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Market in Depth Last Updated: August 31, 2018

Weak growth hits Jordan's housing market

Returns on investment for individual investors can be good in Jordan. Rents are high and yields reasonable, due to the large influx of refugees from Iraq and Syria. But because of weak economic the country's residential real estate price index rose by only 0.3% y-o-y in Q1 2018, according to the Central Bank of Jordan. When adjusted for inflation, prices actually fell by 3.3%.

Villa prices rose by 0.6% y-o-y (-3% inflation-adjusted), while apartments rose by 0.5% y-o-y price increase (-3.1% inflation-adjusted) in Q1 2018. In contrast, house prices fell by 2.1% (-5.6% inflation-adjusted) during the year to Q1 2018, based on the central bank figures.

The UAE-based property management firm Asteco produces figures based on observed sales prices.  It saw a 1% y-o-y increase in Amman's apartment sales prices in Q1 2018, noting that "it is unknown whether these improvements are based on actual transactions".

In Amman's major districts:
  • In Abdoun, the capital city's most affluent area, apartment prices rose by 4% to an average of JOD 1,425 (US$ 2,011) per square metre (sq. m.) during the year to Q1 2018, according to Asteco.
  • In 4th Circle, apartment prices increased by 2% y-o-y to JOD 1,350 (US$ 1,905) per sq. m.
  • In Sweifieh, the average apartment price was up by 1% to JOD 1,200 (US$ 1,693) per sq. m.
  • In Um-Othainah, the average apartment was unchanged in Q1 2018 from a year earlier, at JOD 1,250 (US$ 1,764) per sq. m.
  • In Al-Rabiah, apartment prices were also stable at an average of JOD 1,100 (US$ 1,552) per sq. m.
  • In Der Ghabar, the average apartment price was also unchanged at JOD 1,200 (US$ 1,693) per sq. m.

"There is a lot of negativity in the air as the prices are becoming higher and higher for a normal citizen to buy instead of renting and this is creating a big problem for many," says Amman property agent Fayez Hannan.  Real estate transaction volumes fell by 14% in 2017, according to the Department of Land and Survey (DLS).

One factor that limits Jordanians buying homes is high mortgage rates. Arab Bank, Jordan's largest regional bank, charges a lending rate of 7.5% per annum.  Yet loans to the construction industry have been rising. In April 2018, the total amount of credit to construction rose by 8.76% to JOD 6.74 billion (US$ 9.51 billion) over the same period last year, based on the figures from the Central Bank of Jordan.

In hopes of stimulating capital inflows in the country, Jordan approved an investment program that grants citizenship or permanent residency of non-Jordanians in early 2018. This program includes permanent residency for non-Jordanians who purchase properties worth a minimum of JOD 200,000 (US$ 282,216) and hold the properties for 10 years. Grants of Jordanian citizenship or residency are limited only to 500 applicants per year, according to State Minister for Media Affairs and Government Spokesperson Mohammad Momani. 

Foreigners are allowed to buy property in Jordan, provided Jordan and the buyer's country of residence have a reciprocal relationship, and that the approval of the Cabinet (Council of Ministers) is obtained. Foreigners can only sell the property five years after acquisition. Most properties for rent and for sale can be found in Amman, Jordan's capital city. 


Analysis of Jordan Residential Property Market »

Rental Yields

Jordan: gross rental yields good at 6.5% to 9%

Property prices. Typically, it costs around US$1,850 per square metre to buy an apartment in Jordan’s capital Amman - less at the lower end, more for larger apartments, according to our sample (though this may not apply to the very smallest apartments).

Property rents. Rental rates in Amman are rather high, due no doubt to the large number of refugees who have poured in to the country. Smaller apartments yield significantly more than larger apartments.

Property returns. Gross rental yields on apartments in Amman are good.

Yields on villas are somewhat lower. We researched villas in previous years but this year were unable to gather data. The lower yields are because villas tend to cost substantially more on a per square metre basis, because of the land value.

Property buying costs. Round trip transaction costs on the purchase of residential property in Jordan are moderate to high, especially in comparison with the rest of the Middle East. See our Jordan residential property Buying Guide and Residential property transaction costs in Jordan compared to the rest of the Middle East.

Read Rental Yields »

Taxes and Costs

Moderate to high taxes in Jordan

Rental Income: Rental income is considered business income and is subject to corporate income tax at a flat rate of 20%.

Capital Gains: Capital gains are generally not taxed in the country.

Inheritance: There are no inheritance taxes in Jordan.

Residents: Residents are taxed at progressive rates.

Read Taxes and Costs »

Buying Guide

Total transaction costs are moderate in Jordan

Roundtrip transaction costs are around 7.94% to 12.94%. Registration fee is levied at 3% to 8%, the applicable rate varies depending on the status of the buyer and property size. Both parties equally share the real estate agent’s fee of 4%, which is subject to a 16% Goods and Services Tax (GST).

Read Buying Guide »

Landlord and Tenant

Rents are paid a year in advance in Jordan

Jordan luxury residential housesRent: 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).

Read Landlord and Tenant »

ECONOMIC GROWTH

Economic growth still weak; new government to cut spending

Jordan gross debtJordan's economy expanded by 2% in 2017, unchanged from the previous year and the lowest level in two decades. This was amidst the political and social unrest in the region brought by the continuing chaos in Syria and Iraq, which severely effected Jordan's exports, tourism, and overall economic performance.

During the first quarter of 2018, Jordan's  real GDP increased by 1.9% y-o-y, down from the 2.2% growth in Q1 2017, according to the Central Bank of Jordan.

The economy is expected to have a modest expansion of 2.5% in 2018 and by 2.7% in 2019, according to the IMF.

To jumpstart the economy, His Majesty King Abdullah unveiled an ambitious economic stimulus plan (2018-2022) that include reforms in various sectors,  projects worth JOD6.9 billion (US$9.7 billion) and private sector investment opportunities amounting to JOD9.5 billion (US$13.4 billion).

The IMF approved a three-year extended arrangement under the Extended Fund Facility (EFF) for Jordan in August 2016 for US$723 million, on condition that the government reduces public debt as a percentage of GDP from 93% currently to 80% by 2021. It was recently reported that Jordan plans to renegotiate the IMF loan, as the kingdom wants to extend beyond the 36 months, and to revisit some targets, according to Deputy Prime Minister Rajai Muasher.

“Public debt needs to be put on a downward path through gradual fiscal consolidation over the medium term while preserving essential social spending,” the IMF noted.

Jordan GDP inflationThe public sector deficit fell from 3.2% of GDP in 2016 to 2.6% of GDP in 2017. However, due to weak economic growth, the country's public debt to GDP ratio increased to 95.3% in 2017.

In June 2018, massive protests occurred against price hikes as well as an income tax draft law aiming to reduce Jordan's public debt, in line with the IMF recommendations. The income tax draft law was supposed to raise employees' income taxes by at least 5% and on companies by around 20% to 40%.

The protests resulted to the resignation of former Prime Minister Hani Mulki, who was replaced by then education minister Omar Razzaz, who  pledged to withdraw the income tax law, and instead of raising taxes plans to cut spending by 150 million dinars ($211 million) this year. 

Jordan's unemployment rate remains high at 18.4% in Q1 2018, but slightly down from the 'record high' rate of 18.5% in both Q3 and Q4 2017, according to the Central Bank of Jordan. In 2017, the unemployment rate stood at 18.3%, up from 15.3% in 2016, 13.1% in 2015, 11.9% in 2014, and 12.6% in 2013.

In June 2018, inflation stood at 5.1%, up from 3.3% in 2017, and -0.8% in 2016 and -0.9% in 2015.