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French Version

Construction sector building new realities

Jordan is often identified as a priority market for the building and construction sector.

Jordan is often identified as a priority market for the building and construction sector. Why? It's position in the region makes it a focal point for many investors and businessmen tempted to have use of facilities and prerequisites the government now provides foreign investors.

The construction sector today contributes some 15 percent to the GDP, a 3 percent increase from 1995. In actual dollars, the sector gross growth is estimated at $1 billion. This marks recuperation from its sharp downturn four years ago, when gross output was less than JD 700 million.

The construction industry is a highly profitable business in Jordan, where most construction materials are produced locally and available at some of the lowest construction prices in the region. This is even more obvious in the tourist sector where many hotels, tourist sites, and villages were recently built in the Kingdom thanks to the quality and quantity of locally-produced materials.

Besides tourism, building and construction projects are also up due to demands for housing. A report by the General Statistics Dept revealed recently nearly 46,000 new apartments and villas are not yet inhabited in Amman, due to concerns by many Jordanian families that prices are too high.

No specific surveys are available on how much investment is involved in the building and construction sector. Unofficial reports indicate increased growth daily. Many contractors and businessmen believe the current row between the government and steel-manufacturing companies over steel prices cannot prevent continued sector growth.

Although the recent hike in steel prices was a shock for most contractors and project managers, experts agree the sector is booming. "I'm confident the construction sector's portion of the GDP will increase gradually from now on. It is vital if it is to meet mounting public demand for houses," said Mousa Abu Hdaib, director general of the Abu Hdaib of Housing and Estate Services Co.

A recent profile statement issued by the UK-based Trade Partners Office explained the growth in the construction and building sector in Jordan was due to the construction of new hotels and tourist villages in Amman and other areas around Jordan. It noted infrastructure in Jordan, particularly in water, energy and transport sectors, is expanding.

Jordanian contractor Antoine Abu Zghaibra said the increase in uninhabited apartments and villas in Amman was due to public concern about the current political instability in the region. He said many Jordanians want to keep their cash liquid, rather than invested in fixed projects.

"Despite this, however, there is an increasing number of Jordanian families who buy villas and apartments in the western districts of Amman. They do not harbor such concerns," Abu Zghaibra told The Star.

Most Jordanians prefer housing in one of Amman's more prestigious districts such as Deir Ghbar, Abdoun or Sweifiyah. Other areas, like Al Jandawil, Jabal Amman and areas in eastern Amman, are also favored, but at different scales. Among those buying new flats and villas in Amman are Jordanian expats now returning home.

Prices vary from one district to another. In west Amman, a medium-sized flat sells between JD 150,000 to 200,000. Villa prices soar to around JD 300,000. On the other side of the capital, a medium-sized flat runs JD 60,000, with many far cheaper. Villas are less than JD 100,000. "Many contractors today like to cut prices of their flats to make easy profit rather than keep waiting for buyers," Abu Zghaibra added. "This is often at the expense of quality and flat size."

The Jordan Construction and Contracting Association has often warned of the increasing number of unregistered contractors in the Kingdom. The association's registered contractors now surpass 2,400. There are no official statistics on unregistered ones.

That said, the British report does highlight the proficiency of local contractors. "Jordanian contractors are well experienced in the construction of building projects and most infrastructure projects," urging British contractors and building companies to take advantage of the facilities the Jordanian government provide in the construction sector.

Almost all of banks operating in Jordan provide comfortable housing loans and facilities to contractors to set up business. The growing attitude among local investors and businessmen to employ their resources in the construction and building sector inspires many to build.

"It should be clear, investments anywhere other than the construction sector can't make swift and easy growth," explained Abu Hdaib, who has spent more than 23 years in the construction sector. He said every contractor could make a minimum of 25 percent in profit over a short period. "There is fierce competition amongst Jordanian contractors to attract better customers to their projects. Such a thing will certainly make the sector more powerful in the future."

Abu Zghaibra said the market is receiving more and more contractors everyday. He is sure the new companies will make the sector flourish. "Who can say Jordanians are enduring economic burdens? The current price of flats and villas mirrors a growing demand amongst Jordanian families for housing."

Ghassan Joha
The Star

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