Government measures to stave off negative sentiment stabilise residential sales and rental rates
Jordan’s property sector remains stable, with minor price increases in residential sales amid the political unrest that has slowed the property market, says Asteco’s latest Q1 Jordan report.
During the first three months of 2011, Asteco noted continuing demand for small-and medium-sized apartments, partly due to restricted land supply in prime locations and reduced housing budgets. A move in favour of small- and mid-sized apartments instead of larger units or villas has also had an impact in this regard.
“The Jordanian government moved swiftly in adopting policy changes to protect various areas of the economy, including real estate, as political unrest impacted some countries of the Middle East. As a result, of these changes, which included limitations on price increases and the waiving of transfer fees, Jordan’s property market has shown little sign of slowing,” said Elaine Jones, CEO, Asteco Property Management.
The most movement was seen in areas east of the capital of Amman, with affordable housing for low-to middle-income earners showing reasonable activity in both sales and leasing transactions.
Apartment sale prices in Jordan’s 4th Circle were down 1% over the quarter, at JOD 950 per square metre, with Abdoun remaining the most expensive area, with an average selling price of JOD 1,050 per square metre.
An issue also raised in the report was the end of the transfer fee-free period on property sales, which expired on 31 March 2011. At the start of April, the waiving of transfer fees for properties less than 150 square metres, and 5% fee reduction on those between 150 and 300 square metres, came to an end. Naturally it is too early to gauge the impact of this change in policy.
The report highlighted the more pro-active approach being adopted by Jordanian banks, with some approaching developers directly to offer products and services aimed at attracting more buyers and stimulating market activity. Another bank has also embarked upon a GCC road show to showcase attractive financial packages and mortgage programmes to overseas investors as part of the country’s new property developments.
With new developments being delivered to the office market, oversupply issues have continued from the last quarter. Across the sector, office sales eased 5% during the first three months, with rentals faring only marginally better, down 2%. The report found companies still favoured leasing commercial space, rather than buying to keep overheads as low as possible amid the economic uncertainty.
Office rentals generated some new interest during the quarter, with a small number of organisations, including some local Jordanian companies along with European semi-government foundations, looking for large office units of between 500 and 1,000 square metres. With many taking considerable time before committing to tenancy contracts, intense competition has built-up between real estate companies looking to win the business.
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