Friday, December 12, 2008

Iraq sees property boom rising out of the rubble

Business Intelligence Middle East A serious shortage of property in Baghdad is creating a mini real estate boom with prices soaring as security improves in the Iraqi capital. Estate agents believe that the return of refugees will ensure that demand continues to be high for many years. Several hundred thousand Iraqis are believed to have fled since 2006 and with the everyday situation becoming better they are starting to return. And the government is seeking private investors to help develop property with an estimated 2.5 million new homes needed by 2015."The price per square metre in the Zayuneh district has risen from US$500 in 2005 to more than US$1,000 today," said Abu Abbas, owner of Zayuneh estate agency in an upmarket area of Baghdad on the east bank of the Tigris."Sellers have become even greedier since the ratification of the security agreement with the United States," he said, referring to the pact setting a timetable for US forces to leave Iraq by the end of 2011."Many friends living in Arab and European countries have called me in recent days to ask me to find them a house. They say they want to return," Abbas added.In the Salhiya neighbourhood of central Baghdad, property prices have doubled in two years and rents have jumped by the same proportion, according to estate agent Iyad Abu Mohammed.Although property prices are plunging in many other cities across the world amid the global economic crisis, the return of Iraqi refugees to Baghdad is leading the demand.Abu Mustafa who runs the Mustafa agency in the Karrada business district of Baghdad said buyers are civil servants and people who work for foreign companies. Most in demand are small properties. But large houses converted into units are also popular."We are dividing up each big house or plot because it is impossible to sell to one occupant. Even to rent out an apartment or house is an achievement as the rent for an average apartment is around US$416 a month," Mustafa said. The average salary in Iraq is US$585 a month.Official figures are hard to come by but it is estimated that Baghdad has around one million homes for its seven million inhabitants. Bayan Dazai, the Housing and Construction Minister, estimates that Iraq will need 2.5 million new homes by 2015."We must build 200,000 homes a year and that can only be done with private investors," the Minister said recently. He confirmed that the Ministry is working on 28 residential developments across Iraq. "But it is not enough. What we are doing is only a drop in the ocean in solving the problem," Dazai said.