Building and construction to Jordan
(Last updated: 26 Sep 2011)
Trends and opportunities
The market
There has been positive growth in both the construction and property markets in Jordan this year. However, this has been tempered by declining government infrastructure spending. The construction sector in Jordan has witnessed positive growth since the start of the year, after registering a drop in its activity the previous year. In parallel, the property market was active in the early months of 2011, with a 41 per cent growth in property turnover and a 24 per cent rise in real estate sales (37 per cent for apartments and 21 per cent for land sales) over the first four months of 201, when compared to the corresponding period in 2010. (Source: Marcopolis, ‘Jordan Construction Sector Analysis 2011').
The decline in government capital expenditure in 2011 is again adversely affecting the sector's activity, noting that the slowdown in infrastructure and non-residential projects last year was partially attributed to limited capital spending allocations in the government's budget.
While cement production posted a decline of 15.1 per cent in the first three months of the year, totalling 798,000 tonnes, the number of building permits increased by 24.3 per cent year-on-year and reached 6,967 in the first quarter of 2011. New construction permits also increased by 28 per cent year-on-year to reach a total of 3,426 thousand square meters. Banks' credit for construction reached US$4.6 billion at the end-March 2011, up by 6.3 per cent relative to end-March 2010. Jordanian banks had a more proactive approach since the beginning of the year, with some approaching developers directly to offer products and services aimed at attracting more buyers and stimulating market activity. (Source: Marcopolis, ‘Jordan Construction Sector Analysis 2011').
The pace of recovery has not satisfied all builders and prompted some to lobby the government to provide some relief, with the Jordan Construction Contractors Association (JCCA) calling for new state works projects to be included in the 2011 budget.
The government put on hold all new state construction projects for this year in an effort to rein in the deficit and give it time to reassess priorities. Though the move may have helped reduce the red ink in the state accounts, according to Ahmad Tarawneh, the president of the JCCA, the halt in new state work has been a major challenge for the sector.
Though state officials have said there will be a capital works component in next year’s budget, there has been no indication of what projects will be funded.
The JCCA has also taken the government to task over the contracting out of major construction projects to foreign firms, which the association claims offer little or no subcontracting work to local companies.
Though the construction sector may not realise former levels of public orders for the remainder of the year, the private sector may offer more hope. With demand apparently growing in the real estate sector and existing housing stocks being depleted, the market is approaching the tipping point of demand exceeding supply. Once that point is reached, some predict this will occur within 18 months, the market should once again see a flurry of new development activity.
Both the residential and commercial construction markets are growing with increases forecast to exceed 20 per cent per annum over the next five years.
Jordan has strong national manufacturing capabilities including the local production of stone, cement, steel reinforcement bars, ceramic tiles, sanitary fixtures, cables and some electrical components. However, it imports a wide range of other building materials.
Jordan’s infrastructure supports local, regional and international business growth with features including:
- A national carrier (Royal Jordanian), serving 55 destinations directly and 700 in conjunction with alliance partners.
- A deep-water port in Aqaba offering facilities for general, containerised and specialised cargo.
- A deregulated telecommunications market with a mobile penetration rate of 78 per cent and 100 per cent Internet access following significant growth of broadband and wireless networks.
- Skilled labour
Residential and commercial property
Residential and commercial property sales have been stimulated by the global financial crisis and the resultant return of Jordanian expatriate workers, as well as demand from international businesses seeking to establish in Amman as a hub for business in the region. In addition, growth is being fuelled by population growth and political stability. Regional instability has also driven some Syrian and Egyptian residents to relocate to Jordan and residential property acquisitions have resulted.
The number of hotels in Jordan continues to grow. New hotels have being launched in Aqaba and the Dead Sea with more expected to open this year. This has been fuelled by increasing demand from visitors and tourists for 4- and 5-star accommodation.
(Sources: Ministry of Public Works and Marcopolis)
Market drivers
Security and political stability – Jordan has good relations with all its neighbours. It has maintained continuous stability, moderation and security in a region prone to volatility. Jordan is a fourth generation monarchy with consistent and continuous foreign and internal policies, a democratically elected Parliament and a visionary leader dedicated to progressive reforms of political, economic, fiscal, legal and social significance.
Strategic position – Jordan is well situated as a regional entry point, being well connected to neighbouring countries and global markets through modern transportation and communication networks. Jordan’s location allows for diversification and expansion into increasingly affluent markets. Trade agreements give Jordan access to markets of more than one billion consumers.
Skilled workforce – Many Jordanian engineers and professionals are working in the GCC and internationally. Local labour costs remain the most competitive in the Middle East.
Favourable business environment – Jordan is a free market oriented economy, with outward-oriented economic policies and a private sector-led approach. Jordan has experienced ongoing privatisation of major state-owned enterprises and implemented significant advances in structural and legal reform.
Opportunities
Services opportunities
Construction, project management and specialist sub-contracting, specialist services to sectors of power, light, passenger and freight rail, roads and ports, transport and logistics, water and wastewater management, green building, facility management and renewable energy.
Product opportunities
Products for water management, water saving and wastewater management, a wide variety of building materials and products including sustainable solutions, systems for rail and ports, building automation, air-conditioning and security, solar and wind solutions and swimming pool equipment.
What makes Jordan an attractive place to do business?
- Well-educated, professional and highly skilled labour force.
- An economy driven by regional and international investment, youthful population, well-established and managed banking system, excellent infrastructure and a sophisticated business community familiar with Western practices.
- Australia's profile in Jordan is high. There is increasing recognition of Australian companies and capabilities. Several companies have opened a presence in Jordan as a regional base for the Levant and Iraq market.
- Stability and transparency.
- Modern communications infrastructure and good financial services.
- Wide use of English (as well as Arabic) in business.
- Favourable exchange regulations and import regulations.
- A free-market oriented economy, advanced judiciary and communications system, and well-regulated capital market.
Contact details
The Australian Trade Commission – Austrade – is the Australian Government’s trade, investment and education promotion agency.
Through a global network of offices, Austrade assists Australian companies to grow their international business, attracts productive foreign direct investment into Australia and promotes Australia’s education sector internationally.
For more information on how Austrade can assist you, contact us on:
Australia ph: 13 28 78 | Email: info@austrade.gov.au
A list of Austrade offices (in alphabetical order of country) is also available.