Jordan's real estate volume in the first quarter of 2021 has shown a significant increase of 34 percent year on year; specifically, land sales led the growth by 39 percent, followed by apartment purchases by 19 percent in the same period. The country expects apartment sales to record a 68 percent growth by the end of 2021, the same growth rate experienced in the pre-pandemic era.
However, the robust growth of real estate did not seem to reflect itself on Jordan construction sector, with the latter recording over JD 100 million of loss due to the COVID-19 pandemic. Even before the pandemic, the construction sector in Jordan has been facing challenges, including income taxes and several bureaucratical issues, which have further worsened after the pandemic arrived. As a result, many construction companies suffered from an inability to pay employees and equipment during the global crisis alongside the government's lack of support and compensation.
Multilayered Challenges
Additionally, the construction challenge in Jordan is heightened by the rise in global raw material prices, which has risen to 55 percent as logistics companies are forced to increase their prices. The Amman Chamber of Industry is said to discuss solutions to the materials price hike, considering the construction sector plays an exponential part in Jordan's economy by employing more than a third of the country's population. As the construction sector struggles, many families are threatened to be out of jobs, causing distress in the overall macroeconomic outlook.
One of the discussed solutions to the suffering industry is for banks to provide fair interest rates, allowing companies to propose more liquidity through loans and encouraging families to tap into the entrepreneurial wagon.
SFD to Provide Loans and Grants
The Saudi Fund for Development (SFD) has also injected a USD 19 million grant for Jordan to inaugurate a three-level highway intersection, pushing the construction sector activities on the kingdom's main Amman-Dead Sea road. The crossing would include a 240 meters concrete bridge connecting the Marj Al-Hammam and the Prince Hussein Road, alongside a 110 meters tunnel linking the Amman-Naur to the Dead Sea road. The establishment of the project would allow 65.000 vehicles per day and reduce the long-overdue traffic congestion throughout the route.
SFD has taken an expansive role in Jordan's infrastructure and construction developments, providing over USD 2 billion combinations of loans and grants to build and reestablish several essential sectors, including construction, education, health, and infrastructure industry. The initial progress will focus on building and infrastructure, eventually enabling the transportation sector to thrive and better the quality of life of Jordan citizens. Today, the SFD has facilitated 21 loans to finance several mega-projects conducted in Jordan, encouraging other foreign investors to tap into the nascent but growing market.
Today, the government has approved an additional two construction potential projects in Jordan that the country's domestic construction players will conduct, inviting public-private partnerships and further encourage growth Micro, Small, and Medium Enterprises (MSMEs) revolving around the construction sector to take part in the country's attempt to reestablish the backbone of the kingdom.
