11 March 2008
Faced with rising property costs, Jordan has launched a $7bn initiative to provide affordable housing for low-income citizens.
Unveiled by King Abdullah II on February 26, the "Decent Home for Decent Living" plan will create 100,000 houses across Jordan during the next five years. The government will provide over $20m to jumpstart the project, with work beginning on the first 20,000 properties later this year. The project will be run by a new government agency, in association with the Housing and Urban Development Corporation (HUDC).
To ensure that the new properties remain within reach of lower-income segments of the populace, the initiative will set the price for apartments built under the policy at $33,000. Buyers will also be provided with a number of payment options, including instalment plans, to alleviate the burden of large down payments.
Sahel Majali, the minister of public works and housing, told local press, "The government has already received 18,000 applications to benefit from the plan... We will study the possibility of building another 100,000 houses if the need arises, as well as mechanisms to provide houses to private sector employees on limited and low incomes."
While the royal initiative represents a massive investment into a property sector that is often overlooked, several other low-income housing projects are also in the pipeline, spurred in part by the slowdown in the luxury market. According to industry insiders, at least 100,000 new apartments will have to be constructed over the next five years to meet demand from Jordan's lower and middle-income groups.
One of the largest proposals is the King Abdullah Bin Abdul Aziz City in Zarqa, a 25m sq metre mixed-income city. Spearheaded by Mawared (the state-owned National Resources Investment and Development Corporation), the city will house over 400,000 low-income residents in some 70,000 units of up to 160 sq m. When completed, the city will also include a variety of non-residential projects, including religious buildings, entertainment complexes, hotels, a 400-bed hospital, and an 80,000 sq m retail centre, to be developed by The Land Holding. Local banks will be contracted to provide low interest loans and financing to buyers.
Akram Abu Hamdan, Mawared's director general, speaking at the Jordan Economic Forum last week, said one of the objectives in providing a master-planned mixed-use approach for the new development was to "[stimulate] the economy of Zarqa and [help] to further raise the standard of living in the area."
Taameer Jordan Holdings has also opted to increase its own stock of affordable housing with the 7.5m sq m Ahl Al Azim mixed-use development. Aimed at the medium and low-income markets, the $900m project will be located on the outskirts of the Greater Amman Municipality, and will include over 16,000 units with targeted financing plans to encourage first-time buyers. The new development, which is being built in cooperation with the HUDC, will include a variety of health and education facilities, as well as public spaces and leisure areas.
The housing finance market has also risen to meet the demand for loans and mortgages from the low-income market; in some instances, institutions offering low interest loans will be subsidised by the state. Darkom, for example, a new housing loan insurance company, signed an agreement in January with Cairo-Amman Bank to provide home buyers long-term housing loans with low interest rates, smaller down payments and reduced monthly instalments.
While 2007 saw the beginnings of a slow-down in the high-income real estate market, with apartment sales dropping by up to 14% over 2006, according to the Department of Lands and Survey, demand for affordable housing has remained strong, pushed in large part by rising property costs. The removal of fuel subsidies last month has led to cost increases across the board, with the official inflation rate rising to around 6.3%, a significant increase over the 2002 rate of less than 2%. Food prices have risen nearly 21% over the same period.
Faced with rising property costs, Jordan has launched a $7bn initiative to provide affordable housing for low-income citizens.
Unveiled by King Abdullah II on February 26, the "Decent Home for Decent Living" plan will create 100,000 houses across Jordan during the next five years. The government will provide over $20m to jumpstart the project, with work beginning on the first 20,000 properties later this year. The project will be run by a new government agency, in association with the Housing and Urban Development Corporation (HUDC).
To ensure that the new properties remain within reach of lower-income segments of the populace, the initiative will set the price for apartments built under the policy at $33,000. Buyers will also be provided with a number of payment options, including instalment plans, to alleviate the burden of large down payments.
Sahel Majali, the minister of public works and housing, told local press, "The government has already received 18,000 applications to benefit from the plan... We will study the possibility of building another 100,000 houses if the need arises, as well as mechanisms to provide houses to private sector employees on limited and low incomes."
While the royal initiative represents a massive investment into a property sector that is often overlooked, several other low-income housing projects are also in the pipeline, spurred in part by the slowdown in the luxury market. According to industry insiders, at least 100,000 new apartments will have to be constructed over the next five years to meet demand from Jordan's lower and middle-income groups.
One of the largest proposals is the King Abdullah Bin Abdul Aziz City in Zarqa, a 25m sq metre mixed-income city. Spearheaded by Mawared (the state-owned National Resources Investment and Development Corporation), the city will house over 400,000 low-income residents in some 70,000 units of up to 160 sq m. When completed, the city will also include a variety of non-residential projects, including religious buildings, entertainment complexes, hotels, a 400-bed hospital, and an 80,000 sq m retail centre, to be developed by The Land Holding. Local banks will be contracted to provide low interest loans and financing to buyers.
Akram Abu Hamdan, Mawared's director general, speaking at the Jordan Economic Forum last week, said one of the objectives in providing a master-planned mixed-use approach for the new development was to "[stimulate] the economy of Zarqa and [help] to further raise the standard of living in the area."
Taameer Jordan Holdings has also opted to increase its own stock of affordable housing with the 7.5m sq m Ahl Al Azim mixed-use development. Aimed at the medium and low-income markets, the $900m project will be located on the outskirts of the Greater Amman Municipality, and will include over 16,000 units with targeted financing plans to encourage first-time buyers. The new development, which is being built in cooperation with the HUDC, will include a variety of health and education facilities, as well as public spaces and leisure areas.
The housing finance market has also risen to meet the demand for loans and mortgages from the low-income market; in some instances, institutions offering low interest loans will be subsidised by the state. Darkom, for example, a new housing loan insurance company, signed an agreement in January with Cairo-Amman Bank to provide home buyers long-term housing loans with low interest rates, smaller down payments and reduced monthly instalments.
While 2007 saw the beginnings of a slow-down in the high-income real estate market, with apartment sales dropping by up to 14% over 2006, according to the Department of Lands and Survey, demand for affordable housing has remained strong, pushed in large part by rising property costs. The removal of fuel subsidies last month has led to cost increases across the board, with the official inflation rate rising to around 6.3%, a significant increase over the 2002 rate of less than 2%. Food prices have risen nearly 21% over the same period.
© Oxford Business Group 2008
