Jordan: Overview

RENTAL YIELDS

Last Updated: Sep 29, 2009

Stability in Jordan

Not much has changed in the past year in terms of prices and rents in Amman, Jordan. If anything, the trend is down, through some categories are a little cheaper, others a little more expensive. Apartment rents have definitely fallen a little, and the result is that gross rental yields on apartments in Amman now range between 7% and 8.5%.

These yields are significantly down on four years ago, when we started keeping track, when rental yields on apartments of 80 square metres and 120 square metres were 16% and 14% respectively.

Read Rental Yields  »

TAXES AND COSTS

Last Updated: Mar 19, 2007

Rental income taxes range from low to high in Jordan

Effective Tax Rate on Rental Income
Monthly Income	US$1,500	US$6,000	US$12,000
Tax Rate	nil	1.9%	5.0%
Click here to see a worked example
Source:			Disclaimer

Rental Income: Tax rates rise quite steeply from 5% to 25%. Additional social services tax is levied on the income tax liability at 10%.

Capital Gains: Capital gains coming from the sale of real property are not taxed.

Inheritance: There are no inheritance taxes in Jordan.

Residents: The income of resident individuals is taxed at progressive rates.

Read Taxes and Costs  »

BUYING GUIDE

Last Updated: Nov 14, 2007

Total transaction costs are moderate in Jordan

Roundtrip transaction costs are around 14.58%. Registration fees are at 10% -- the buyer pays 6%, and the seller 4%. Both parties equally share the real estate agent’s fee of 4%, which is subject to a 13% Goods and Services Tax (GST).

Read Buying Guide  »

LANDLORD AND TENANT

Rents are paid a year in advance in Jordan

Rent: Since most rents are paid a year in advance, deposits are not required.

Tenant Security: The typical lease contract lasts a year, with an option to renew. Although leases with shorter terms are also allowed in Jordan, such contracts have higher rents (the one-year contract of lease, under Jordanian law, cannot be broken).

ECONOMIC GROWTH

Last Updated: Nov 12, 2009

Lower economic growth

The Hashemite Kingdom of Jordan is a small constitutional monarchy (pop 5.8 million) situated across West Bank and Gaza, two hot spots in the on going tension between Israel and Palestine. Jordan is not an oil rich country (GDP per capita is only US$2,423), and is continually supported by foreign loans, aid and remittances from abroad. Despite this unpromising premise, Jordan is relatively peaceful compared to its other oil-rich neighbors.

Jordan’s economy has been transformed in the last fifteen years. After a devastating banking and exchange rate crisis in 1993 which halved the standard of living of the average Jordanian, the economy has been turned from a state-controlled economy, with highly regulated trade, to a deregulated liberal economy with a fast growing export sector, and with a reputation as a place where business can be done. The present King Abdullah, who ascended to the throne in 1999, is said to be a key proponent of these changes.

Jordanian economy was seriously affected by the global financial crisis as investment from oil-rich Gulf countries dropped while remittances from its expatriate labour forces dropped.

Remittances from Jordanian working abroad for the first three quarter of 2009 dropped by 6.5% to JOD1,892 million (US$ 2,652 million) compared to the same period last year, according to the Central Bank of Jordan (CBJ). Many Jordanian abroad agreed to work with lower salaries than what they used to get and preferred to save money than to transfer it to the Kingdom due to the increasing cost of living abroad.

After growing by an average of 8.3% from 2004 to 2008, real GDP growth is expected to slow down to 3% in 2009 and 4% in 2010, according to IMF.

Government officials and businessmen are optimistic of an imminent economic recovery. A major reason for this optimism is that there were “no major companies that collapsed, no factories filed bankruptcy and Jordan will follow the overall global trend improvement,” says Zaki Ayyubi, Director General of Jordan Chamber of Industry.