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Senior Project Manager – Hospitals
Industry: Construction
Location: Abu Dhabi, UAE -
Contracts Engineer
Industry: Construction
Location: Dubai, UAE
Amman on a mission
by Andrew Mernin on Sunday, 18 February 2007
Landmark: The US$30m Officers Club hotel is set to welcome an influx of visitors to the Jordanian capital.
As leader of Jordan’s largest real estate company and close confidant to the King, Akram Abu Hamdan has played a major role in the rapid economic development of the once troubled Arab state. And if the optimism of the King’s ‘right hand man’ is to be believed, Jordan’s capital is poised to become the region’s premier destination for multinational giants in search of Middle Eastern wealth. “Amman has the human resources, the indigenous population and has grown steadily over the years,” says the director general of Mawared, Jordan’s government-run property empire. “Although land prices have risen, it remains very reasonable and is cheaper than any of the countries around us, barring Iraq,” he adds. Fuelled by an influx of Iraqis into the Kingdom alongside expansive development across a range of industries, Jordan’s real estate market has witnessed exponential growth in recent years.
The sector grew by 40% in 2006 to reach a value of US$6.9bn compared to US$4.9bn the previous year.
At the moment, the largest group of non-Jordanian residents in the Kingdom are Iraqis, followed by Kuwaitis, Saudi Arabians, Americans, then Syrians.
With a current project portfolio of up to US$1.5bn, Mawared — known as the National Resources Investment and Development Corporation — has been at the heart of Jordan’s property boom since its inception six years ago.
When the company started life, its original mandate was to transform several inner-city military sites into vast real estate developments, as well as providing new out-of-town facilities for the army. In return for former military land from the government, the company rebuilds army facilities, such as the US$160m general headquarters in Amman, without making a profit. Mawared’s cornerstone project remains the Madinat Al Sharq — a 2500 hectare settlement in Zarqa that aims to house 500,000 people by 2025. In partnership with the Hariri family and Kuwaiti investment group Kipco, Mawared is also behind Amman’s ambitious US$1.5bn urban development project, Abdali. Stretching over a built up area of one million sq m, the project will become a fully functioning city centre for Amman.
Recalling the beginnings of the Abdali project, Hamdan says: “We sent out around 30 proposals to people all over the world, and it was soon after 9/11 so developers in the West were not interested in the region, but we found a lot of loyalty to the Middle East from regional companies. In the end we decided to go with Saudi Oger (the Hariri family’s construction arm), who we felt had the experience, the credibility and the ability to secure capital for projects of this magnitude.” Alongside the vast Abdali project, Mawared is also working on the US$110m ‘Living Wall’ residences and the US$30m Officers’ Club hotel developments, both in Amman.
According to Hamdan, it is projects such as these that are helping to bring a much-needed flow of foreign direct investment (FDI) into Jordan. “FDI is on the increase and we expect to see more coming in, from sub-developers who come in and take parcels from us and develop them, and banker tenants that will rent spaces from us.”
For a country heavily reliant on foreign aid contributions, an increase in FDI flow would be a welcome boost to its ongoing emergence as an international centre for business and trade. While the Hashemite Kingdom is expected to reduce its budget deficit to US$540m this year compared to US$640m in 2006, the shortfall will still represent 8.4% of GDP if aid contributions are discounted. This compares to the International Monetary Fund’s recommended limit of 3% of GDP.
This year, the country will also receive US$565m in aid from the KSA and US$131m from the US. While there is clearly a long way to go before Jordan is economically self-sufficient however, Hamdan sees a bright future for the nation as a honey pot for foreign investors.
“There is a surplus of money in the region and so there is certainly an appetite in the region for Jordan — it’s politically stable and secure, and currently has a shortage of industry,” he says.
Hamdan admits that Western investors are still reluctant to enter the Kingdom. “Europeans don’t really have an appetite to invest in Jordan — maybe they look at the region as a whole and are discouraged by pockets of uncertainty.
“[Perhaps] they feel there is too much competition since there is so much interest from within the region,” he continues questioningly.
As well as welcoming foreign investment, Mawared will itself soon become a foreign investor as it breaches the Kingdom’s borders.
Last week Arabian Business revealed that the group was in negotiations to enter Abu Dhabi’s lucrative multi-billion-dollar real estate industry. Although no deal has been struck as yet, the company remains focused on becoming a major player in the UAE. With the value of property sales in Abu Dhabi on target to reach US$2.4bn by the end of the year, it’s no surprise that the company is initially focusing in on the UAE capital and not elsewhere.
“Of course, Dubai is attractive for us because it is where the buzz is, but it has also become expensive and the revenue you get from real estate there is not as attractive as you might get elsewhere in the region,” says Hamdan. Mawared’s global operations will be centred around a holding fund set up in Luxembourg due to the European state’s “credible jurisdiction” and “suitable” tax exemptions. As well as the UAE, the group is also interested in taking its projects to other GCC states and North Africa.
Having been at the helm of the government-owned developer since its creation in 2001, Hamdan works closely with Jordan’s ruler and sits on the board of a number of government bodies.
“In Jordan everyone is close to the King,” says a laughing Hamdan, playing down his status as a close affiliate of King Abdullah II. Despite being part of a state-run business, Hamdan insists he is given a free role in operating the company. “His Majesty keeps an eye on projects that support the national economy and he always likes to get involved in major projects. Sometimes he asks for projects to speed up or gives us direction, but he never interferes with the fate of them,” he says.
While the King may have little effect on the business however, Jordan’s government legislation can sometimes hinder Mawared’s operations. “We are audited by a special state agency and sometimes, whenever we set out [on a new project] we have to get a cabinet resolution to do so, which can sometimes delay things.”
Describing Abdali as the anchor project that will attract global businesses to Jordan, Hamdan believes the next ten years will see a surge of multinational businesses looking to set up in Jordan — although he admits the country is only now gearing up as a business hub. “There was a lack of high-end offices in Amman for many years,” he says. Looking forward, the ongoing economic growth of Jordan hinges on “the provision of off-site infrastructure,” according to Hamdan. “The government in Jordan is trying to secure infrastructure that will [attract] developers. It’s been a rough road but we have made a lot of progress so far,” he says. While land prices in Jordan may be relatively low compared to other areas of the region, they are definitely on the up, as more and more developers look to cash in on the emerging Kingdom. “Land prices will continue to rise, only in areas where they are allowing high-rise buildings to go up, and this makes it much more feasible to take advantage of the market price.”
In fact, 2005 saw land prices in Jordan increase by 90%, with an 8% climb in construction activity, while last year saw a 20% increase in prices. With projects worth US$8.4bn being built in Jordan in 2006, these sharp rises are clearly not deterring developers from entering the Kingdom however.
As Mawared, the Jordanian government and the King continue to focus on building Amman into an international business hub, this figure could well be surpassed in 2007. And, if Hamdan’s foray into the Gulf is a success, this year could see even more homegrown Jordanian enterprises taking their businesses on the road to globalisation.
Jordan in numbers:
• Last year saw US$8.4bn worth of property projects being developed in the Hashemite Kingdom of Jordan.
• The Kingdom’s property sector grew by 40% in 2006 to reach a value of US$6.9bn compared to US$4.9bn the previous year.
• The nation’s largest property developer, Mawared, has projects worth up to an estimated US$1.5bn.
• Mawared’s Abdali project will cover 30 hectares and comprise a built up area of 1,000,000 sq m.
• With a population of 5.9 million, Jordan has GDP per capita value of US$4900 according to the CIA World Factbook.
• The KSA will be the biggest contributor of monetary aid to Jordan this year, offering US$565m in financial assistance.
• According to the Centre for Global Development, the US — that will offer US$131m in aid to Jordan this year — provided the equivalent of US$70 of aid to every Jordanian citizen in 2005.
• In the first nine months of 2006, Saudi Arabia accounted for 20% of Jordan’s tourists with nearly one million visitors crossing the border, an increase of 21.1% on the same period last year.
• In 2006, Jordan had a GDP real growth rate of 4.6%.
• Earlier this month, a US$150m private equity fund for investment into Jordan was launched through a partnership between The Foursan Group and Deutsche Bank.
• Last year saw US$8.4bn worth of property projects being developed in the Hashemite Kingdom of Jordan.
• The Kingdom’s property sector grew by 40% in 2006 to reach a value of US$6.9bn compared to US$4.9bn the previous year.
• The nation’s largest property developer, Mawared, has projects worth up to an estimated US$1.5bn.
• Mawared’s Abdali project will cover 30 hectares and comprise a built up area of 1,000,000 sq m.
• With a population of 5.9 million, Jordan has GDP per capita value of US$4900 according to the CIA World Factbook.
• The KSA will be the biggest contributor of monetary aid to Jordan this year, offering US$565m in financial assistance.
• According to the Centre for Global Development, the US — that will offer US$131m in aid to Jordan this year — provided the equivalent of US$70 of aid to every Jordanian citizen in 2005.
• In the first nine months of 2006, Saudi Arabia accounted for 20% of Jordan’s tourists with nearly one million visitors crossing the border, an increase of 21.1% on the same period last year.
• In 2006, Jordan had a GDP real growth rate of 4.6%.
• Earlier this month, a US$150m private equity fund for investment into Jordan was launched through a partnership between The Foursan Group and Deutsche Bank.
"Amman has the human resources, the indigenous population, and has grown steadily over the years"
