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.

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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.

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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).

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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: Oct 12, 2007

Jordan's economic growth hit by Iraq war

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.

Amman has changed greatly in the past decade – visibly by the building of first class hotels to serve the tourism industry, but also through building internationally-renounced hospitals, universities and training centres, and the holding of regional trade fairs. In addition there has been rapid growth of exports such as textiles and apparel, pharmaceuticals, and some agricultural product.

A significant proportion of this growth is associated with duty-free quota access to the US markets in designated zones and associated with minimum Jordanian, Israeli and Palestinian contents. “Amman used to be a small town, with nothing higher than 6 or ten storeys,” says Ruba Munir manager of Abu Judom Real Estate. “Now it is becoming a city.”

The booming export sector has also increased confidence in the Jordanian dinar. Inflation has been brought under control by appropriate monetary and a combination of sound fiscal balance policies and debt relief. The local commodity market, previously replete with subsidies and price fixing, has been substantially deregulated. There has been an active privatization policy.

The war in Iraq initially had a substantial negative effect on the economy, since Iraq proved subsidized oil to Jordan. This has hit the transport sector, and affecting confidence. However the international community has been supportive with grants, and Jordan is seen as an island of stability in the region, bringing in much investment. Finally, the development of Aqaba, both as a port and as a tourist destination, has added a new dimension to this growth.

The government is putting especial stress on education, with all Jordanians taught English as a second language. There is also a high profile anti-corruption campaign and a large number of economic laws to upgrade the regulatory and legal structure of business.