Interview: Yousef Al Nowais
How have the regional unrest and the global economy affected the property development market?
YOUSEF AL NOWAIS: Despite the existence of some adverse political and economic conditions, the real estate market in the Middle East and North Africa (MENA) region continues to offer significant opportunities to property developers. For example in Jordan, the government has launched comprehensive economic reforms over the last decade to improve living conditions for the local population and attract foreign direct investment. In particular, policymakers in the kingdom have focused on improving the country’s tourism infrastructure through the construction of new hotels and mixed-use developments. Indeed, this is a wise strategy given the role tourism – which has multiplier effects across the economy – plays in both driving growth and helping to reduce unemployment.
In addition, by conducting several in-depth market studies, one observation that we have made about the property development market in Jordan, and especially in Amman, is that the sector has room for growth in the luxury suite segment.
For example, although occupancy rates at five-star luxury hotels in the capital have been average, rates for high-end suites within these hotels have been quite high, which points to strong demand.
What steps should property developers and other companies in Aqaba take to ensure that the region is effectively marketed?
AL NOWAIS: It is important that all stakeholders at Aqaba work in unison to promote the area to tourists and the international investment community, as a unified effort is more effective than disparate messages. In particular, our marketing efforts should concentrate on the business segment and the growing market for official delegations, both of which tend to produce more long-stay, value-added visitors. Also, some have recommended that stakeholders in Aqaba establish a private company to help organise all Aqaba-related promotions, an idea that should be seriously considered moving forward. Ultimately, success in Aqaba will be determined by a variety of factors. For example, we currently need a greater supply of hotel rooms, restaurants and entertainment facilities to stimulate demand for the Aqaba tourism product, which is currently missing some key pieces.
In the coming years we must also ensure that the business environment continues to benefit from the generous regulations and incentives put in place by the Aqaba Special Economic Zone Authority (ASEZA). Over the last decade under ASEZA’s leadership, Aqaba has been a successful model of decentralisation; that is, putting more legal control in the hands of investors and companies, and creating a more open businesses environment where the free market can flourish. In the coming years, we must endeavour to ensure that this model continues to remain in place.
What do you say to those who argue that real estate is not a productive sector of the economy?
AL NOWAIS: Some argue that, on a macroeconomic level, building factories or production facilities is more useful than building real estate. This line of reasoning is flawed. For starters, significant labour is required to create or maintain a real estate property, especially one that caters to tourists.
In other words, real estate projects can support job creation, which is one of the most crucial issues currently facing Middle Eastern economies. Further, real estate projects in the hospitality segment bring tourists, which bring in foreign currency reserves and boost sales tax collection.
Another related issue is that, for cultural reasons, young people in Jordan have been reluctant to work in the hospitality or real estate business, or, more generally, in service-oriented industries. However, this is starting to change, as more graduates come to understand that this line of work offers a number of highly desirable long-term opportunities to build a career.
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