Project: Jordan Affordable Housing

Duration: 18 months, Budget: $1.317.400
Donor: Governments of Switzerland and Denmark; UNHCR

New housing solutions are needed, for both Jordanians and for refugees.

The Jordan Affordable Housing Programme of UN-Habitat and the government of Jordan is a predominantly private sector funded solution that will deliver houses to lower-middle income Jordanians without the use of subsidy. It combines the credit capacity of Jordanian families interested to make an incremental investment in property, financing from local commercial and Islamic banks and the available resources of Jordanian developers and their construction capacity.

The Jordan Affordable Housing Programme seeks to enable the scaled delivery of small-sized housing units priced at 15,000-16,000 JD per unit across the Kingdom of Jordan that can be purchased by lower-middle income Jordanians (Jordanian families earning between 300 and 500 JD per month). These units can be occupied by the new owners or rented to low-income Jordanians or refugee households. They will be designed such that they can be expanded or combined to create 100–130m2 units in the future. This is a large-scale, private sector solution for both lower income Jordanians (through increased affordable housing supply) as well as refugee populations (through increased quality rental housing). The JAH Programme will raise the entire build cost from private sector capital (up to JD 450 million or $600 million for the delivery of 30,000 housing units) and as such will be an excellent example of a needs driven housing solution in Jordan, both for lower-middle income Jordanians seeking a home of their own, and for refugees and vulnerable Jordanian families in need of rental accommodation.

The refugee crisis is severely straining the absorption capacity of the Jordanian housing market. The sustainable development of cities, towns and other human settlements requires resilience – the ability to withstand crisis and difficulty. Jordan’s resilience is being severely tested by the crisis in Syria as all levels of government struggle to meet the needs of Jordanians as well as Syrian refugees. UN-Habitat’s Jordan programme is working to support and strengthen resilience in the areas of affordable housing and develop municipal capacity. The focus of the work is on sustainability and scale, using partnerships with the private sector to achieve lasting results for all Jordan residents and Syrian refugees.

The number of Syrians living in Jordan is estimated at 1.4 million, including around 630,000 refugees. While some 82 per cent of all refugees have settled in host communities, particularly in the urban area of hosting communities of Jordan, the remaining are hosted in refugee camps.

Even before the refugee crisis, Jordan had a persistent lack of affordable housing. The price for a house on the market today is well above the reach of lower middle income Jordanians. Although the construction sector is strong, delivery of housing supply has not been well aligned with demand, leading to an oversupply at the middle and upper end of the market but a lack of affordable housing for the lower middle and lower income market. The refugee crisis has worsened an already existing affordable housing shortage.

The Programme has two phases:

Phase 1 - 2014-2016:

With generous support from the Governments of Switzerland, Denmark and UNHCR, the JAH Programme has been able to make strong progress on analysis, perception change and partnerships and will create the formal structure to which all partners will contribute as well as deliver a number of demonstration houses.

A demand survey in eight governorates (excluding central Amman), undertaken at the start of 2015, has confirmed that there is a very high demand for affordable housing of this type (around 500,000 households), and that both the price and the size of this proposed housing unit would be very acceptable to the target market.

Local banks can offer 10 or more years of financing for 80% (and potentially up to 100%) of the purchase price at market rates. Currently the repayment amount over 10 years for a 13,000 JD grant, whether from a commercial or Islamic bank, would be around 150 JD per month. The survey indicated average monthly rental rates outside Amman are 145 – 150 JD, so a buyer would pay essentially the same amount to be an owner as they would to be a tenant if they are currently renting. Alternatively a purchaser should be able to fully offset the cost of financing if a tenant family were installed.

Following a design competition held by the Jordan Engineering Association, a house design has been selected by the programme. Work is underway to build demonstration units of this design in 4 locations (Karak, Amman, Dhleil, Ramtha) to enable people to see a 65m2 house firsthand, as well as the space created when it is expanded to both 100 m2 and 130m2. These demonstration units, paid for by the programme and situated on land provided by the four municipalities, are expected to be completed in early 2016. At the same time, discussions are ongoing with a number of developers and municipalities about the possibility of undertaking one or more pilot projects. These projects will test the viability of the entire affordable housing delivery proposition at scale, from availability of funding - for suitable serviced land and construction, to permissions, preparation and construction at expected cost, to buyer demand and availability of finance for purchase. The first phase is expected to end in April 2016.

Phase 2 - 2016-2018:

I The second phase of the programme will deliver “proof of concept,” combining all the separate stakeholder agreements into two pilot projects that deliver up to 200 units of affordable housing. The pilots will be supported by several related activities including: (i) marketing campaign to promote the concept with local Jordanian families (as buyers) and with potential tenants (including Syrian refugee and vulnerable Jordanian families), developers, contractors and financial institutions; (ii) using the demonstration houses from Phase I as technical information hubs to provide borrower education training, information on designs to potential participants; (iii) provision of technical support to municipalities and ministries on affordable housing policy, public private partnerships, green technology and urban extension planning; (iv) establishing an affordable housing entity, including an agreed structure and staffing plan, a business plan, and the development of an operational policies and procedures manual, including appropriate measures to ensure the protection of vulnerable renter groups, including Syrian refugees.