Jordan real estate market facing uphill struggle
AMMAN - Jordan’s property market is facing an uphill struggle as citizens deal with lower finances and higher interest loans from banks.
Significant investment from non-Jordanians in the market has also contributed to increased prices of apartments and houses, which are now out of reach for many Jordanians.
Trade volume in Jordan’s real estate market during 2017 dropped 14% to $8.5 billion compared to $9.9 billion in 2016, the Jordanian Department of Land and Survey said.
“The market is facing some issues and 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,” said Amman property agent Fayez Hannan.
“Jordanians are thinking twice before buying an apartment due to many factors, such as the increase in prices and the difficulties of taking a loan from banks and this is slowing the market as people are heading towards staying in their rented places and postponing any plans of owning their own house or apartment.”
The presence of Iraqis and Syrians has also put pressure on the market, as they are more likely to pay higher prices in cash.
In 2017, non-Jordanian investors bought about 2,060 apartments and 715 parcels of land. Iraqis were the top non-Jordanian investors, spending a total of $221.7 million on real estate. Saudi investment totalled $89.4 million while Syrian investment totalled $114.3 million.
“Iraqis have the financial power to buy and in many cases they pay cash,” Hannan said. “For example, an Iraqi family paid about JD800,000 ($1.12 million) in cash for a four-storey building in Amman and this cannot happen with Jordanians who are struggling to buy a small apartment through banks’ complicated procedures.”
Jordanian companies are also struggling to sell apartments that have been on the market for years, said Osman Abssi, who owns a real estate company in Amman.
“We are facing difficulties in selling some apartments in certain areas in the east of Amman because many prefer to buy in the western areas more than the eastern areas of Amman, although a few years ago people preferred to head back to the eastern areas because the west is becoming more crowded. The trend today changed and people are more interested in buying in the western part of Amman,” he said.
The Northern Amman registration office ranked first in the kingdom in property sales, taking in $1.8 billion in trade volume. This was followed by the Amman registration office, which took in $1.1 billion; Western Amman, which took in $988.7 million; and Southern Amman, which took in $908.3 million.
A report by the Central Bank of Jordan said the kingdom’s real estate prices had increased 50% over the last decade.
“According to the report, the residential property in all its types increased 54% but the industrial property or the non-residential increased 12% and the prices of lands in general increased by 47% and this is really unbelievable and citizens are finding it very hard to buy their own small apartment due to this increase,” Abssi added.
While many citizens said they would rather receive a bank loan to buy property than rent a house, there are concerns about securing a loan.
“We have been thinking of buying a small apartment for some time but we are thinking twice because the prices are really high. For example, a two-bedroom apartment will cost around JD120,000 ($169,252) in a good area and with a loan it will become around JD180,000 ($253,878) and this is I think a bad investment because the real estate market is unpredictable,” said Omar Hassan, who married last summer.
“We think that staying in a rented house is the good decision at this stage as we are paying around JD4,000 ($5,641) per year for a rented two-bedroom apartment,” he added.
Some that received a long-term loan were confident their investment will eventually pay off.
“We bought a 150 sq. metre, three-bedroom apartment with a loan from one of the banks and we are happy with that as at the end of the 20 years we will own our first apartment,” Yasmin Lifdawi, 28, said.
The original price for the apartment was $84,626 but that is expected to double in 20 years due to interest on the loan, Lifdawi noted.
“That is a lot of money but we don’t have a choice as we used to pay JD600 ($846) per month as rent but now we pay the same for our own apartment, which we can call our home in 20 years,” she said.
Abssi stressed the need for banks to offer more flexibility and lower interest rates on loans.
“Paying interest that equals the price of the apartment is not an encouraging issue for many,” he said.