Journal of Modern Accounting and Auditing, ISSN 1548-6583August 2011, Vol. 7, No. 8, -
The Relationship Between the Real Estate Market and the Stock Market and Its Impact on the Strategic Planning Process in theJordanian Organizations
Ahmad M. Zamil
King Saud University, Kingdom of Saudi ArabiaAhmad Y. M. Areiqat
Al-Ahliyya Amman University, JordanThis study aims at the relationship between the real estate market and Amman Stock
Exchange, through the impactof three macroeconomic factors (GDP, inflation rate, and the population growth rate) and another three factors fromthe microeconomic indicators (interest rate, remittances of Jordanian expatriates, and the loans provided by theJordanian banks). The results show that the stock market is more sensitive to the microeconomic indicators than thereal estate market, and responds more rapidly than the real estate market for the changes in the microeconomicindicators. The study presents some recommendations for the Jordanian companies who own or manage anyinvestment portfolio to be aware for the existing relationship between the two markets, and to reflect this awarenessin their strategic Plans, Particularly in the regression atmosphere that causes by global crisis.
real estate market, stock market, strategic planning
The relationship between the real estate market (R.E.) and the financial stock market
as two investmentarenas within the markets of any economy has a great importance. The changes in microeconomic andmacroeconomic factors across the time affect the two markets in many areas such as, prices, demand, supply,and the cost, and the rate of return. For Jordan, the landscape or real estate in Jordan evolved transforming theface of major cities across the kingdom. The real estate industry showed significant changes during the fiveyears expressed by a large development projects ranging from residential, commercial, tourism, and industrialestates. This booming in the real estate sector can be attributed to several factors: (1) the growth of theJordanian economy; (2) investors from gulf countries with excess liquid, resulting from rising oil revenues whofound profitable opportunities in the Jordanian market; (3) political unrest in Lebanon and Iraq, increased the population in Jordan and the demand for housing and other services; (4) the wide base of young population inJordan created a natural demand for housing (Jordan investment board, 2008).But, almost since two years the real estate market in Jordan shows a sharp regression in both demand and
Ahmad M. Zamil, Ph.D., associate professor, Faculty of Administrative Science, Riyadh Community College, King SaudUniversity.Ahmad Y. M. Areiqat, Ph.D., assistant professor, Business Administration Department, Faculty of Financial and AdministrativeScience, Al-Ahliyya Amman University.