Jordan's growing coastal city Aqaba continues to attract investment

While most business activity is still concentrated in and around Amman, as Jordan’s only seaport city, Aqaba plays an important role in the economy. Since the decision to turn the coastal port city and its surroundings into a special economic zone was announced in 2001, its significance as an economic base and tourist destination has grown.

Aqaba borders both Israel and Saudi Arabia, 360 km to the south of Amman on the Red Sea’s north-eastern tip, and extends to the territorial waters of Egypt. The city has a long tradition of being a regional centre for trade going back to 4000 BCE, with the Aqaba Special Economic Zone (ASEZ) serving as the catalyst for recent large-scale expansion.

Regulatory Bodies 

The Aqaba Special Economic Zone Authority (ASEZA) is responsible for the management and development of the special economic zone, which covers an area of 375 sq km, including the entire 27-km Jordanian coastline. As an administratively and financially independent organisation, ASEZA is empowered with regulatory, managerial, fiscal and economic responsibilities for the zone. The overall aim is to offer one-stop-shop assistance to businesses covering all investment needs.

Another key agency is the Aqaba Development Corporation (ADC). Launched in 2004 with the task of accelerating the economic growth, it is the central development arm of the ASEZ and is owned in equal parts by the central government and ASEZA. The ADC is in charge of the development and has management rights of the Port of Aqaba, Ports Community projects – such as the Sheikh Sabah Al Ahmad Terminal for liquefied natural gas (LNG) launched in 2015 – King Hussein International Airport (KHIA) and strategic parcels of land in ASEZ. It is also tasked with attracting new investments and implementing the ASEZ’s master plan, which runs to 2020.

Strategic Planning

The initial ASEZ master plan was adopted in 2001 and divides Aqaba into five special areas for the promotion of urban, tourist, commercial, academic and other investment sectors. The are the Aqaba town, the port areas, the coral coastal zone, the southern industrial zone and the airport industrial zone. The plan also includes a sixth area pertaining to environmental zones made up of coral and nature reserves, and archaeological and beachfront areas, aimed at preserving natural resources within the development framework.

Strategic Goals 

Firm investment and growth targets were established in the initial stages of the master plan’s implementation, but these were quickly surpassed. One of the key goals was to attract $6bn in committed investment by 2020; however, by 2008 it had attracted $18bn, and as of 2017 there was over $20bn of investment in Aqaba. While the latter figure was committed investment with specified obligations, there was $10bn in realised investment – in tourism real estate and port development. In the port alone, $1bn was pledged in the three years through to 2017 to develop the surrounding waterfront community. Having exceeded many of its investment goals, expectations in other areas are well on track to being met. Aqaba authorities set the goal of reaching 250,000 inhabitants by 2020, and in 2017 the population reached 200,000, with the number of residents more than tripling since 60,000 in the late 1990s.

Speaking at an industry conference in October 2017, Nasser Shraideh, chief commissioner of ASEZA, reported that local authorities were currently planning to attract $10bn worth of investment by 2025, creating an additional 30,000 jobs. Shraideh also said that Aqaba expected to host five logistics hubs by 2025 – up from two today – with plans to expand the number of tourists from 600,000 in 2017 to 1.5m by 2025. Hotel rooms are expected to increase from 4650 to 12,000 over the same period, while the Port of Aqaba is targeting an annual capacity of 2m containers, up from 875,000. “Bringing more added-value industries and services to Aqaba and across the country will strengthen the backbone of our economy, create jobs and give guarantees to potential investors,” Shraideh told OBG.


One of the key reasons behind the success of ASEZ has been its favourable business environment. Companies established in ASEZ benefit from a corporate income tax rate of 5% on all profits, with the exception of banks and financial institutions, insurance and reinsurance companies, and road transport companies. With ASEZ primarily targeting logistics, warehouses, transportation and tourism, firms operating in these areas are exempt from Customs duties on imports of goods, and general sales taxes related to the import and sale of goods and services. Exemptions are also available for building, land and capital gains taxes. There are no foreign equity restrictions on investments in tourism, industry, retail and other commercial services, with 100% foreign ownership permitted. There are likewise no foreign currency restrictions, with full repatriation of profits and capital possible. More relaxed labour regulations also allow for up to 70% of the workforce to be foreign labour. In February 2017 it was reported that companies offering financial, legal or technical services within ASEZ would be exempted from income tax if 60% of their operations are within the zone.

Air & Sea

Aqaba’s economic importance is heavily linked to its connectivity within the greater region, with the ASEZ’s seaport and airport of particular significance for broader growth. Operated by the Aqaba Company for Ports Operation and Management, the Port of Aqaba has a capacity of 28m tonnes of cargo per year and is able to accommodate 410,000-tonne vessels.

The port has undergone a major modernisation and expansion in recent years, with new facilities and more efficient systems put in place (see analysis). “Aqaba port has been working hard to improve the clearance process, and the next step is to benchmark Dubai and Singapore ports in order to remain a competitive player in the region,” Steven Yoogalingam, CEO, Aqaba Container Terminal, told OBG.

Measuring 1.7m sq metres, the port consists of a 12-berth main port, used for general cargo, grain and phosphate exports; a seven-berth middle port, which comprises of a passenger terminal, and container and floating roll-on/roll-off berths; and an industrial port in the southern part of the facility, which has an oil jetty, as well as timber and industrial berths. In late 2016 the government approved a third phase of expansion at the port, which will be built in parallel with ongoing work on the second phase.

Flying High

Officially inaugurated in 1972, KHIA is managed by the Aqaba Airports Company (AAC), which was established in July 2006 under the supervision of the ADC. KHIA has an annual capacity of around 2m passengers and is currently home to a 260-sq-metre terminal building, a civil aviation academy, a single runway, a private aircraft hangar, a freight facility and maintenance areas.

In the first nine months of 2017, the airport accommodated 1762 carrier fights, up from 1737 over the same period of 2016, with almost exactly half being domestic flights and half international flights. Meanwhile, 95,120 passengers arrived in the city on a total of 910 chartered flights, up 115% yearon-year (y-o-y). In June 2017 Royal Wings announced it was launching biweekly, direct flights between KHIA and Al Maktoum International Airport in Dubai.

The Jordan Economic Growth Plan 2018-22 calls for the development of KHIA for both passenger flights catering to the tourism sector and cargo shipments, with around JD100m ($141.1m) having been invested in its upgrade as of June 2017. “Infrastructure improvements conducted since November 2016 have achieved some results. Nowadays, the cost per passenger stands at €5.50 ($6), which is one of the lowest in the region,” Bashar Abu Rumman, CEO of AAC, told OBG. He added that efforts are under way to become a maintenance centre and a hub for spare parts, with the next step being to provide these services for Boeing and Airbus aircraft. In 2015 UAE-based Al Baddad Holding began work on a $75m aircraft maintenance centre at KHIA.


Despite the regional uncertainty caused by unrest in neighbouring nations, the number of companies setting up shop in Aqaba has been steadily growing over the past few years. One of the key areas for industrial development is the 1.7m-sq-metre Aqaba International Industrial Estate (AIIE). Located east of KHIA, the estate is run by PBI Aqaba Industrial Estate, which is responsible for funding, planning, development and marketing the AIIE under a 30-year concession agreement. Companies operating within the AIIE benefit from the favourable tax incentives offered to companies in the ASEZ, while receiving assistance in obtaining operating and building permits, company registration, employment, and Customs and local partnering guidance services. The AIIE offers open lots, fully serviced land and finished buildings for lease or sale.

Traditionally, companies operating in the AIIE were largely involved in metals, engineering, plastics and food industries; however, these have now been joined by high-tech manufacturing and garments companies. “We have signed over 100 contracts, worth almost $500m in total investment, creating jobs for more than 2000 people.

“When the site is finally completed in about five years’ time, we will have 200-250 companies and investment close to $1bn, generating employment opportunities for over 5000 people,” Sheldon Fink, CEO of PBI Aqaba Industrial Estate, told OBG. While older parks in Jordan continue to have a larger footprint, according to Fink, the AIIE has led overall performance over the past 5-10 years.

In September 2015 an memorandum of understanding was signed with the Shenzhen Chamber of Investment in China to develop and operate an industrial and logistics estate in the southern area of ASEZ. With an initial investment of $700m, the Shenzhen Aqaba Estate will be managed as an expansion of the AIIE and is targeting the creation of 2500 jobs.

With projects such as these, the expansion of the industrial footprint of Aqaba has lead to a growing need for a steady supply of human resources. “A lot of work still needs to be done in regards to vocational training. In Aqaba we have seen some recent improvements with upskilling the labour force, but this is still a work in progress,” Fink told OBG. “There is a real need for modern job training programmes,” he added.


A number of companies are drawn to the region’s logistics potential. “Logistics should be the priority in Aqaba, it has the capability and prospects to become a one-stop-shop like Dubai thanks to its location and infrastructure works,” Sharif Kamal, CEO of the National Real Estate Company (NREC) Jordan, told OBG.

Formerly known as Aqaba National Real Estate Projects Company, the NREC Jordan was founded in 2006 as the developer of the ADC Warehousing and Industries Park (ADC WIP). Also known as the South Project, the ADC WIP is a 1.5m-sq-metre development focused on logistics and warehousing, located 12 km south-east of downtown Aqaba. It has 60,000 sq metres of warehousing units, as well as 500,000 sq metres of serviced and developed land plots, according to ADC figures. NREC Jordan, which is 70% owned by Kuwaiti company NREC and 30% by the ADC, is also responsible for the North Project, located 2 km east of KHIA, which has a total area of 534,000 sq metres. Work on the project is expected to start by the end of 2018.

It Takes A Village

The Aqaba Logistics Village (ALV) also offers warehousing, logistics and cargo support services from a site adjacent to Aqaba Container Terminal. The project was conceived to fulfil a vision of establishing ASEZ as a regional centre for logistics and cargo support services. The project is being developed in phases, with the 140,000-sq-metre Phase I completed in 2009, comprising a container freight station, distribution centre, a hard stand, asphalt open yards and a service centre. Phase II, was completed in 2015 and covers an additional 120,000 sq metres, adding open and shaded storage space, and a multipurpose warehouse for cross-docking, storage and distribution.

Phase II has seen a slower pick up than Phase I, although company officials believe that the potential reopening of trade with Iraq and Syria in the near future could boost this. As such, Phase III, which is in the early stages of planning and implementation, will cover 220,000 sq metres and potentially include bespoke warehouses and additional tailor-made developments under long-term agreements. “Phase III will include some special warehouse features to help attract major companies to the project. The end goal is to develop Aqaba as a premier cargo hub for Iraq and the Levant,” Yazan Al Jalamdeh, sales manager at the ALV, told OBG.

Another development set to bolster Aqaba’s image as a logistics centre is the Golden Triangle Logistic City. Being developed by a group of private companies in cooperation with the ADC, the JD20m ($28.2m) project aims to offer comprehensive logistics services. The project is home to a 260,000-sq-metre building and 140,000 sq metres of land for Customs services, making it the biggest development of its kind in the region, according to the project’s CEO, Mohammad Shwaikini.

One of ASEZ’s main challenges is to promote regional and global awareness of its strategic position and offerings for businesses, especially those looking to export throughout the region. “The benefits of operating out of Aqaba are still not well known. We provide competitive regulations and benefits, but we have to concentrate more on marketing,” ALV’s Al Jalamdeh told OBG. “We need more campaigns and events. We have attracted key global names, but we need to boost the number of firms using Aqaba as their centre of operations.”

Regional Role

Aqaba’s strategic location means that it is a relatively short journey by land or sea to a number of countries. Backed by Saudi Arabia, one flagship regional development is the Neom project, a $500bn, 26,500-sq-km industrial zone along Saudi Arabia’s Red Sea and Gulf of Aqaba coastline. The project will connect Asia to Africa by creating a special zone spanning Saudi Arabia’s borders to Jordan and Egypt. The zone is expected to strengthen the economies of the three countries, enhance trade and open new markets for their exports.

Aqaba is also hoping to benefit from the future reconstruction of nearby Iraq and Syria. “The perspective rebuilding of these countries could be very positive for Aqaba, as it plans to assist as a logistics centre for the upcoming reconstruction period,” AAC’s Rumman told OBG. In August 2017 Jordan’s government reopened the Karameh border crossing with Iraq, which had been closed in 2015 due to security concerns. The border will initially be open only to passenger traffic, but there is a hope that trade can resume in the near future.


Aqaba has its own 1250-MW thermal power station, which provides electricity to domestic users and the region, as well as a 13-km underground cable that supplies ASEZ with power from Egypt. In August 2015 the Sheikh Sabah Al Ahmad Terminal opened, which is used to pump LNG from Aqaba to electricity generating stations across the country. The terminal cost $65m and was financed by the Kuwait Fund for Arab Economic Development.

With an output of around 350m standard cu feet per day, the LNG project is expected to further contribute to the development of the local and national economy while securing and diversifying Jordan’s supply of gas. Following repeated cuts to the natural gas supply from Egypt, and a complete halt to supplies in early 2014, the country switched to importing diesel and heavy fuel. However, Jordan is still heavily reliant on LNG, and as of August 2016, 82% of its electricity was being generated using imported gas, according to the Ministry of Energy and Mineral Resources. Around the same time, the National Electricity Company estimated that the Aqaba terminal would save Jordan JD600m ($846.4m) by the end of 2016 alone.


Rising in tandem with economic and population growth has been water demand. While the nearby Disi sandstone aquifer supplies the region with approximately 17.5m cu metres of water per year, according to the ADC, significant ongoing efforts have been made to develop additional supplies. In March 2017 Jordan’s first water desalination plant opened, which will desalinate water from the Red Sea. The Aqaba plant was constructed by Arab Fertilisers and Chemicals Industries on a seven-year build-operate-transfer contract. The facility is expected to produce 5m cu metres of potable water per year, to be used for domestic consumption as well as agricultural and industrial needs. According to the Ministry of Water and Irrigation, this will help Aqaba meet its water requirements until 2035, with the largest portion of the water – around 70% – to be pumped into the Aqaba Water Company network and distributed to end consumers.

Real Estate

Several major real estate and infrastructure projects are under way to cater to residents needs. These will have major implications for the housing sector and the reputation of Aqaba as a tourist destination. Notable projects include Marsa Zayed, named in memory of the late Sheikh Zayed bin Sultan Al Nahyan, former president of the UAE and ruler of Abu Dhabi. The $10bn redevelopment project is being built on 3.2m sq metres of waterfront property and features a marina, Aqaba’s first cruise ship terminal, hotels, apartments, villas, commercial spaces and a 2000-person capacity mosque. Marsa Zayed is being developed by Abu Dhabi-based investment and development firm Eagle Hills Properties.

Eagle Hills is also developing Saraya Aqaba, a $1.5bn mixed-use project with a marina, waterpark, apartments and villas, as well as commercial space and hotels. Being built around an artificial lagoon, Saraya Aqaba will feature upwards of 850 residential units, four five-star hotels operated by Marriott International and Jumeirah Hotels & Resorts. The development will also be home to an open-air amphitheatre and the Al Multaqa Conference Centre to cater to a burgeoning meetings, incentives, conferences and exhibitions industry. Eagle Hills bought out the project’s previous developer in 2015, after the project had been hit by more a decade of delays.

Ayla Oasis Development Company is currently working on a $2.5bn waterfront property covering 4.3m sq metres and featuring an artificial lagoon, golf course, hotels, apartments and retail outlets. Meanwhile, the already established $1.2bn Tala Bay Resort, a 2.7m-sq-metre seaside destination, continues to be a draw for visitors and residents, featuring hotels, apartments, retail spaces and a marina.

The growing number of Aqaba residents will require additional services, and in March 2017 the ADC floated a tender for a 100-bed hospital project, as well as a 50-bed private hospital to be located on a 85,000-sq-metre plot of land in the north of the city, adjacent to KHIA. These developments will add to the city’s three existing hospitals: the six-storey, 212-bed Prince Hashim Bin Abdullah II Hospital, the Aqaba Islamic Hospital and Aqaba Modern Hospital.

Hotels & Hospitality

In addition to developments for permanent residents, significant tourism infrastructure is being built. As of late 2017 the city boasted 45 classified hotels housing 4213 hotel rooms and employing 4000 people. By 2020 there is expected to be an additional 4121 new hotel rooms across more than 12 new hotels. Hotels in Aqaba still primarily cater to domestic tourists, with 274,242 of the 433,408 guests between January and September 2017 being Jordanian. Russians made up the second-highest number with 87,641 visitors, a growth of 148% y-o-y, followed by Israel (18,068), Saudi Arabia (12,076) and Palestine (10,345).

Large-scale residential and retail developments are including hotels in the mix. In July 2017 Swiss-Belhotel International opened its first five-star property in Jordan, the Grand Swiss-Belresort Tala Bay Aqaba. This was followed a month later by the launch of its second hotel in the city, the 260-room Marina Plaza Hotel. In addition to its mixed-use residential properties, Ayla Oasis Development Company is working on two hotels to add to its 300-room Ayla Fort Hotel. The 200-room Ayla Spa Hotel and the 350-room Ayla Beach Hotel are set to open in 2020. Ayla Oasis also built the country’s first 18-hole championship golf course, which opened in 2016. The Saraya Aqaba mixed-use development features seven hotels, including the Westin Saraya Aqaba Hotel, which will open in June 2018, and the 1421-room Al Manara, a Luxury Collection Hotel set for completion by the end of 2018.

The area is also looking to promote itself as a cruise ship destination, with 22 vessels docking in the port in the first nine months of 2017. “Diversifying offerings in terms of leisure facilities and high-end real estate is a must to increase the attractiveness of Aqaba as a major tourist destination in the region,” Sahl Dudin, managing director, Ayla Oasis Development Company, told OBG.


Selected as the 2011 Arab Tourism Capital by the Arab Tourism Ministers Council, Aqaba is already capitalising on its beaches, coral reefs and year-round sun. Proximity to the protected desert wilderness Wadi Rum is also a big draw, as is the ancient historical and archaeological city of Petra.

ASEZA is also working on an ambitious plan to diversify tourism offerings to attract and retain foreign and local tourists. “We have the beach and hotel rooms, which is great, but it’s not enough,” Hani Al Mulki, then-chief commissioner of ASEZA and current prime minister, told media in May 2015, adding that the goal was to extend the average length of stay, aided by developments like the new golf course and conference centre. In May 2017 it was reported that Aqaba Marine Park would the network of nature sites, becoming the country’s first marine nature reserve. In November 2017 a disused military transport plane, donated by the Jordanian Royal Air Force, was lowered into the Red Sea to serve as an underwater reef habitat and dive site.


Aqaba has expanded at pace since becoming a special economic zone in 2001, and with a number of significant residential, commercial and industrial spaces and tourism projects under development, the economy looks set to continue to experience strong growth in the near future.

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