Apartment rental rates rose in certain areas in Jordan during the fourth quarter of 2011 due to an amendment to the landlord and tenant law which permits landlords to increase rents to current market values, according to leading property consultancy Asteco.
The amendment allows landlords to discontinue existing agreements, which in some cases were entered into over five years ago.
“Rental rates in some areas are expected to continue rising in 2012 as landlords continue to bring prices up to current values,” said Elaine Jones, CEO, Asteco.
Demand in the rental market has come mainly from local families in the country’s capital, Amman, for apartments ranging from 150 to 250 square metres.
Apartment rents in Abdoun rose by 5% compared to the third quarter, with a two-bedroom apartment achieving rental rates of JOD9,250 on average. However, the biggest increase was in Al-Rabiah where rents climbed by 19%, with rents for a two-bedroom apartment reaching an average of JOD7,500.
Despite the new law and resulting increases, rental rates in general are expected to fall as more supply enters the market mid-2012, combined with an anticipated low level of demand.
Apartment sales prices in most areas were relatively stable in the fourth quarter compared to the third quarter. However, average prices rose by 2% and 5% respectively in the low-end areas of Sweifieh and 4th Circle.
Increasing supply coupled with weak demand caused prices in high-end Um-Othainah to fall to JOD1,100 per square metre from JOD1,200 per square metre over the last three months.
Increased demand in the sales market was recorded for independent and semi-attached villas, especially in Abdoun and Dabouq, due to insufficient stock. Developers are meeting this demand by building three to four residential compounds.
Sales prices this year are expected to remain similar to 2011 levels with demand continuing for medium-sized and larger apartments in prime locations.
Sales for residential compounds are predicted to pick up as more projects are completed by the end of 2012, on Airport Road in particular, which will offer good sized quality products at affordable prices.
Demand for office space for sale will continue to slow in 2012 as more supply enters the market and as companies opt to lease rather than buy.
The office market continues to see little movement in leasing rates due to supply outstripping demand and this is likely to continue as new commercial buildings are expected to be delivered in the near future.