Even though the statistics show Jordanians are snapping up millions of dollars worth of Dubai real estate, it doesn’t mean cash is flooding out of Jordan to do so.
By Jawad J. Abbassi
Dubai’s property market has rebounded well from the dark days of the global economic downturn. The Dubai Land Department (DLD) reported the total amount of real estate transactions in the emirate in 2014 exceeded $59.3 billion through 53,871 transactions. The outlook for this year looks just as rosy, with transactions in the first quarter exceeding $17.4 billion through 11,603 transactions.
Many Jordanians are amongst the buyers. Last year, out of all non-Gulf Arab investors, the DLD said Jordanian investors made the most number of purchases with 1,028 transactions worth $680 million. While in the first quarter of 2015, the DLD said Jordanian investors also ranked highest in terms of the number of transactions at nearly $192 million worth of deals through 204 transactions.
So over in 2014 and the first quarter of 2015 combined, Jordanians accounted for 1,232 real estate transactions in Dubai with a total value of $872 million. Some media reports in Jordan suggested that Jordanians moved this amount out of Jordan into Dubai. A closer examination of the figures suggests otherwise.
Jordanian real-estate transactions in Dubai constituted 1.88 percent of the total number of transactions, and 1.14 percent of the total value of real estate transactions there in 2014 and the first quarter of 2015. As there are close to 200,000 Jordanians in the UAE, representing some 2 percent of its population, the share of Jordanians seems in line with their size relative to Dubai’s population.
The figures also suggest that Jordanians are bargain hunters. Jordanian real estate transactions in Dubai were quite smaller than the total average. The average transaction value for Jordanians was $711,000 in 2014 and the first quarter of 2015, 40 percent less than the total average of $1.17 million.
What the figures clearly suggest is that Jordanians working in Dubai are now quite eager to plough their savings into Dubai real estate market. Dubai’s liberal property rules that allow foreigners to buy easily into the market have clearly succeeded.
Mortgages tell the rest of the story. A full quarter of all real estate transactions reported in Dubai were via mortgages, representing 44 percent of the total value of the real estate transactions in Dubai—and a full 87 percent of total sales transactions—in 2014. Assuming that Jordanian buyers in Dubai relied on mortgages at the same rate, then it follows that Jordanians relied on UAE banks to finance close to 87 percent of their real estate purchases in Dubai. Moreover, it follows that Jordanian purchases of Dubai real estate totaled an estimated $459 million. In short, the DLD data shows that Jordanian residents of Dubai bought offices, houses, and apartments at an average price of a little over $700,000 to save on rent or serve as rental properties. The total purchases over 2014 and the first three months of this year were around $460 million, of which the great majority ($415 million) were financed by mortgages from UAE banks. But this money didn’t leave Jordan because it was never in the Kingdom to start with.
What we have is yet another example of Dubai’s success in convincing expatriates to invest their savings in their adopted home instead of repatriating all their savings to their home country.