Samer SunnuqrotDeputy CEO

Ahli Investment Banking Group

ssunnuqrot@ahlibank.com.jo

Talal A. TouqanHead of Research & Financial Analysis

Ahli Investment Banking Group

researchunit@ahlibank.com.jo

Research & Financial Analysis:

Masa JumaRabe Al-Bataineh

Tele: +962 6 5689851/4/7

Fax: +962 6 5689864

P.O. Box: 3103 Amman 11181 Jordan

Website: www.ahli.com

Facts & Figures

Name Hashemite Kingdom of Jordan

Capital City Amman

Currency Jordanian Dinar (JOD)

Languages First: Arabic – Second: English

National Day May 25th

Land Areas

Land 89,200 Square Km

Water 329 Square Km

Total 89,529 Square Km

Land Divisions 12 Governorates

LandformsHighest Jabal Ram: 1,734 m

Lowest Dead Sea: -411 m

Real GDP2005 7,308.2

2006-est 7,746.7

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TABLE OF CONTENTS

1. Executive Summary 03-05

2. General Overview 05 – 12

2.1. About Jordan

2.2. Economic Outlook

2.3. Money Supply & Other Aspects

3. Factors Influencing the Real Estate 13 - 26

3.1 The Legal Environment

3.2 Credit Facilities

3.3 Population Growth

3.4 Tourism Sector

3.5 Industrial Sector

4. The Real Estate Industry 27 - 39

4.1. Trading Activity

4.2. Land Selling Activity in Jordan

4.3. Apartments Selling Transactions in Jordan

5. Major Projects in Jordan 40 - 52

5.1. Residential Projects

5.2. Commercial Projects

5.3. Malls

5.4. Tourism & Mixed Use Projects

5.5. Infrastructure Projects

6. Interim Growth Strategy (IGS) 53- 55

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1. Executive Summary:

Throughout the last several years, a number of integral factors have helped fuel the boom in the Jordanian

real estate market. To begin with, the Jordanian economy has been growing at a fast and effective pace,

thus, providing the booming real estate market with a vast room to grow. Secondly, excess liquidity and

exceptional returns on the back of the outstanding performance witnessed by many of the region’s capital

markets over the past few years, along with soaring fuel prices in GCC countries, have helped sharpen

investors’ focus on investing in Jordan, especially investors from the Gulf. Thirdly, political unrest in

neighboring countries such as Iraq and Lebanon has created an increased number of comparatively wealthy

expatriates relocating to Jordan, while the situation calms down in their countries, creating a shortage of

upscale-quality apartments in some of Amman’s key areas, which in turn prompted soaring rental prices.

Other factors such as a youth intense population demographic, along with the flexibility of credit facilities

extended to the sector have also helped keep demand strong. Accordingly, many local and foreign developers

leaped on the opportunity to meet the newly triggered demand for various types of properties, resulting

in the construction of huge development projects, which are already beginning to change the landscape of

the Jordanian real estate market.

Immense capital inflows from GCC countries as well as from Iraq and Lebanon gave a tremendous boost

to the national economic wheel during the last three years, urging therewith a quick uplift in the domestic

infrastructure. As a result, a Global Investment Report issued earlier in year 2006, revealed that Jordan was

ranked among the top 20 countries out of 141 rated countries in terms of foreign direct investments.

The national economy has successfully shown that main growth pillars foreshadowed the numerous

drawbacks Jordan has witnessed, posting an estimated real growth of 6% to tackle JD7.75 billion by the end

of year 2006, compared to annual real growth rates of 7.2% and 8.4% in year 2005 and 2004,respectively.

This in turn created a vast room for new job vacancies, especially in both real estate and financial markets,

where initial statistics revealed that the unemployment rate in year 2006 decreased to 13.9% in comparison

with 14.8% in year 2005.

The latest figures issued by the Department of Statistics (DOS) show that Jordan’s population stood at

approximately 5.47 million by the end of year 2005. Over the past five years, population has increased at

a CAGR of 2.4%. Based on this growth rate, population is estimated to reach 5.60 million and 5.74 million

in 2006 and 2007, respectively.

Looking at the population breakdown by governorate, we notice that almost 38.8% of the total population

of Jordan resides in the capital Amman. Irbid and Zarqa both host another 32.6% of the population and the

remaining 9 governorates play host to only 28.5% of total population.

It is worth noting that married couples contributed a great deal on the demand side for residential units

where the number of married couples has been on the rise since 2002 and it is expected for the number of

units in demand to stretch to 29,350 units in 2007 on form of “Natural Demand Force”.

4

Looking at the performance of Amman in comparison with other governorates for the last three years, we

notice that during 2005, there has been heightened land selling activity in Amman, where transactions

increased by 37%, while in the rest of Jordan, land selling activity increased by only 3%. On the other

hand, during the same period, apartments selling transactions have dropped by 12% in Amman compared

with a 34% increase in the rest of Jordan. In year 2006, the trend was different to some extent, where land

selling transactions as well as apartment selling transactions have grown by 11% and 17% in Amman, while

faster growth was registered in the rest of Jordan at 33% and 22% for land transactions and apartment

transactions, respectively.

In year 2006, it was observable that Iraqis have had only 13% of the total area associated with land and

apartment selling transactions, while their contribution in terms of investment value reached approximately

63% of the total value traded for non-Jordanians. On the other hand, Kuwaitis shared 37% of total area,

through investing only 2%. In other words, Kuwaitis have invested much less money compared to Iraqis, yet

they have acquired more property area.

The real estate industry is expected to benefit from more than JD13 billion worth of investments down the

road, including planned residential and tourist resort developments in the Dead Sea and Aqaba. This number

could rise up to JD15 billion if future and ongoing infrastructure projects are taken into consideration. Also

worth mentioning is that a significant amount of capital is also going into the construction of shopping

malls, which all include entrainment and retail facilities.

One of Jordan Investment Board (JIB)’s objectives is to have, by mid 2007, the time required to license

investment projects reduced to only 3 days. Jordan is already well ahead of regional averages as described

in the World Bank’s Doing Business Report for 2006.According to the report, it took investors an average

of 18 days to have a project set up in Jordan in 2006, which is about 3 weeks faster than the time needed

to do so in other parts of the region.

Jordan harbors some of the world’s most sought after tourist destinations such as Petra, Wadi Rum, Aqaba

and the Dead Sea. The region’s natural allure combined with the government’s efforts to provide a first-

class business environment have led to the setting up of some of the most major projects in mainly two of

the highly popular international tourism destination choices for travelers: Aqaba and the Dead Sea.

The hotel industry has been a direct beneficiary of the tourism sector’s impressive performance over the

past few years. Jordan has been appearing more obviously on major hotel chains radars, with international

hotels opening their doors in strategic locations across Jordan, such as the relatively recent opening of

Intercontinental hotel in Aqaba and Kempensiki resort at the Dead Sea. A steady increase in the number of

hotels in Jordan is quite obvious, especially in light of the continuous news of major hotels currently under

construction or soon to commence construction across strategic locations in Jordan.

Furthermore, it seems that the side effects of the boom in the real estate sector have also been rippling

through Jordan’s retail industry. After a relatively stagnant performance up until early 2000, the country’s

retail market has been witnessing a flourishing activity. Malls are proving to be a popular development

option, as Jordanians and expatriates become more interested in shopping inland, rather than abroad.

Taking note of the growing buying power, several companies have already commenced the construction of

large scale malls that are expected to be launched in the near future.

5

Also worth noting is that with Jordan’s increasing levels of industrial activity, the industrial sector is set to

have a significant impact on Jordan’s burgeoning real estate market. Besides housing, retail, and commercial

demand, which are all the main elements of the Jordanian real estate market, the emergence of Jordan as

an industrial hub augurs well for the industrial property sector, especially with the fully fledged support

being continuously offered to the sector by the Jordanian government.

In an effort to transform Jordan into a modern, regional business and transport hub, the Jordanian

government is investing approximately JD1.26 billion within a 25 year-long plan to develop an extensive

network of main roads across Jordan. Moreover, by the spring of this year, it is hoped that two bidders

will have won the tenders to build a light railway link from Amman to Zarqa as well as a new terminal

building at Queen Alia International Airport. The government of Jordan is more than keen to ensure that

its infrastructure keeps pace with the bout of major construction projects going on and is a vital factor

for a world-class economy. Thus, there are always fresh tenders in the pipeline and feasibility studies

commissioned for new road construction schemes as well as further possible additions to the country’s

promising rail network and public transportation.

The bonanza in Jordan’s real estate market, unfortunately, comes hand in hand with a rising concern for the

location of some of the high-rise buildings currently under construction or are due for construction in the

near future. Noting that Amman has long suffered from unsystematic planning, HM King Abdullah II urged

the Mayor of Greater Amman Municipality (GAM) to embark on the preparation of Amman’s first official

Master Plan. In the meantime, an Interim Growth Strategy (IGS) has been adopted by the municipality

while the master plan is completed.

2. General Overview:

2.1 About Jordan:

Jordan is a relatively small country, located in the heart of the Middle East. Syria borders the country from

the north, Iraq from the northeast, Saudi Arabia from the southeast, while Israel & the West Bank boarders

from the west. The Great Rift Valley of the Jordan River separates Jordan and the West Bank. Western

Jordan has a Mediterranean climate with a hot dry summer, a cool wet winter and two short transitional

seasons. However, about 75% of the country can be described as having a desert climate. Jordan occupies

approximately a total land area of 89.2 thousand square kilometers, with 329 square kilometers occupied

by water. Jordan has access to the red sea via the port located in the city of Aqaba. Jordan is divided into 12

governorates -country subdivisions- including: Ajlun, Amman, Aqaba ,Balqa, Irbid, Jerash, Kerak, Ma’an ,

Mafraq, Ramtha, Tafilah and Zarqa. Major cities include the capital Amman in the northwest, Irbid and Al

Zarqa both in the north, and Aqaba in the south.

2.2 Economic Outlook:

Jordan in general enjoys a stable economic environment, which proved by all means to be solid and able to

demonstrate low exposure to escalating political risks and turmoil in the region. It is well known that the

national economy operates on a different formula in contrast with other surrounding countries, especially

when compared to members of the Gulf Cooperation Council (GCC).

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Immense capital inflows from GCC countries, as well as from Iraq and Lebanon, gave a tremendous boost to the national economic wheel during the last three years, urging therewith a quick uplift in the domestic infrastructure. As a result, a Global Investment Report issued earlier in year 2006, revealed that Jordan was ranked among the top 20 countries out of 141 rated countries in terms of foreign direct investments.

However, the national economy has successfully overcome the numerous drawbacks, posting an estimated real growth of 6% to tackle JD7.75 billion by the end of year 2006, compared to annual real growth rates of 7.2% and 8.4% in year 2005 and 2004, respectively. This in turn created a vast room for new job vacancies, especially in both real estate and financial markets, where initial statistics revealed that the unemployment rate in year 2006 decreased to 13.9%, in comparison with 14.8% in year 2005.

Furthermore, Moody’s Rating Agency upgraded Jordan’s sovereign debt credit rating from negative to stable, hence; etching into records a remarkable improvement at the level of financial solvency.

Economic Indicator 2005 2006-est GrowthReal GDP 7,308.2 7,746.7 6%Nominal GDP 9,012.2 10,084.6 11.9%External Trade 10,369.7 11,781 13.6%Total Exports 2,926.7 3,665 20.01%Total Imports 7,443 8,116 9.04%Domestic Revenues 2,561.8 3,201.6 24.9%

Economic Indicator 2005 Oct. 2006 Chg.Rediscount Rate 6.5% 7.5% 1%Interest on Time Dep. 3.52% 5.21% 1.69%Foreign Currencies Res. 3,363.4 4,042.2 20.18%Workers’ Remittances 1,544.8 1,788.8 15.79%Foreign Direct Inv (FDI) 1,086.1 2,451.2 125.6%

Economic Indicator Oct. 2005 Oct. 2006 Growth

Money Supply (M1) 3,940.8 4,478 13.6%

Money Supply (M2) 12,213.8 13,580 11.2%

Economic Indicator 2005 Aug. 2006 Chg.Gross Domestic Debt 2,467 2,800 13.49%Total External Debt 5,056.7 5,175.8 2.35%Total Debt to GDP 83.5% 79.1% (4.4%)

*Figures are in JD million

Despite the fact that recent studies issued by international economic agencies emphasized a slower pace for national economic growth during 2007, the general outlook for the upcoming four years is still optimistic in light of the current economic inputs and prevailing circumstances. Ahli Bank’s research unit gained its economic insight through relying on a bundle of growth driving forces to constitute fair estimates for the Real GDP during the period that extends from year 2007 up to 2010.

The tremendous growth in foreign direct investments during the last three years, along with a progressive growth in cash inflows from workers’ remittances, contributed heavily to the local money supply, implying a vast room for economic growth to be foreseeable in the long run. This has also sustained the foreign currencies reserves held with the Central Bank of Jordan (CBJ), which hit a new record high by the end of year 2006, thus, infusing a state of relief towards allegeable far-fetched threats around pressures over the

local currency.

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Real Growth Rates (1993 - 2010-est)

It is worth mentioning that Jordan has embraced itself during the last three years with many new projects,

mainly targeting various fields in the Real Estate, Financial and Tourism sectors. In that respect, it is

essential to comprehend the nature of such projects, which entails a dwelling into medium to long-term

gestation periods prior to the start of generating actual returns.

On the flip side, several challenges started to evolve recently due to the incidence of higher prices, which is

partially ascribed to the imported inflation, and hence; eroding a considerable portion of the local purchasing

power. Basically, the upward shift in the general price level was mainly urged by the preceding rise in oil

prices and precious metals, followed by the wide strides that have been traversed by the government’s

decision in floating oil prices in the local market. Adding to that, foreign demand represented a key factor in

shifting aggreggate demand upward without a commensurate downward shift in the short-run aggregate

supply. Nonetheless, a downward shift in the long-run aggregate supply is probably expected to occur since

the overall economic pie expanded remarkably amid an anticipated severe competition.

Having said that, with respect to the cyclical nature of the Jordanian economy, an econometric model has

been constructed to come up with reasonable forecasts for the national economy at a macro level. The

rationale of the model is founded by translating the current economic variables into a future prospect

”holding other geopolitical factors constant”, while the arithmetic backbone of the model was based on the

log-linear regression analysis.

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2.3 Money Supply & Other Aspects:

As a result of the high security level that makes Jordan one of the most desired countries in the region

to have strategic investments in, the liquidity inflows kept reviving in a healthy manner, wiping out the

negative impact of leakage rates caused by higher imports.

Relying on figures reported at the end of October, 2006, the Money Supply (M2) rose by 11.2% to reach

JD13.6 billion, of which 14.4% took the form of currency in circulation.

Time & saving deposits in local currency captured the lion share by forming 43.5% of total M2, while

similar accounts in foreign currencies represented 18.5%

Furthermore, on one hand, demand deposits in local currency comprised 18.6%, while on the other hand,

demand deposits in foreign currencies contributed also 5% to total M2, upholding a similar percentage

when compared to the corresponding period in year 2005

Real GDP (1992-2010-est) JD Billion

Money Supply Structure - October 2006

9

Total currency in circulation grew by 15.2% to register JD1.95 billion at the end of October 2006, in contrast with JD1.7

billion reported at the end of the same period in year 2005. On the bright side, the growth of currency in circulation surpassed

its compound annual growth rate (CAGR) for the last four years, which turned out to be around 8.4%. On the other hand,

Demand deposits in local currency witnessed a good hike, climbing up 12.4% to end at JD2.5 billion. However, it seems

that the tight monetary policy, represented by increasing the level of interest rates, had a slight negative impact on demand

deposits, serving as a rein against further growth acceleration, where it fell below its CAGR that has been calculated around

27.2%.

The growth of quasi money preserved a constant step forward, where it grew by approximately 10% to arrive at JD9.1

billion, all of which, time and saving deposits ”denominated in foreign currencies” rose by 11.8% to reach JD2.5 billion. On

the other way around, demand deposits in foreign currencies grew by 6.4% compared to a historical CAGR of 25.6%.

2001 2002 2003 2004 2005 Oct-06 Oct-05 Growth CAGR (02 - 05)

Currency In Circulation 1,202.4 1,252.7 1,443.7 1,414.4 1,657.2 1,953.0 1,694.7 15.2% 8.4%

Demand Deposits (JD) 917.3 1,063.5 1,476.1 1,778.5 2,404.1 2,525.0 2,246.1 12.4% 27.2%

Money Supply (M1) 2,119.7 2,316.2 2,919.8 3,192.9 4,061.3 4,478.0 3,940.8 13.6% 17.7%

Demand Deposits (Foreign Currencies)

249.6 334.7 482.0 636.9 622.0 676.3 635.8 6.4% 25.6%

Time & Saving Deposits (JD)

3,925.6 4,154.4 4,323.3 4,676.7 5,391.1 5,911.0 5,387.1 9.7% 8.3%

Time & Saving Deposits (Foreign Currencies)

1,571.2 1,613.8 1,740.6 2,064.9 2,289.6 2,514.7 2,249.7 11.8% 9.9%

Quasi Money 5,746.4 6,102.9 6,545.9 7,378.5 8,302.7 9,102.0 8,272.6 10.0% 9.6%

%Chg. 6.2% 7.3% 12.7% 12.5% 9.6%

Money Supply (M2) 7,866.1 8,419.1 9,465.7 10,571.4 12,364.0 13,580.0 12,213.4 11.2% 12.0%

%Chg. 7.0% 12.4% 11.7% 17.0% 9.8%

*source: CBJ’s monthly statistical bulletin

6.103 6.546 7.379 8.303 9.102

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Attention should always be paid for main drivers of money supply, where weights of such drivers vary

across countries. In that regard, a great emphasis is being placed on foreign direct investments and workers’

remittances, which play in essence a crucial role in offsetting the negative impact of cash outflows as a

result of the persistent trade deficit, especially during the period in which the oil prices rose to new record

highs.

Moreover, the dwindling size of foreign grants imposed a cumbersome mission over the local government,

calling forth an urgent necessity to fuel the public budget by incorporating other domestic sources mainly

through reformulating income taxes, sales taxes and domestic debt, in addition to motivating the trend of

privatization.

The diagrams below shows that tax revenues are expected to mark JD2.2 billion by end of 2006 compared

to JD1.77 recorded during the year before, which is 23.8% higher. Also, non-tax revenues are estimated to

rise by 38.5%.

Taking a quick glimpse at the future outlook, the projected plans for the upcoming years imply in their folds

new structural changes that are mainly represented by dictating serious endeavors to gradually amortize

significant portions of the public debt.

This shall take place through exploiting all surpluses generated from removing the item of oil subsidies to

write off tranches of the outstanding external debt.

However, advancing to such levels brightens the future outlook for the Jordanian economy, albeit a burden

might temporarily fall at the expense of potential savings from personal income.

Goverment’s Main Sources of Income - JD Million

Goverment’s Revenues Structure 2006-est

11

Consequently, total public debt rose by 6% to reach JD7.98 billion, representing around 79.1% of the

estimated gross domestic product (GDP) for year 2006, all of which 51.3% pertains to external debt, while

domestic debt formed 27.8%.

In connection with the above subject matter, the government has already started to shift its debt financing

from external resources to place more emphasis on gross domestic debt.

The charts below indicate that gross domestic debt rose by 13.5%, amounting to JD2.8 billion by end of

August 2006, in comparison with JD2.5 billion reported at the end of the same period in year 2005. On the

other hand, total external debt increased by 2.4% to reach JD5.17 billion against JD5.06 billion.

2004 2005 Aug-06 Chg. %Chg.

Gross Domestic Debt 2,082.0 2,467.0 2,800.0 333.0 13.5%

% of GDP 25.8% 27.4% 27.8%

External Debt 5,348.8 5,056.7 5,175.8 119.1 2.4%

% of GDP 66.2% 56.1% 51.3%

Total Debt 7,430.8 7,523.7 7,975.8 452.1 6.0%

% of GDP 92.0% 83.5% 79.1%

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Interest Rates

Due to the fact that Jordan falls among the countries whose local currency is pegged to the US dollar,

following similar monetary policy actions was deemed imperative and compelling. However, the expansive

monetary policy has implicated cutting rediscount rate from 5% by end of 2001 to reach 2.50% by the end

of year 2003. Afterwards, leading economic indicators pertaining to the US economy signified at an early

stage in year 2004 a loss of control over inflation rates, calling forth a reversal action, which happened to

get prices back to normal levels through higher rediscount rate.

The consumers’ confidence was apparently in high spirit, having a golden touch on the Jordanian banking

system. This was primarily reflected on the lending capacity of most licensed banks amid rising levels of

demand, saving and time deposits. Therefore, squeezing net interest margins became more feasible in light

of relatively low non-performing loans ratio, which dwindled to around 5%. To elaborate, interest on time

deposits increased since the beginning of year 2006 up to the end of October by 169 basis points to reach

5.2% against 3.5%, while on the other hand interest on loans and advances rose during the same period

merely by 22 basis points to exhibit the severe competition among licensed banks.

2001 2002 2003 2004 2005 October-06

Rediscount Rate 5.00% 4.50% 2.50% 3.75% 6.50% 7.50%

Six Months CD’s 4.00% 3.45% 2.15% 3.20% 6.95% 6.85%

Interest on Time Deposits 5.19% 3.97% 2.75% 2.49% 3.52% 5.21%

Loans & Advances 10.45% 9.85% 8.92% 7.59% 8.10% 8.32%

Furthermore, year 2003 represented a major turning point in terms of investment behavior, where lower

nominal interest rates paralleled to a sequence of higher inflation rates ”measured by the Consumer Price

Index (CPI)” drove real interest rates to the negative area. This in turn played a crucial role in switching the

overall sentiments from risk averse to risk taking aptitude, thus; the local business climate brisked up with

concentration given to the stock market as well as the real estate sector.

September-06

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3. Factors Influencing the Real Estate Sector:

3.1 The Legal Environment:

The Jordanian government has been actively amending and renewing its legislative system in order to

achieve a top notch legal environment that facilitates the flow of investments into the country.

Tenants Law

Taking a look at the law that governs the renting for both residential, as well as commercial purposes,

we observe that prior to year 2000, the tenant enjoyed an advantage over the landlord. The law gave the

tenant the right to stay as long as he should need or want, even if the owner should want the dwelling for

own use, provided that he is not violating the signed contract conditions. However, a shift was witnessed

with the approval of the landlord and tenant law #30 for the year 2000. This amendment annulled the

previous right that grants the landlord the power to evict the tenant upon the predetermined date set in

the contract, unless a new contract is signed. Moreover, a grace period was given to tenants till the end of

2010. The deadline after which any lease concluded before 31 August 2000 would become null and void,

unless a new contract was reached between the landlord and the tenant.

Double taxation agreements

Furthermore, Jordan has signed agreements to prevent double taxation with Algeria, Bahrain, Canada,

Egypt, France, India, Indonesia, Kuwait, Malaysia, Poland, Romania, Sudan, Syria, Tunis, Turkey, United

Kingdom, and Yemen.

Encouraging foreign investment

The government of Jordan has been exerting mammoth efforts in creating a lucrative and friendly

environment for both Jordanian and foreign investors, through reforming its investment law, streamlining

procedures, granting attractive incentives of tax and customs duty exemptions. In 1995, the Investment

Promotion Law was passed, which gives equal treatment to Jordanians and non-Jordanians. International

investors looking to invest in Jordan are provided with first-rate opportunities in terms of income tax

exemptions, custom-duties exemptions, and unrestricted transfer of capital and profits in major sectors.

The Investment Promotion Law offers exemptions to projects within the following sectors:

1. Industry

2. The Agriculture Sector

3. Hotels

4. Hospitals.

5. Conventions and Exhibition Centers.

6. Leisure and Recreational Compounds.

7. Maritime Transport and Railways

8. Pipeline transportation and distribution services for water, gas and petroleum derivatives, as well as its

exploitation.

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Broadly speaking, the law divides the country into three development areas: Zones A, B and C. Hotel

and tourism related projects set up along the Dead Sea coastal area, leisure & recreational compounds,

convention & exhibition centers receive a zone A designation.

Investments in Zone C, the least developed areas of Jordan, receive the highest level of exemptions.

Furthermore, all agricultural, maritime transport, and railway investments are classified as Zone C,

irrespective to the location. Qualifying Industrial Zones (QIZ) are zoned according to their geographical

location, unless they apply for an exemption.

The Investment Promotion Law specifically allows the following incentives:

Exemptions from income and social services tax for up to 10 years for projects approved by the Investment

Promotion Committee and in accordance with the designated zones scheme:

· 25% tax exemptions for Zone A.

· 50% tax exemptions for Zone B.

· 75% tax exemptions for Zone C.

Moreover, an additional year of the abovementioned tax exemptions is granted to projects each time they

undergo expansion, modernization, or development that results in a 25% increase in their production

capacity for a maximum of four years.

Additionally, investments within industrial cities that are designated as special industrial zones receive

additional exemptions. Industrial projects are granted exemptions on income and social services tax for

a period of two years. Industrial projects are granted property tax exemptions throughout their lifetime.

Industrial projects are granted partial or full exemptions from most municipality and planning fees.

Regional offices and offshore firms are treated on an equal footing with Jordanian firms, and are entitled

to the same privileges extended to local businesses. The authorities that approve foreign ownership of

land and property, depending on the size and location of the property in question, are the Land & Survey

Department, its General Director, the Ministry of Finance or the Cabinet.

Foreign nationals and companies are allowed to own and/or lease property in Jordan for investment

purposes and/or personal use, provided that their home country offers equal property ownership rights to

Jordanians. Investment properties should be developed within five years of the date of approval.

The Investment Promotion Law succeeded in accomplishing its purpose, where total investments benefiting

from it was measured at JD1,834 million during the first ten months of 2006, of which 53.9% was invested

by domestic investors, while other Arab investors captured a 42.20% stake, leaving only 3.9% for non-Arab

investors.

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The following two charts demonstrate the total investment benefiting from the Investment Promotion Law

during the first ten months of 2006 by sector and by country.

* Conventions & Exhibition Centers

Source: Jordan Investment Board website

An environment ripe for investments

Jordan Investment Board (JIB) is dedicated to ensuring that Jordan is the destination of choice for every

investor. JIB offers a comprehensive range of services to investors, such as appealing incentives, working

on behalf of the private sector, acting as a facilitator, providing information to investors, and promoting

Jordan abroad.

One of JIB’s objectives is to have, by mid 2007, the time required to license investment projects reduced to 3

days only. Jordan is already well ahead of regional averages, as described in the World Bank Doing Business

Report for 2006:

Indicator Jordan Region

Procedures (number) 11 10.3

Time (days) 18 40.9

Cost (% of income per capita) 73 74.5

Min. capital (% of income per capita) 864.4 744.5

Source: www.doingbusiness.org

According to the report, in 2006, it took investors an average of 18 days to have a project set up in Jordan,

which is about 3 weeks faster than the time needed to do so in other parts of the region.

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One –Stop-Shop:

Jordan Investment Board (JIB) created the «Investment Window» which acts as a One-Stop-Shop (OSS)

center for investors, benefiting from the investment incentives, to register their companies, and to get the

needed approvals from concerned governmental bodies within 14 days.

The OSS works as a one-step process to get business up and running. It basically provides representatives,

which are located at JIB, from most of the governmental agencies dealing with the registration and licensing

of projects.

OSS provides the following services:

· Registration of projects according to The Companies Law.

· Issuing preliminary licensing approvals for the start-up of projects.

· Issuing visas and permanent residency approvals for investors and foreign labor needed for the project.

· Follow up services.

OSS provides services to projects within the following sectors:

· Industry

· Agriculture

· Hospitals

· Maritime Transport

· Railways

· Leisure and Recreational Compounds

· Convention and Exhibition Centers.

· In addition to projects in Pipeline Transportation, Distribution Services for Water, Gas and Petroleum

Derivatives as well as its Exploitation, or any other investment project which has a JD50,000 non-Jordanian

share.

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3.2 Credit Facilities:

Jordan’s economic growth has been coupled with an expanding credit facilities’ base to compensate for the socioeconomic

developments taking place in Jordan. In effect, total credit facilities granted by banks have had an accerelated growth for

the last couple of years, while registering a mere 2.6% increase during 2003. This rate has soared to about 25% during 2005

and continued to rise during 2006 to stand at JD9.7 billion by the end of October, thus registering a 27.6% increase for the

first 10 months of the year compared to the same period in 2005.

JD Million Historical Performance Latest Performance

YEAR 2001 2002 2003 2004 2005 Oct-06 Oct-05 Chg. % Chg.

Agriculture 105.5 102.9 98.8 113.6 110.9 136.4 120.9 15.5 12.8%

Mining 77.7 95.3 78.0 77.7 56.5 52.5 54.5 -2.0 -3.7%

Industry 728.6 789.8 801.4 895.3 981.6 1,154.3 1,015.7 138.6 13.6%

General Trade 1,206.1 1,250.9 1,327.3 1,472.9 1,585.0 1,814.1 1,588.9 225.2 14.2%

Construction 728.9 764.9 804.5 953.2 1,162.1 1,515.6 1,157.5 358.1 30.9%

Transportation Services 132.1 163.6 166.6 174.1 219.6 275.4 223.1 52.3 23.4%

Tourism, Hotels & Restaurants 171.0 173.5 172.8 154.9 181.2 194.5 148.1 46.4 31.3%

Public Services & Utilities 326.4 349.7 349.0 494.3 554.1 627.4 503.9 123.5 24.5%

Financial Services 150.9 139.7 133.1 97.2 176.1 243.0 126.7 116.3 91.8%

Buying Stocks 15.5 43.8 22.5 83.9 220.1 453.7 191.3 262.4 137.2%

Other 1,306.2 1,255.9 1,308.4 1,672.1 2,497.1 3,210.6 2,451.8 758.8 30.9%

Total Credit Facilities 4,948.9 5,130.0 5,262.4 6,189.2 7,744.3 9,677.5 7,582.4 2,095.1 27.6%

In parallel to the growth in total credit facilities, extended credit facilities targeting the construction sector has followed suit

with near growth rates of 21.9% during 2005 and another 30.9% during the first 10 months of 2006. In terms of market

share, facilities extended to construction activities corespond to a 15.6% share out of total credit fecilities as by the end of

October 2006, which is a contribution that has remained almost stable during the last couple of years, standing at 15.4%

and 15% in 2005 and 2006, respectively.

This development came amid Jordan’s booming real estate and property market, which was valued at JD4.9 billion for the

year 2006, while registering a 20% increase for the first two months of the current year compared with the same period

in 2006. A situation that created an urgent need to accommodate for a growing population, creating therefore, a large

potential market for mortgages.

However, banks could only provide mortgages at floating or fluctuating interst rates to protect against any future increase

in cost of funding mortgage loans, which makes such packages unattractive to prospective homeowners. In light of this

notion, the Jordan Mortgage Refinance Company (JMRC) and more recently, the Jordan Mortgage Insurance Company

(JMIC) have come to exist in an effort to promote residential housing finance in Jordan by providing refinancing facilities

for commercial banks. The criteria entails the issuing of long-term housing bonds, in which participating banks become

the main investors. However, the interst rates on these bonds are normally fixed for periods of 3 years and fluctuating

afterwards. This in turn provide banks with fixed rate refinancing, allowing them to issue fixed rate mortagage loans that

18

are more attractive for potential homeowners. As a result, most of Jordan’s leading commercial banks

became involved in residential mortgage lending for periods that extend up to 15 and 20 years, which is a

service that is growing rapidly and is becoming more competitve among banks.

Oct

19

3.3 The Natural Demand Force:

The latest figures issued by the Department of Statistics (DOS) show that Jordan’s popultion stood at

approximately 5.47 million by the end of year 2005. Over the past five years, population has increased at

a CAGR of 2.4%. Based on this growth rate, population is estimated to reach 5.60 million and 5.74 million

in 2006 and 2007, respectively.

Looking at the breakdown of the population as shown in the graph below, we notice that the youngest

group falling between the ages of 0-14 is the largest among all other age groups. The second largest group

is between the ages of 15-29 followed by the age group between 30-44 and so forth. The trend here is one

of a descending order where the youngest forms the largest portion of the population, while the oldest are

the minority.

Population by Age Group - 2005

Age Group

Population and Growth Rate

20

In relative terms, the table below shows that almost 37% of Jordan’s population is under the age of 15

yrs and close to 68% are under the age of 29 yrs. This clearly indicates that youth covers the majority of

Jordan’s population with only 5% over the age of 60 years. Also worth mentioning, is that the male to

female ratio was almost 1:1 by end of year 2005.

Age Group Male % Male Female % Female Total % of Total

0-14 1,048,890 51.3% 993,940 48.7% 2,042,831 37%

15-29 867,480 51.9% 802,730 48.1% 1,670,211 31%

30-44 536,570 51.8% 498,290 48.2% 1,034,861 19%

45-59 222,870 50.4% 219,570 49.6% 442,441 8%

60+ 145,290 51.4% 137,370 48.6% 282,661 5%

The significance of population breakdown by age group underlies a crucial factor that contributes a great

deal to the prospects of the real estate sector in Jordan, namely, the rate of new marriages within the

Jordanian community. The number of newly married couples will eventually translate into a demand force

in the real estate market, and in the case of Jordan this has proven to be very significant.

To elaborate more on this point, consider the average marriage age for both males and females living in

Jordan, which is 29 years and 26 years according to statistics provided by the Department of Statistics.

Keeping this in mind, in recalling that 68% of the total population is under the age of 29 years, this means

that the demand curve in the real estate sector should be heading upward. The following table shows the

population growth rate and the crude marriage rate for the past 5 years period connected to our estimates

for 2006 and 2007 based on the historical mean for that same period.

2000 2001 2002 2003 2004 20052006-est.

2007-est.

Growth Rate 2.5% 2.4% 2.6% 2.3% 2.3% 2.4% 2.4%

Crude marriage rate 0.91% 0.96% 0.88% 0.89% 1.00% 1.03% 1.02% 1.02%

Under this projected scenario for the years 2006 and 2007, we can estimate the demand force for residential

units being driven by the newly married couples in Jordan. This demand is better described as a ‘Natural

Demand Force’ and is illustrated in the graph below.

Natural Demand Force for Accommodation from Expected Marriage

21

Figures plotted on the above graph represent the natural demand force corresponding to new marriages

were calculated based on the crude marriage rate and the population estimates as provided by the

Department of Statistics. They represent the number of married couples on yearly basis, and as can be seen,

the curve has been upward sloping since the year 2002. Accordingly, and based on our estimates, there will

be approximately 29,350 units in demand in the year 2007.

Population by Governorate

Looking at the population breakdown by governorate, we notice that almost 38.8% of the total population

of Jordan resides in the capital Amman. Irbid and Zarqa both host another 32.6% of the population and the

remaining 9 governorates play host to only 28.5% of total population.

By incorporating the area factor along with the population for each governorate, we obtain a better

indication with respect to density of population.

Distribution of Population and Area by Governate as % of Total

22

The upper graph shows that Amman, while hosting 38.8% of the total population has an area of less than

10%. On the other hand, both Mafraq and Ma’an host less than 7% of the total population combined,

however, covering almost 67% of the total area of Jordan.

Looking at the density of population for the different governorates, Irbid ranks as the governorate with

the highest population density, standing at 620 Square Km /per capita, followed by Jarash at 400 Square

Km./per capita

Governate Population % Population Area % Area Population Density

Amman 2,125,400 38.8% 7579 8.54% 280.43

Irbid 974,800 17.8% 1572 1.77% 620.10

Zarqa 810,500 14.8% 4761 5.36% 170.24

Balqa 367,200 6.7% 1119 1.26% 328.15

Mafraq 257,200 4.7% 26541 29.90% 9.69

Karak 214,100 3.9% 3495 3.94% 61.26

Jarash 164,300 3.0% 410 0.46% 400.73

Madaba 137,100 2.5% 940 1.06% 145.85

Ajlun 126,100 2.3% 420 0.47% 300.24Aqaba 115,100 2.1% 6900 7.77% 16.68Ma’an 104,100 1.9% 32832 36.98% 3.17Tafila 77,100 1.4% 2209 2.49% 34.90Total 5,473,000 100% 88,778 100% 61.65

23

3.4 Tourism Sector:

The abundance of historic sites and riveting cultural experiences Jordan has to offer, along with the

government’s vast efforts in revitalizing tourism activity by adopting open business polices, have led to a

clear revival in Jordan’s tourism sector over the past few years. The following graph illustrates the steady

growth in the number of arrivals Jordan has been enjoying since 2003.

The number of arrivals jumped 21.5% in 2004 when compared to 2003, which coincides with the second

Gulf war in Iraq. In 2005, arrivals to Jordan increased by 4.1% to 5.82 million. An estimated 6.25 million

arrivals are estimated for 2006, around 7.4% higher than arrivals in 2005.

Hand in hand with the number of tourist arrivals, tourism revenues have also been improving progressively,

growing by 35.7% in the years 2003-2005. Moreover, tourism revenues for 2006 are expected to figure

JD1.1 billion as can be seen below:

Arrivals by Nationality

As shown below, arrivals form Arab countries constitute the majority of tourist arrivals to Jordan with an

83.5% share in 2005. Arrivals from Arab countries expanded even more after the 9/11 attacks when Arabs,

especially those form GCC countries, switched from holidaying at their usual travel destination in Europe

and the US to Arab countries. The political situations in Iraq and Lebanon have also been fueling the inflow

of visitors from various Arab countries.

Number of Arrivals

Tourism Revenues

24

Hotel Industry The hotel industry has been a direct beneficiary of the tourism sector’s impressive performance over the

past few years. Jordan has been appearing more noticeably on major hotel chains radar with international

hotels opening their doors in strategic locations across Jordan, such as the relatively recent opening of

Intercontinental hotel in Aqaba and Kempensiki resort at the Dead Sea.

A steady increase in the number of hotels in Jordan is quite obvious, especially in light of the continuous

news of major hotels currently under construction or soon to commence construction across strategic

locations in Jordan.

Lively Dead Sea

Notably, hotel investments in the Dead Sea area have been progressively rising, as the tourism industry has

been marketing the area as an ultra high quality destination with its therapeutic waters and mineral rich

mud treatments, not to mention being the lowest point on earth, rendering the area as a key holiday spot

in Jordan. Therefore, the tourism industry has been keen on pursuing hotel expansions in the Dead Sea

area to accommodate the rising tourist numbers, and to stay in line with other development projects that

are currently underway in the area.

Thus far, the Dead Sea area has been the recipient of an estimated JD638.1 million in the form of various

investments. This estimate is very conservative as it does not include the values of some of the major

projects in the area.

Some of the upcoming projects in the area include:

Crystal City Project

The Dubai-based development company Omnix Group is investing JD99.3 million to develop several new

hotels, convention centers and a water park on the eastern shores of the Dead Sea slated for completion by

the end of 2007.

The Royal Resort & Spa

The third component of Gulf Finance Houses’ multi-million Royal Metropolis Project is the Royal Resort &

Spa, which will feature a 300-room, five star luxury resort & spa in the Dead Sea area and is expected to

cost JD141.8 million.

Arrivals by Nationality

25

3.5 Industrial Sector:

Given the current level of industrial activity, the industrial sector is set to have a significant impact on

Jordan’s growing real estate market. Besides housing, retail, and commercial demand, which are all the

main elements of the Jordanian real estate market, the emergence of Jordan as an industrial hub augurs

well for the industrial property sector, especially with the fully-fledged support being continuously offered

to the sector by the Jordanian government.

Free Zones

Jordan’s Free Zone areas were established to promote export-oriented industries and transport trade.

Commodities and goods of various origins are deposited in the free zone areas for the purpose of storage

and manufacturing, without having to pay the usual excise fees and other taxes, since they are treated as

goods outside Jordan.

Qualified Industrial Zones (QIZ’s)

Qualified Industrial Zones agreement was established to allow quota free and duty free access to the US

market in an effort to boost economic cooperation between Jordan and the U.S. and increase Jordanian

exports to the U.S. market.

Currently, Jordan Industrial Estates Corporation (JIEC), which was established in 1984 as a semi–

governmental corporation that provides comprehensive and integrated industrial cities, owns and manages

the following five industrial estates:

· Abdullah II Ibn Al-Hussein Industrial Estate – Amman

· Al-Hassan Industrial Estate - Irbid

· Al-Hussein Bin Abdullah II Industrial Estate – Al Karak

· Ma’an Industrial – Ma’an

· Aqaba International Industrial Estate - Aqaba

Industrial estates offer the following incentives to investors:

· 100% exemptions for two years on income and social services tax for industrial projects located only

within industrial estates owned and managed by JIEC.

· Total exemption from buildings & land tax.

· Exemption or reduction on most municipalities’ fees.

· 100% exemption from taxes and fees on fixed assets for the project, fixed assets for expansion or

modernization, and on spare parts.

Total capitals invested in the abovementioned public industrial estates amounted to JD1.14 billion by end

of October 2006. Moreover, these public industrial estates have an area totaling 10,814 dunums.

In addition to the industrial parks managed by the Industrial Estate Corporation (JIEC), there are

private industrial parks in Jordan including: Al-Tajamouat Industrial Park, Jordan Gateway project, Al-

26

Mushatta Qualifying Industrial Estate, Al-Qastal Industrial Park, and Cyber City Park, which also enjoy QIZ

designation.

A New Addition

A plan to build a special development zone in Al Mafraq area was recently launched. The 9,000 dunum

estate will function as a transport, logistic and industrial hub serving Jordan, along with neighboring

countries such as Saudi Arabia, Syria and Iraq. Worth mentioning is the fact that, on the back of this news,

unprecedented growth in the prices of land has been witnessed in Al Mafraq and surrounding areas.

Aqaba Special Economic Zone (ASEZ)

The Aqaba Special Economic Zone (ASEZ) was launched in 2001 as a duty free, low tax and multi sector

development zone offering global investment opportunities in sectors including tourism, professional

services, multi model logistics and manufacturing, in a world class business environment. ASEZ is spread

over an area of 375 square kilometers, which covers the total Jordanian cost line (27 Km), the sea port, the

international airport and the historical city of Aqaba.

Key incentives offered by Aqaba Special Economic Zone (ASEZ):

· A flat 5% income tax on net profits.

·Exemptions from social services tax.

· Traded goods - except for cars - are exempted from custom tax and fees.

· Exemptions from taxes on distributed dividends & profits.

· No restrictions on repatriation of capital and profits.

· Businesses registered and operating in the ASEZ also enjoy similar incentives provided to the rest of the

country, such as 100% foreign ownership.

· Exemption from land and building taxes on used property.

· Liberal foreign currency regulation.

The formation of ASEZA

In 2000, the Aqaba Special Economic Zone Authority (ASEZA) law was passed by the Jordanian Parliament.

The law established the ASEZA as the statutory institution empowered with all the authorities to manage,

regulate and be the municipality for the ASEZ. ASEZA was successful in creating a one-stop shop that

provides all the necessary points of contact required by potential investors.

ADC Follows

In 2004, the Aqaba Development Corporation (ADC) was launched by the government of Jordan as a new

private sector corporation placed to be the central development body for ASEZ. Consequently, ownership

of Jordan’s ports, the city’s international airport and strategic parcels of land, as well as the development

rights for these assets and key infrastructure and utilities were transferred to ADC.

ADC’s main objectives are to invest in all major sectors, including infrastructure, transport and logistics,

trade and industry, property and real estate, tourism, and education in a manner that is consistent with

both ADC’s mandate and the vision of the Aqaba Special Economic Zone (ASEZ).

27

4. The Real Estate Industry:

4.1. Trading Activity: The Boom Stage (2004-2005)

The above graph shows the upward shift of major indicators that are to a great extent representative of the

state and performance of the real estate sector in Jordan. As illustrated by the graph, all three indicators

represented by building licenses, building area and the number of licensed residential units have been on

the rise since the year 2000, which is normal considering that population in Jordan has grown at a CAGR

of 2.4% (2000-2005). The increasing trend in terms of building area and licensed residential units seems

to be more or less consistent, as both have witnessed almost matching growth rates.

The surprising element, however, lies in the trend that correlates to the increase in the building licenses.

That is, although it has been on the rise, the percentage increase in the building licenses is lower than the

percentage increase in both building area and the number of licensed residential units. In other words, the

later indicators have had a more accelerated growth compared to the number of issued licenses, which has

actually shown a decreasing curve in year 2005. To illustrate, in the year 2004, both the number of licensed

residential units and the building area have both increased by almost 108% and 96% respectively, while we

have seen the number of building licenses grow by only 37% in the same year. This discrepancy was puffed

up even more by the year 2005, where growth reached 125% for the number of licensed residential units

and 115% for buildings area, whilst the number of building licenses retracted by 10% during that same year

compared to the previous one.

Therefore, if this development is expected to continue through, the impending result is that by the year

2007, we will have more residential units constructed through less issued licenses. A possible justification

for this phenomenon is that a trend towards the construction of apartment buildings as opposed to villas has

been surfacing as the dominant trend. This also confirms the strong emphasis taking place on residential

units for limited income breadwinners to be in line with the overall social improvement program.

This developing trend could also be identified in the capital Amman as it becomes evident in the following

graph.

Jordan

28

Amman

By examining figures plotted on the above graph, an equally important trend stands out. As stated

earlier, both the number of licensed residential units and building area have been growing, however, the

gap between both has also been growing. On one hand, the building area in Amman has been growing

at 61%, 116% and 144% throughout the last 3 years, while on the other hand, licensed residential units

have registered a relatively more considerable growth of 74%, 158% and almost 200% throughout the

same period. This trend has also been repeated in the graph depicting all of Jordan, yet the gap is more

significant when it comes to Amman. Nevertheless, with residential units growing at a faster rate compared

with the associated building area, this implies that the area per residential unit has been shrinking. This is

described in the following graph.

As can be seen by the above graph, the general trend has a downward slope moving towards less Sq.m. per

residential unit. Except for a minor variation in year 2003 where the average area per residential unit has

slightly increased, it did not prevent the continuation of a more dominant descending trend that took away

almost 21% of the average area per dwelling in Amman and almost 6% in the case of Jordan as indexed

to the year 2000. Hypothetically speaking, during 2005, residential units in Amman were built with an

area that was 21% smaller compared to those built in year 2000. The same can be said regarding licensed

residential units in all of Jordan, where the rate is 6% smaller.

The indication is that the real estate sector has reached a stage where more utilization of land is being

achieved, which further supports our previously stated argument, underlying the trend towards apartment

buildings.

29

Aqaba, however, which has been transformed into a Special Economic Zone (SEZ) in year 2000, has

witnessed an exceptional growth in the real estate sector due to the investment nature and environment

of the zone. Building area in Aqaba stretched by more than 300% in 2004 and over 600% in 2005 since

its commencement in 2000, while licensed dwellings and building licenses have grown by approximately

400% and 200%, respectively, as shown in the graph below.

The above analysis does not necessarily apply to other governates, as no apparent trend seems to prevail

with respect to other major governments. Having said that, volatility seems to be the trend with the

highlight being that all three indicators, including building licenses, building area and licensed residential

units, were shifting very closely with each other.

It becomes, therefore, clear that the two governates represented by Amman and Aqaba Special Economic

Zone have actually blown up the results of the real estate sector in Jordan in terms of main indicators. To

illustrate, another graph that excludes the figures of these two governates would give a different indication

regarding the real estate sector performance in other governates.

Jordan (Excluding Amman & Aqaba)

Aqaba

30

The above graph includes the figures of only 10 governates out of 12 in Jordan, being Balqa, Zarqa, Madaba,

Irbid, Mafraq, Jarash, Ajlun, Karak, Tafila and Ma’an in terms of the real estate indicators. In year 2005, all

three indicators have retracted by almost 20% in comparison with the year 2004, which means that there

has been a relative slowdown in the real estate sector in Jordan except for the capital Amman and Aqaba.

4.2. Land & Apartments Selling Activity in Jordan:

Aiming at demonstrating the trading performance in Jordan in terms of land and apartments, we have

analyzed the pertinent transactions registered in major governorates. In that respect, during 2005, Jordan

has witnessed a notable growth rate in land selling transactions, which hit 14% to reach 116.3 thousand

transactions. On the other hand, the number of apartments sold during the same period slid down slightly

by 2.8% to approach 17.9 thousand transactions. More recent figures obtained from the Department of

Land & Surveys for year 2006 show that number of both land selling transactions as well as apartment

selling transactions have grown substantially, each adding 25% and 18% respectively. In combining the

results of both 2005 and 2006 years we notice that land selling activities have been more active, thus

growing by almost 42% compared to a 15% growth rate in the apartment selling transactions.

Source: Department of Land & Surveys

Looking at the performance of Amman in comparison with other governorates for the last three years, as

shown in the graph below, we notice that during 2005 there has been heightened land selling activity in

Amman where transactions increased by 37%, while the rest of Jordan’s land selling activity increased by

only 3%. On the other hand, during the same period, apartments selling transactions have dropped by

12% in Amman compared with a 34% increase in the rest of Jordan. In year 2006, the trend was different

in Amman to some extent, where land selling transactions, as well as apartment selling transactions, have

grown by 11% and 17% respectively, while faster growth was registered in the rest of Jordan at 33% and

22% for land transactions and apartment transactions, respectively.

31

Shedding light on the main forces that stood behind the notable brisk in the land trading activity in Jordan,

it is imperative as a first step to look at the volume changes in land trading markets in each governorate and

the contribution of each governorate to the total market share in Jordan.

The following charts show the change in land trading volumes during 2004 and 2005 and the corresponding

market contribution of each governorate .

The capital city Amman along with Mafraq and Irbid occupied almost 65% of total market share of land

transactions in Jordan in year 2005. Having the year 2004 as the base year, Amman recorded an increase of

37% in land selling transactions in year 2005, corresponding to a market share of almost 39%, thus adding

another 8% to its share compared to year 2004. In Mafraq, a flourishing demand for acquiring land in

that governorate marked a 48% hike in year 2005, the highest among all other governorates. These rates,

however, should be perceived with caution. The percentage increase in land selling activities is almost

10% higher in Mafraq than it is in Amman. However, the relatively smaller market share of the former,

being only 9.9% in 2004, compared to 31% for Amman, makes the effect in terms of its contribution to the

market’s total number of selling activities rather limited. Therefore, the considerable 48% increase in land

32

trading activities in Mafraq is translated into a mere 3% increase in the total market share. Nevertheless,

Mafraq has appeared on the investors’ radar in the wake of government’s plans to turn the governorate into

an economic zone, which to some extent explains the boom in land trading activities that have materialized

during 2005 in anticipation of a flourishing future prospect for this governorate. In Irbid, the second major

contributor to the market in 2004, land trading activities have increased by less than 0.5% in year 2005,

yet Irbid is put on the same level with Mafraq in year 2005, each acquiring 13% of total market. In contrast,

the majority of the other governorates, while maintaining almost constant levels of activity, have shown

a decrease in the number of land transactions when comparing year 2005 to 2004 figures, except both

Tafileh and Jerash.

The capital city Amman maintained a leading position in terms of its contribution to the total market share

in terms of land selling transactions and therefore it credits further consideration, to which we now turn. A

graph that divides Amman into 5 regions showing land selling activities in year 2004 and 2005 is presented

below.

In considering the historical performance throughout 2004 and 2005 within the capital Amman, there was

a clear indication that land selling activities have been mainly concentrated in the southern Amman region,

which has seen land transactions tripling to more than 260%. On the other hand, there has been a relative

slowdown in western and eastern Amman by less than 30%, while selling transactions have shifted up by

less than 5% in both northern Amman as well as the Na’ur Region.

Land selling AmmanRelative importance 2004

Land selling AmmanRelative importance 2005

Amman west8%

Amman south47%

Amman central13%

Amman central9%

Amman east4%

Amman north19%

33

According to the upper two graphs showing total market share of the different regions of Amman in

terms of land selling transactions during 2004 and 2005, the boom in southern Amman in year 2005 has

eaten almost 50% of all transactions taking place in Amman. This reality has reshuffled all market share

allocations, thereby drawing a new map as for the latest hot spots in the land markets.

During 2004, the areas of central and northern Amman have each contributed a little over 25% to the

total market. Yet, in year 2005, these areas were not able to maintain this level and have seen their market

shares shrink. While central Amman’s share has gone from 25% to almost 13%, Northern Amman has

been less affected, yet contributing to only 19% in 2005 as opposed to 25% in 2004. The shrinking market

share of both central and northern Amman could be attributed to two different factors. Firstly, the number

of land trading transactions and secondly, the growth in total market share. The first factor is more direct

in the case of central Amman, where land transactions were almost 60% less in year 2005 compared to

their levels in 2004, therefore, affecting its market share. On the other hand, while land transactions have

increased by less than 5% in the case of northern Amman, it has seen its market share diminish by 6% due

to the growth of total market share, which is the second factor. By the same token, a considerable growth

in the volume of land transactions taking place in southern Amman amounting to 260% has extended

the market pie. In other words, a combination of these two factors have contributed to placing southern

Amman as the holder of the lion’s share in total land transactions and the corresponding smaller shares for

both central and northern Amman.

Therefore, it is safe to assume that the new picture drawn in year 2005 shows a sturdy shift from central

Amman towards southern Amman. The boom in southern Amman and the new reality is consistent with

the increasing volume of projects that are taking place in what is called the Airport corridor area, which is

part of southern Amman. These projects will be looked at in more details in other parts of this report.

4.3. Apartments Selling transactions in Jordan

Apartments Selling Transactions in Jordan

Next we look at the historical performance of apartment selling activities in Jordan. The graph below shows

the numbers for apartments sold per governorate during the years 2004 and 2005:

34

There has been a slight decrease in the number of transactions, down by 2.8% during 2005. Taking the

case of Amman, it faced the largest decline in number of transactions during 2005, retracting 12% from the

numbers registered in 2004. On the other hand, the majority of other governorates have witnessed a rise

in selling transactions. The highest percentages being in Tafieleh and Madaba, each registering over 500%

increase in 2005. However, these numbers could be misleading without considering the market share of

each governorate. Therefore, to put these figures in such context, it would be very useful to look at the

change of market share that corresponds to number of the apartments sold.

As mentioned above, Tafieleh and Madaba have each witnessed a little over 500% increase in apartment

selling during 2005. However, looking at the graphs above, we notice that these two governorates among

other 4 shared less than 1% of the market in year 2004, which makes their contribution to the market

hardly noticeable and not accounted for in the context of Jordan. Consequently, we have seen their market

share grew less than 2% out of total market in 2005. Nevertheless, within the individual context of each of

these two governorates, the increase is very true and considerable and we can conclude that there has been

rather dynamic development in these terms in the said governorates. Irbid, on the other hand, had more

weight in terms of market share by the end of 2005, again corresponding to an initial and a relatively higher

market share when compared to 2004.

Moving on to Amman, its market share has shed 7.4% during 2005, settling at 73%. This shrinkage in

market share was mainly attributed to a drop in the volume of selling activities, which is 12% less in year

2005, compared to 2004. It could also be attributed to the growing volumes in other governorates, yet to

a very less extent.

Apartment Selling TransactionsRelative Importance - 2005

Apartment Selling TransactionsRelative Importance - 2004

35

Further examination for the capital city Amman as represented by the upper two graphs, we notice that

northern Amman captured the biggest share of apartment selling transactions throughout 2004 and 2005,

yet shedding 8% during last year to settle at 34% compared to 42% in 2004. Similarly, central Amman have

seen its market share drop by half to reach only 6% as opposed to the 12% market share it used to have in

year 2004. On the other hand, the areas of western and eastern Amman as well as the Na’ur region have

all witnessed an increase in their market shares as a result of an increasing volume in apartment selling

transactions during year 2005. What is interesting in these graphs, however, is the area of southern Amman

which has maintained its 1% share of the market throughout 2004 and 2005.

In recalling our previous discussion regarding land selling transactions, southern Amman have seen

vibrant land selling activities reaching a 260% increase during 2005. This, however, hardly corresponds

to the 1% market share it holds in terms of apartment selling. In other words, there does not seem to be

any connection between these two indicators, being land and apartment selling transactions. Thinking of

the possible implications of such a discrepancy, two main explanations come to mind. First, it could be the

case that the wave of land selling activities taking place in southern Amman during 2005 is being mainly

dedicated for new start-up projects that will see the number of apartments and selling activities increase

in the next coming years, which again reconfirms our previous findings of this report that justifies the

notable boom in southern Amman. Second, it could also be the case that investors’ interest in southern

Amman is being mainly driven by speculative purposes. Therefore, we can definitely assume that the boom

in southern Amman area, whether due to the start-up projects or speculative activities, or both, has a

Apartment Selling AmmanRelative Importance - 2005

Apartment Selling AmmanRelative Importance - 2004

36

futuristic outlook attached to it. To elaborate, the constant level of apartment selling transactions does not

reflect an immediate drive to inhabit the area of southern Amman. If this was the case, we would have seen

some movement in the apartment selling activities, yet that remained static, while land selling volumes

soared up.

Furthermore, it would be very useful to integrate statistics regarding licensed residential units in the

different areas of Amman to compliment the above analysis, especially in the area of southern Amman, yet

unfortunately that kind of data was not available by the time this report was prepared. Nevertheless, the

residential projects assigned to southern Amman along with an increasing demand for land purchases, both

indicate that intermediate and long-term prospects for that area in Amman are still very much promising.

In 2005, the number of apartment selling transactions has decreased by 12%, where the major decline was

recorded in northern Amman with a decrease of 27.5% dragging its market share from 42% to 34%. In

western Amman, the number of selling transactions increased by 38%, expanding its market share by 10%.

Similarly, selling transaction increased in eastern Amman by 21% and its market share increased to 26%.

In contrast to the very high land selling transactions in southern Amman - 47% market share with 21274

selling transactions, while only 90 apartments sold in 2005.

37

Non-Jordanian Real Estate Activities :

Aiming at realizing a more comprehensive coverage for the real estate sector, we now turn to examine the

statistics of Non-Jordanians in terms of their land and apartment selling activities and their contribution

to this sector. The data made available by the Department of Land and Surveys makes reference to 3 main

indicators that include the number of land and apartment selling transactions, their values, in addition to

the corresponding areas associated with the selling activities in the real estate sector.

The developments in the real estate sector as it corresponds to Non-Jordanians have not been coherent

among the different indicators representing the sector. That is, during 2006, we have seen the number

of transactions drop by 25%, while their value has dropped by less than 2%. On the other hand, the area

associated with these transactions has been extended a little over 57% as shown in the above graph.

Consequently, the graph reveals that non-Jordanian investors have acquired 57% more land and apartments

during 2006 through fewer transactions and less investment value. Therefore, on average, each of these

transactions amounts to a larger area. The initial indication here is that the category of non-Jordanian

investors seems to have been targeting low-priced real estate properties. According to this notion, two

scenarios may have emerged. On one hand, it might be the case that non-Jordanian investors have targeted

the comparatively lower price areas in Amman, while on the other hand, another scenario highlights the

possibility that this market has existed in areas outside Amman, targeting far-flung areas in Jordan

The latter argument seems more credible however, according to preliminary indicators issued recently.

That is, bearing in mind the fact that prices of both land and apartments have soared in almost all parts

of Amman compared with other regions in the country, the significantly larger areas associated with the

non-Jordanian transactions, amounting to a 57% increase, seem to suggest that these transactions have

taken place in areas outside Amman. Furthermore, although the data provided by the DOS makes unclear

distinction between land and apartment selling transactions, it remains that the 25% drop in the number of

transactions, again paralleled with tremendous hike in total area, further suggests that these transactions

were for the most part land selling oriented as opposed to apartment selling. In other words,

Changes in the Real Estate Secor Indicators for Non-Jordainians

During 2006

38

non-Jordanian investors, in general, seem to have their preference shift away from Amman towards the

countryside where they seem to have purchased areas of land as opposed to apartments. More in depth

analysis of the non-Jordanian real estate market will assist in determining the trend and the direction of

that market.

Next, we look at the breakdown of the non-Jordanian market and the contribution of each category to the

real estate sector.

The above graphs show that Iraqis have had the largest stake in terms of number of land & apartment

selling transactions during 2005, capturing a market share of 67%. This market share is identical to their

market share in terms of value, which again stood at 67%. Similar figures for year 2006 depict almost the

same picture, as shown in the following graphs.

During 2006, Iraqis, while shedding almost 5% of their market share, are still the most active in terms of

land and apartments selling transactions, locking in 62%. Also, the value of their transactions, while losing

4% of total market share, continues to hold the biggest chunk of the total traded value in 2006, standing

at almost 63%.

39

The dominance of Iraqis on the non-Jordanian activities was very much expected with the influx of huge

numbers of Iraqis since year 2003 due to the political unrest in Iraq. The major market shares for other Non-

Jordanians in year 2005 were divided among the Saudis, Kuwaitis and Syrians, each holding 7%, 6% and

3%, respectively, while other nationalities contributed almost 17% of total number of land and apartment

selling transactions. There was no significant change during year 2006, and these rates shifted within a 3%

range. However, the surprising element lies in the graphs showing the registered areas that correspond to

number of transactions taking place during the last year.

In year 2006, it was observable that Iraqis have had only 13% of the total area associated with land and

apartment selling transactions, while their contribution in terms of investment value reached approximately

63% of the total value traded for non-Jordanians. On the other hand, Kuwaitis shared 37% of total area,

through investing only 2%. In other words, Kuwaitis have invested much less money compared to Iraqis, yet

they have acquired more property area.

A graphical illustration depicting changes in the Kuwaitis investment behavior during 2006 is presented

below to affirm their recent trend in acquiring far-flung corners across the country

Changes in year 2006 representing Kuwaitis Investment Behavior

40

Kuwaitis involvement in the real estate market was on the rise with 9% more selling transactions in 2006

compared to 2005. However, registered area for these transactions grew significantly by 796% in 2006.

Looking at the increase in the investment value financing the growing area, we see that it has grown by

only 11%. This brings to mind our previous argument, in which we claim that the general trend within the

non-Jordanian real estate market is heading more towards purchasing land in the areas outside Amman.

After studying the Kuwaitis investors’ behavior, it appears that this category of investors have triggered this

trend, or at least, have influenced the market to appear this way.

5. Major Anticipated Real Estate Projects in Jordan:

Blooming Market

Several factors have had a playing hand in shaping the Jordanian real estate market over the past several

years. To begin with, the Jordanian economy has been growing at a fast and effective pace, thus, providing

the booming real estate market with a vast room to grow. Secondly, excess liquidity and exceptional returns

on the back of the outstanding performance witnessed by many of the region’s capital markets over the past

few years, along with soaring fuel prices in GCC countries, have helped sharpen investors’ focus on investing

in Jordan, especially investors from the Gulf. Thirdly, political unrest in neighboring countries such as Iraq

and Lebanon has created an increased number of comparatively wealthy expatriates relocating to Jordan,

while the situation calms down in their countries, creating a shortage of upscale-quality apartments in

some of Amman’s key areas, which in turn prompted soaring rental prices. Moreover, a youth intense

population demographic, along with the flexibility of credit facilities extended to the sector has also helped

keep demand strong. Accordingly, many local and foreign developers leaped on the opportunity to meet the

newly triggered demand for various types of properties, resulting in the construction of huge development

projects, which are already beginning to change the landscape of the Jordanian real estate market.

Changing Structure

Jordan’s Real Estate market mainly consists of residential, commercial, and tourism oriented or mixed

use properties. Other types of properties such as industrial, warehousing and public properties also take

up a considerable part of the market, however, not to the same extent the aforementioned properties

do. Notably, many of the major projects being launched are mixed use developments, catering to the

commercial, residential and investment sectors in one place.

5.1. A Glimpse of the Residential Sector:

As previously mentioned, with factors such as a very youthful population and a booming economy along

with the continuous inflow of expatriates from neighboring countries, the possibility that housing units

may become scarce in the short to medium term has entered the picture. A situation that has not left prices

unaffected, with rents rising high, prices of land and properties following suit.

In residential terms, new residential areas are sprouting up across the kingdom as the concept of the “Gated

Community” or fully outfitted residential compounds are being introduced by many local and international

companies.

41

Some of the main residential projects being developed are mentioned below:

Andalusia Village Andalusia Resorts & Real Estate Development, a subsidiary of the Jordanian company for real estate

development, Taameer Jordan, was one of the first companies to introduce the “gated community” concept

to the Jordanian society. Andalusia Village, which is situated 24 kilometers south of Amman, in the

Madaba area, will feature 600 two-storey villas, indoor and outdoor swimming pools, a shopping center,

kindergarten, a mosque, in addition to a medical clinic.

Royal Metropolis

The Royal Metropolis is Gulf Finance House’s first project in Jordan. At an estimated cost of JD709 million,

the project is being undertaken in phases starting with Jordan Gate and Royal Village, which are the first two

components of Royal Metropolis. The Royal Village will offer more than 1,000 residential units comprising

luxury villas and apartments, spreading across 468.5 dunums in Marj Al Hamam, bordering the Dead Sea

highway, and a 15 minute drive away from the city center .The development will also feature a commercial

retail section catering to the residents of Royal Village and its surrounding area.

Greenland Land Residential Estate

Greenland is the local Kurdi Group’s latest housing development, set in Marj Al Haman area, the project will

include 880 properties to be constructed over 1,100 dunums of land with a total cost of JD212.7 million, in

addition to various amenities within an extravagant setting.

The need for low –medium income housing arises:

Due to the northward journey property prices have been taking in different parts of the kingdom, His

Majesty King Abdullah II has launched a nationwide scheme to provide underprivileged families in the

kingdom with homes.

Under the first phase of the project, 600 housing units, estimated at a cost of JD5 million, will be constructed

in underprivileged areas in all the governorates of Jordan expect the capital and Zarqa, which are already

the recipients of other major projects.

Emaar Jordan

Following the king’s urging, Emaar Jordan, is currently building housing units meant to cater the needs of

low to medium income citizens. The project, with an estimated cost of JD50 million, is located to the east

of Marka airport and will be carried out in two phases, resulting in 3,000 apartments spread over 3,000

dunums meant to provide housing for up to 18,000 individuals by mid 2007. The average price of the

apartment will be between JD (13 – 19) thousand, which is much lower than current market prices.

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Taameer Jordan

Similarly, Taameer Jordan, will build 17,000 housing units for medium and limited income individuals on a 7,500 dunum

plot of land owned by the Housing and Urban Development Corporation (HUDC). The project, with an estimated cost of

JD709 million, is located south of Queen Alia International Airport in Al-Jiza area where it will see the construction of an

integrated residential city that includes all the infrastructure and services required. On a more recent note, the company

announced that it intends to establish a JD600 million housing project in Aqaba, including 18 thousand housing units

spread over an area of 2,000 dunums. The project will target the city’s growing middle-income individuals.

Akram Ramadan Housing

Akram Ramdan Housing in partnership with Arab National Leasing Company’s JD12 million housing projects will also

provide Housing for low to medium income individuals in the form of 42 buildings on an area of 23 dunums.

Major Residential Projects in Amman and Surrounding Area:

Company Project Location Est. Investment (JD Mn )

Total Area (Dunums)

Expected# of Units

Finish Date

Taameer Jordan Andulcia Village Madaba 141.8 800.0 600 2008

Kurdi Group Green Land Marj Al Hamam 212.7 1,100.0 880 2008

Gulf Finance House in partnership with Kuwait Finance & Investment Company

Royal Village - Royal Metropolis Project-

Marj Al Hamam 709.0 468.5 1,000 N/A

Dubai Contracting Company VERTEX Tower and Residences

Amman - Al Abdali Project

90.0 66.034-storey tower

N/A

Amaar Properties Al Hummar Hills Amman 20.0 29.0 36 2008

Bait Al Diyafeh Holding Company

N/AAmman-airport road

2,000.0 3,000.0 2,000 N/A

Akram Ramdan Housing with Arab National Leasing Company

Limited Income Housing Project

Amman (Um Al Swanieh )

12.0 23.0 420Mid 2009

Taameer Jordan with the Housing & Urban Development Corporation (HUDC)

Limited Income Housing Project

South of Queen Alia International Airport ( Al Jiza )

709.0 7,500.0 17,000 N/A

Emmar Investments & Real Estate Development Company

Limited Income Housing Project

East of Marka Airport

50.0 3,000.0 300Mid 2007

Total 9 3,945 15,987 22,236

Source: Company websites, industry sources

From the above table, it can be noted that the rising prices of apartments and houses in central parts of the capital have

43

driven people and major development companies to consider living and building in relatively cheaper areas

on the fringes of Amman, such as the Airport road, Madaba and Marj Al Hamam Area. Construction of the

majority of the developments should be completed by the year 2010, supplying the capital and its outskirts

with an estimated 22,236 residential units in various forms and within different price ranges.

Zarqa Area Receives Attention:

Noting the city’s fast becoming chronic need for housing units, the Zarqa governorate has also been receiving

much needed attention from several key players in the market. The state owned National Resources

Investment & Development Corporation (MAWARED) is aiming to capitalize on Zarqa’s young and growing

community through the construction of Madinat Al Sharq, which is to date, Jordan’s largest planned urban

project. The project is meant to transform Zarqa’s former military camps site into a cosmopolitan urban and

commercial center which will eventually house up to 100,000 individuals and trigger lucrative investment

opportunities for the area. Also targeting individuals with limited income levels, the Dubai-based Taameer

Holding property development firm, envisages the development of a JD177.2 million project, which will

provide 7,000 residential apartments with all the required living facilities and public services. The township

is planned to be comfortably situated between Amman and Zarqa, and will cover a total area of 2,000

dunums.

Ongoing Projects in Zarqa Area:

Company Project Location Est. Investment (JD Mn )

Total Area (Dunums)

Expected# of Units

Finish Date

Taameer Jordan Al Rawda Village- Part of Madinat Al Sharq-

Zarqa 30.0 129.0 500 2009

National Resources Investment & Development Corporation (Mawared )

Madinat Al Sharq Zarqa 1,063.0 25,000.0

Expected to house between 75,000 to 100,000 Inhabitants

2020

UAE-Based Taameer Holding with HUDC

Limited Income Housing Project

Between Zarqa -Amman

177.3 2,000.0 7,000 N/A

Total 3 1,270 27,129 82,500

Source: Company websites, industry sources

5.2. Commercial Projects:

44

Commercial properties have also been sharing the limelight with the residential properties sector. Nowadays,

the construction of commercial complexes and the sale or rent of spaces in commercial complexes for offices

and/or shop establishments is being increasingly regarded as a profitable form of investment; hence, a

significant interest in these types of properties is being expressed by many individuals and corporations

alike. Since the purpose of these properties is commercial, the location aspect is a crucial success element

and, consequently, major projects are being placed in prime locations across Amman. Moreover, major

Developers soon realized that one viable option for them was the construction of high-rise towers, a feature

that, until recently was nonexistent in Amman, but is already beginning to appear on the capital’s skyline,

which encourages the intensification of growth in the country rather than the inefficient sprawl which is a

characteristic of several key areas.

Some of the major commercial projects are mentioned below:

Amman Financial & Commercial Towers

The Kuwait based Grand Real Estate Projects Company is constructing Amman Financial & Commercial

Towers, a 56 floor-tower project on a 20 dunum plot of land, which will include financial institutions and

offices. The project also features a shopping mall, a tower for major international hotels and a second tower

for the offices and branches of international companies.

Jordan Gate

Jordan Gate, the first component of the multi million Royal Metropolis, is a JD280 million project, which

will include two towers connected by a multi-storey podium in the vicinity of the capital’s 6th circle, a

central location. The project is expected to be completed within the coming two years in 2009.

Commerce One

Dubai Contracting Company (DCC) is investing JD14 million in the development of Commerce One, a

six storey office building that will accommodate over 30 of Jordan’s most elite freehold offices and seven

superior retail outlets.

Al Abdali Project

Abdali Investment and Development PSC is a land-development private shareholding company established

in Jordan though the successful public-private partnership between the National Resources Investment and

Development Corporation (MAWARED), a government owned investment corporation and Oger Jordan,

a Jordanian a subsidiary of Saudi Oger Ltd., an international construction company . The project, at an

estimated cost of JD709 million aims at creating a new downtown in Al Abdali area through the integration

of districts comprising of business, residential, retail, educational, cultural and recreational facilities. The

Abdali new downtown will occupy 1,000 dunums of land and will ultimately provide the city with an

introduction to a smarter urban lifestyle to match its rapid modernization and development.

Paradise Tower

The local, Union Land Development Company, is investing JD40 million in the development of Paradise

Tower. The 35-storey building, which will be located adjacent to the northern gate of the city’s Al Abdali

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project, will have one and two bedroom apartments and office space. Construction starts in 2007 and is

expected to be completed within 40 months. The project is being managed by Paradise Towers Investment

Company.

Major Commercial Developments in Amman and surrounding area:

Company Project Location Total Area

( Dunums)

Est. Investment

(JD Mn )Finish Date

Al Abdali Investment and

Development PSC

Al Abdali Urban

Regeneration Amman 1,000.0 709.0 N/A

Grand Real Estate

Projects Company -

Kuwait

Amman Financial &

Commercial TowersAmman 20.0 177.3 2009

Bonyan International

Investment Group

with Greater Amman

Municipality

N/AAmman - On

airport Road58.0 283.6 N/A

Dubai Contracting

Company Commerce One Amman 14.5 14.0 N/A

Union Land Development

Company PlcParadise Tower

Amman - Al

Abdali Project 2.3 40.0 2010

Total 5 1,094.8 1,224

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5.3. Malls:

An expanding retail market:

It seems that, side effects of the boom in the real estate sector have been rippling through Jordan’s retail

industry. After a relatively stagnant performance up until early 2000, the country’s retail market has been

witnessing a flourishing activity. Malls are proving to be a popular development option as Jordanians and

expatriates become more interested in shopping inland, rather than abroad. Taking note of the growing

buying power, several companies have already commenced the construction of large scale malls that are

expected to be launched in the near future.

Established Malls

The Kurdi Group, established in the 1930s, introduced the first comprehensive shopping mall in Amman’s

upscale area, Abdoun, in 2001. Its next project, Mecca Mall, which houses more than 350 shops and

international retail names, is currently undergoing expansion works. The JD360 million extension includes

a new shopping area, a four-star hotel including 350 rooms, an office tower and an entertainment center.

Aqaba Mall & Resort

The group announced plans to develop a JD210 million mall in Aqaba city. The mall, which will sit on a 100

dunum plot of land and is scheduled to be completed by 2010, is going to be located in the port city’s free

trade district and will include a multilevel mall with retail and leisure facilities, a four-star hotel, an aqua

park and entertainment venues for shoppers and children.

City Mall

The local Al-Khayr Real Estate Investment Company/Al-Daoud Group is due to fully open in the next few

months, which will be the largest shopping mall in the kingdom so far. City Mall is to provide visitors

with a world class family shopping, dining and entertainment opportunity. The Mall hosts Jordan’s largest

hypermarket, Carrefour, in addition to many international brand outlets like Virgin Megastore, Zara, H&M,

Aizone, Starbucks, Mothercare, Vavavoom and many more.

Al Baraka Mall

Al Baraka Group for Trade & Investment is building Al Baraka Mall, which is situated in the heart of

Swaifieh’s high end shopping district with two main entrances accessible on two street levels, and over

15 dunums of gross leasable area of retail spaces available and over 15 dunums underground parking

facilities. The mall is due to open by spring 2007.

Al Tajamouat Mall

Al Tajamouat For Touristics Projects Plc., is another public shareholding company which chose to invest

in Jordan’s retail market, with a JD90 million Mall being built in what is fast becoming Amman’s most

affluent commercial area. The mall is envisioned to comprise of 170 dunums of gross built area (GBA) with

an anticipated renting space of 60 dunums. The project, which is expected to commence operations by mid

2008, will consist of an outdoor casual/fine dinning terrace area with an overall focus on entertainment.

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Upcoming Malls in Jordan:

Company Project Location Description Est. Cost (JD Mn)

Finish Date

Kurdi Group Aqaba Mall and Resort

Aqaba

Spread over 100 dunums the mall features a multilevel mall with retail and leisure facilities, a four-star hotel, an aqua park and entertainment venues for shoppers and children.

210 Mid-2010

Al-Khayr Real Estate Investment Company / Al-Daoud Group

City Mall Amman

Total Built Up Area: 150 dunums Gross Leasable Area: 55 dunums Levels: 4 (retail), 3 (parking) Parking: 2,400

N/A Nov-06

Joint venture between the Aqaba Development Company (ADC) and Maden al-Nour Real Estate Investment Company.

Aqaba Development Investment Market (ADIM)

Aqaba

The new multi-purpose Aqaba Development Investment Market (ADIM) is expected to house to over 60 shops and service centers over 8.5 dunums and will cater to the rapidly growing local population as well as the burgeoning tourist trade.

N/A N/A

Al Baraka Group for Trade & Investment

Al Baraka Mall

Amman- Swaifieh

It is the largest shopping mall in Swaifieh with over 15 dunums of GLA of retail spaces and over 15 dunums underground parking facilities.

N/A Spring - 2007

Al Tajamouat for Touristic Projects Plc

Al Tajamouat Mall

Amman-Abdoun

The mall will comprise of 170,5 dunuma of gross built area (GBA) with anticipated renting space of 59.7 dunums.

90 Mid-2008

5.4. Tourism & Mixed Use Properties:

Tourism & Mixed Use Oriented Properties

Jordan harbors some of the world’s most sought tourist destinations such as Petra, Wadi Rum, Aqaba and the Dead Sea. The

region’s natural allure combined with the government’s efforts to provide a first-class business environment have led to the

setting up of some of the most major projects in mainly two of the highly popular international tourism destination choices

for travelers: Aqaba and the Dead Sea.

Many of the projects being developed in Aqaba and the Dead Sea are tourism oriented projects targeting the holiday home

concept; others feature both tourism oriented and huge mixed use projects.

Aqaba alone has so far attracted an estimated JD5.3 billion in real estate investments, a clear indication that Aqaba

Development Corporation (ADC)’s continuous efforts in creating the right investment climate in order to attract local and

international capital have been very successful.

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Some of the mega mixed-use/tourism oriented projects underway in Aqaba and the Dead Sea include:

Tala Bay

Located about 14 kilometers south of the city of Aqaba, Tala Bay is Jordan’s first integrated resort and

residential community, featuring a marina, over 1,500 residential units, five hotels, boutiques and

restaurants. The first phase of the project, which is due to finish in 2007, will provide 300 residential units,

120 commercial units , 1,000 rooms in 3 hotels and approximately 20 villas.

Saraya Aqaba

The JD567.2 million project is going to be an Arabian style themed, mixed use project spread over 648

dunums of land, which will combine world class hotels, residential and commercial properties on Aqaba’s

northern shores. The project will also feature a water park, a convention center, business facilities, health

spas, beach clubs in addition to high-end retail offering. All of which will be built around a man-made

lagoon.

Ayla Oasis

Ayla Oasis Development company is creating a mega water front development built around a series of man-

made lagoons and water canals, and will includes 5 up-market hotels ,3000 residential units, an 18-hole

signature golf course, a 9-hole golf academy, as well as a town center that encompasses a marina, retail

units, cafés, entertainment and recreational facilities.

Grand Dead Sea Touristic Project

The Kuwait based Grand Real Estate Projects Company is investing JD70.9 million to develop a resort in

the Dead Sea’s Zada region. The development will combine 600 suites and rooms, alongside 24 luxurious

villas, in addition to all the necessary entertainment, social and tourist utilities in order to classify the

resort as one of the largest luxurious tourist resorts in the area.

49

A detailed list of the major ongoing mixed-use / tourism oriented projects in Aqaba and the Dead Sea can be viewed

below:

Company Project Location Est. Investment (JD Mn)

Total area (Dunum)

Description Finish Date

Jordan Projects for Tourism Development

Tala Bay Aqaba 354.5 2,671

Phase 1 will provide 300 residential units, 120 commercial units 1000 hotel rooms , 20 villas

2015 with completion of phase 1 in 2007

Saraya Holdings Saraya Aqaba Aqaba 567.2 648Residential, commercial and hotels.

2009

Horizon Development Holdings

N/A Aqaba 3,545 13,500 Mixed use units. Roughly 2016

Ayla Oasis Development Company

Ayla Oasis Aqaba 709 43003000 residential units, 1540 hotel rooms

N/A

Amaar Properties Palm Hills Aqaba N/A 9510 villas, a hotel , and 20 towers.

2009-2010

Taameer-Jordan Red Sea Resort Aqaba 100 147 260 residential units 2008

Sun Days International for Tourism Investment Company

Sun Days Hotel and Resort

Dead Sea 42.5 47.5 A five star hotel resort including 194 rooms

End of FY2007

Social Security Corporation Intercontinental Grand Plaza

Dead Sea 70.9 64Privet chalets with 425 rooms

2007

Saraya Holdings Saraya Dead Sea Dead Sea N/A N/A

Mixed use resort including an 18-hole signature golf course, a clubhouse, a boutique hotel, and other facilities.

N/A

Grand Real Estate Projects Company -Kuwait

Grand Dead Sea Touristic Project

Dead Sea - Zada region

70.9 150

24 villas in additon to 600 suites and rooms

N/A

Omnix Group - Dubai Crystal City Project

Dead Sea 99.3 1423 hotels, business centers

End of 2007

Gulf Finance House in partnership with Kuwait Finance & Investment Company

Royal Resort & Spa-part of the Royal Metropolis Project-

Dead Sea N/A N/A N/A N/A

Emaar N/A Dead Sea 354.5 N/AResidential , commercial units

N/A

Jordan Dubai Capital in parthership with the Social Security Corporation (SSC)

Dibeen Project Dibeen 100.7 N/A Mixed use units. 2010

50

5.5. Infrastructure Projects:

Emerging Infrastructure:

In an effort to transform Jordan into a modern, regional business and transport hub, the Jordanian

government is investing approximately JD1.26 billion within a 25 year-long plan to develop an extensive

network of main roads across Jordan. Moreover, by the spring of this year, it is hoped that two bidders

will have won the tenders to build a light railway link from Amman to Zarqa, as well as a new terminal

building at Queen Alia International Airport. The government of Jordan is more than keen to ensure that

its infrastructure keeps pace with the bout of major construction projects going on and is a vital factor

for a world-class economy. Thus, there are always fresh tenders in the pipeline and feasibility studies

commissioned for new road construction schemes as well as further possible additions to the country’s

promising rail network and public transportation.

Lacking Rail Network

Rail travel in Jordan has always posed a problem. The historic Hejaz railway, which originally ran all the

way from Damascus to Medina, continues to operate on an irregular basis in Jordan, occasionally offering

cargo and passenger services between the country and Syria as the “Hejaz Jordan Railway”, as well as from

the phosphate mines near Ma’an to the Gulf of Aqaba as the “ Aqaba Railway “, emphasizing the extent to

which rail travel is under-utilized in Jordan.

A New Railway

The proposed 28 kilometer light railway linking Amman with the industrial city of Zarqa is designed to

alleviate traffic congestion on the main highway between the two cities. The tender for the scheme, which

could cost up to JD99.3 million, will be offered on a Build, Operate and Transfer basis (BOT). Once the

scheme is on track, plans are in place to extend the rail link up to the Syrian border, and also to Queen Alia

International Airport.

Queen Alia International Airport Expansion

Six qualified consortiums have already been chosen to bid for the JD201.4 million contract to build a new

terminal at the Queen Alia International Airport. The tender will be offered on a build, operate and transfer

basis and will build a 900 dunum terminal alongside the existing one, with a completion date of 2010.

Relocation of Aqaba’s Main Port

The relocation of Aqaba’s main port facilities is core to the ADC mandate. The current port sits at the

heart of major urban and tourism development projects, relocating the port to the south zone will free

over 2000 dunums which represent the prime waterfront property available in Aqaba. It is expected that

the redevelopment potential for the vacated port land will engage investors with unique and lucrative

investment opportunities in the JD1.42 billion range. The project is estimated to cost up to JD709 million

and is to be completed by 2012.

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The area adjacent to the new south port is being developed into the largest specialized chemical/fertilizer

industrial zone in the region, with advanced utilities and centralized services building on the existing

Phosphates and Potash mining operations in the zone and the rest of Jordan. In turn, providing ample

opportunities for investors who want to move into the industrial sector.

The Launch of Red-Dead Canal Feasibility Study:

A study looking at the feasibility of topping up the Dead Sea with water from the Red Sea has been launched.

The USD 2-4 billion project seeks to link the Dead Sea with the red sea by way of a 180-kilometer pipeline,

pumping around 1,900 million cubic meters of water annually from the Red Sea.

Feasibility of Aqaba Railway

The Jordanian government is currently studying the possibility of constructing a 25 Km railway linking

Aqaba’s main port to the south region in Aqaba. If the feasibility is favorable the project could cost up to

JD90 million.

Major Infrastructure Projects:

Project Estimated Cost (JD Mn.)

Description Finish Date

Free Trade Zone 77.9

NREC has established a strategic partnership with ADC through which the new company will develop and operate a free trade zone on a total land area of 2000 dunums.

N/A

DISI Mudwara -Amman Water Conveyor Development Project

425.4 A 25-year build-operate-transfer (BOT) to supply Amman with water from Disi Mudawara. N/A

The Amman Development Corridor Project 114.1

The construction of a road link, and logistics platform to facilitate transit modes and accessibility to affordable land, for productive investments and urban development purposes.

Mid 2009

Re-location of Aqaba Port 709 The re-location of Aqaba’s main port to the south by 20 km to free prime areas for real estate development. N/A

Amman East Power Plant 219.8

Project to meet the electricity needs of the country in an economic and environmentally sustainable way. N/A

Red Sea -Dead Sea Conveyor Project 1,400-2,800

Project seeks to link the dead sea to the red sea with a 180-kilometer pipline , pumping around 1,900 million cubic meters of water annually from the red sea .

N/A

Light Railway 99.3 Construction of a 28km light railway linking Amman with the industrial city of Zarqa N/A

Queen Alia International Airport expansion 201.4 Contract to build a new terminal at Queen Alia

International Airport 2010

Total 3,246

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Lucrative Industry

The heightened investment interest in the Jordanian real estate market stems from local and international

companies strong belief that Jordan is primed to become a true hub for business and tourism across the

region and beyond.

The real estate industry is expected to benefit from more than JD13 billion worth of investments down the

road, including planned residential and tourist resort development in the Dead Sea and Aqaba. This number

could rise up to JD15 billion if future and ongoing infrastructure projects are taken into consideration. Also

worth mentioning is that a significant amount of capital is also going into the construction of shopping

malls, which all include entrainment and retail facilities.

Notably, the majority of the large-scale developments are being built in Amman and Aqaba, where Aqaba

occupies center stage by capturing 43% of the total capital that has been invested in Jordan’s real estate

market over the past few years. Amman comes second with a 40% share of the total capital invested over

the past few years.

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6. Interim Growth Strategy:

Unfortunately, the boom in Jordan’s real estate market comes hand in hand with a rising concern for the

location of some of the high-rise buildings currently under construction, or are due for construction in the

near future. Noting that Amman has long suffered from unsystematic planning, HM King Abdullah II urged

the Mayor of Greater Amman Municipality (GAM) to embark on the preparation of Amman’s first official

Master Plan.

The Amman Master Plan is aimed to be the city’s blueprint for sustainable development for the next 20 years.

It will guide the growth of the community and address issues such as the built-in environment, culture and

heritage, transportation, including public transit, infrastructure and other community services.

In the meantime, an Interim Growth Strategy (IGS) was created to enable investors to invest in Amman while

GAM completes the Amman Master Plan. The IGS features a plan to guide, facilitate and accommodate the

new demand for investments in High Density Mixed Use (HDMU) developments. According to GAM, the

definition of HDMU is any building over 30 meters in height, or over eight storeys high.

The High Density Mixed Use (HDMU) tower strategy undertook a comprehensive analysis of the city to

designate suitable locations for such developments, where, the first stage of this strategy, which will be

fully announced before the end of this year, selected four areas for building high-rises.

Tower developments will be permitted in what is to become Amman’s new central business district, Al

Abdali development site. In addition to Al Abdali area, three other areas have been allocated.

Area (A), referred to as the Central Parkway, is located in the Wadi, running northwest to southeast,

directly south of Jabal Amman, from the new Abdoun Bridge to the Al Qaiseyeh scattered settlement.

Princess Basma Road runs through the northern half of the area and east to the GAM offices. The proposed

intersection with the new Wadi Abdoun Road (i.e. at the ten bridge) is at the southern end of the area and

will connect the city center with the airport. Area (A) is surrounded by existing stable neighborhoods of

varying income levels.

Area ATotal area (Dunum)

HDMU Zones (Dunum)

HDMU Lots HDMU Building Area (square meters)

Central Parkway 282 82 26 311,958

Area (B), called Amman Northern Gateway, is located in Al Jubayhah, along Jordan Road, north of Al-

Shaheed Ring Road, and east of the northern corridor that runs along Queen Rania Road which serves the

university district and Al Hussein Youth City. The Jordan corridor functions as a major corridor, linking the

city center with the northern suburbs and Jarash. Area (B) is located immediately north of the northern

bus terminal and can be easily served by public transit in the near future. Noteworthy is that the Wadis Area

is relatively undeveloped.

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Area BTotal area (Dunum)

HDMU Zones (Dunum)

HDMU Lots HDMU Building Area (square meters)

Northern Gateway 1,060 243 80 855,690

Area (C), Amman Southern Gateway, is already developing along the east side of the Airport Road, south

of Abdoun. The area will be served by an extension of the Inner Ring Road (currently under construction),

as well as the new Wadi Abdoun Road that will link the central city with the airport, passing through site A.

In addition, the future LRT western corridor will likely pass through Area C, on its way to the airport. Area

C’s frontage on, and access to, the Airport Road presents obvious opportunities for HDMU developments.

Area CTotal area (Dunum)

HDMU Zones (Dunum)

HDMU Lots HDMU Building Area (square meters)

Southern Gateway 2,190 419 139 2,594,532

A major part of the interim plan is the integration of major parks and community facilities with the tower

developments; as according to the plan set, for every dunum designated for tower developments, another

dunum will be developed as a park in the designated areas. The following map pinpoints the designated

areas for the tower buildings in Amman.

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Disclaimer:

The data contained in this research report of the Real Estate sector has been obtained from sources

considered by Jordan Ahli Bank to be reliable in all material respects. However, the accuracy, fairness

and completeness thereof are not guaranteed by Jordan Ahli Bank and its third-party suppliers shall have

no liability for errors or omissions with respect to the service or its delivery, regardless of the cause or

source of such error or omission. The Purpose of this report is to provide information and analysis to assist

investors to obtain information to support their decisions. The reader should not make any investment

decision solely based on the information contained in this report and she/he should consult with her/his

investment advisor before investing. This report is a copyright of the Jordan Ahli Bank and should not be

reproduced or redistributed partially or fully in any shape or manner without the express written consent

of Jordan Ahli Bank.

Sources:

· www.dos.gov.jo

· www.dls.gov.jo

· www.worldbank.com

· www.mfa.gov.jo

· www.jordanecb.org

· www.jiec.com

· www.jordaninvestment.com

· www.middleeasttenders.com

· www.free-zones.gov.jo

· www.wttc.org

· www.mpwh.gov.jo

· www.tourism.jo

· www.cbj.gov.jo

· www.alrai.com

· www.jea.org.jo

· www.mpwh.gov.jo