom have maxed out on the lending amounts that they have been allowed for real estate lending, Adwan said.
Another cause of the real estate slowdown has been inflation, which has risen steadily in Jordan for the past few years. ‘The rate of inflation has gone up so tremendously that people have been waiting to see if there will be more of a decline in their purchase power or if things will get better,’ he noted.
At the same time the Jordanian stock exchange has fallen sharply, including a 20%-30% decline over the past few weeks alone, which means people have less money to spend.
As a result of these factors, investors have been either unable or unwilling to invest in Jordan, and instead have focused on other markets in the region.
However, Adwan believes that investors may be getting wary of speculative investing in the UAE property market and might see Jordan as a more stable alternative.
‘Jordanians who have focused on speculative trading and investment in property in Dubai over the past two years are now coming to ask about the market in the kingdom,’ he said. ‘This was not something we had seen last year.’
‘We believe this is an opportunity that we want to seize where people have speculated in the market and have made a profit, but now they want to shelter the money they have made into safe investments and houses that they will live in.’
Jordan represents a ‘return to basics’, Adwan argues, in that it is a real estate market that offers solid investments that do not fluctuate wildly in price, but instead grow by a steady 8%-15% per year.
He believes it will take about one year for the Jordanian property to pick up steam and begin growing again.
Taameer, which is considered the largest real estate developer in the kingdom and seventh largest company listed on the Jordanian stock exchange, may have to curb some of its expansion plans due to concerns that it may not be able to get financing for some of its projects due to the global financial crisis.
At Cityscape, Taameer chose not to market one of its luxury projects – Mansion Hills – a $2.5bn development planned for the southern coastal town of Aqaba that will feature upscale villas and apartments.
The developer is now focusing on projects that offer ‘good value’ for buyers, such as Ahl Al Azm in Amman’s Al Jiza area, which Taameer is developing in cooperation with the Jordanian Housing and Urban Development Corporation. The project will offer villas and apartments at competitive prices that cater to middle to low income families.
Outside of Jordan, Taameer is keen to expand in Saudi Arabia. The company is in the process of finalizing an agreement with Saudi Savola Group to develop two plots of land in Jeddah and Riyadh for a total of seven million square metres.
Taameer is also exploring opportunities in Libya, Algeria, and North Iraq, Adwan said.
Thursday, October 16- 2008 @ 13:04 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.