Wednesday, February 25, 2009

Better security lifts housing market in Iraq

By Alan Gomez, USA TODAY BAGHDAD — Mohammed Aziz remembers back when he would come to his office and spend days without a single customer opening the door. The real estate broker would sit in the office with colleagues and relatives, wondering when the raging violence outside would ease up enough so people would get back to buying and selling homes. "In 2005 and 2006, it looked like a ghost city," said Aziz, pointing out toward the street bustling with reopened shops and heavy traffic. "Nobody came. We would come and sit and read newspapers. "Now," he says, smiling, "it's very good." In contrast with the rest of the world, parts of Iraq are experiencing a rare real estate boom thanks to the dramatic improvement in security here during the past 18 months, Aziz and others say. Home sales and prices have shot up in the past two years as wealthy Iraqis who fled the country during the worst years return, and those who stayed behind feel comfortable enough to open their wallets again. For example, Aziz said a 4,300-square-foot home in Baghdad's Mansour neighborhood — an upscale area that is home to Sunni and Shiite Muslims and saw some of the worst violence between the two sects — has doubled in price from about $170,000 in 2005 to $340,000 in 2008. There are no reliable nationwide data in Iraq for housing prices, and officials at Iraq's finance ministry declined requests for comment. Yet many neighborhoods of Baghdad are lined with "For Sale" signs, and real estate broker Saab Abdul Razak says they're finding an audience: "People are buying," he said with a grin. Despite the progress, the threat of violence still affects business. Three months ago, members of the Abdul Khadr family finally felt that the price offered on their home in the upper-class, Baghdad neighborhood of Yarmouk was high enough. After years of depressed prices, they sold the house in the religiously mixed area for $280,000. The three siblings — Hussein, Mohammed and Lamia — said they took their share of the profit to move to Tikrit because it was a predominantly Sunni city and they would feel safer there. Other obstacles are just now being removed. In Iraq, it is customary for people to purchase homes with cash. Buyer and seller usually meet at a real estate broker's office to sign some documents, and money changes hands. Razak, who works with properties in Yarmouk, said people were scared to even enter his office because insurgents would follow people out, knowing a large sum of money was there for the taking. "They were afraid to bring the money here," Razak said. Many Iraqis were forced to sell their homes or risk losing them to squatters or insurgents. During the height of the sectarian violence, Sunnis fled Shiite neighborhoods, Shiites fled Sunni neighborhoods and some left the country altogether. The fleeing homeowners, combined with low home prices due to the raging violence, actually created a unique business opportunity for Iraqis who were out of the country, Razak said. They bought up the homes to either flip when the market improved or to rent out as an investment property. Unis Mohammed Emin, a civil engineer who has worked outside of Iraq for several years, snatched up a 5,800-square-foot house in the western neighborhood of Ghazaliya in 2005 for $220,000. Emin bought the house from a Christian family who fled to Stockholm to avoid being targeted. He rents it out. "It was like gambling," said Razak, the broker. "You were standing on the edge of a mountain." On a recent day, Razak showed off a home he was selling. The refurbished home has four bedrooms, three bathrooms, a balcony and garden, sits across the street from a mosque and is in walking distance of a good private school, markets and restaurants. Razak received an offer of $350,000 for the house last month, but the family unflinchingly turned it down, wanting at least $380,000. Razak said he was certain there would be a higher offer. For those with less money, the story is less rosy. Nowzad Mohialdin, a retired Baghdad banker, said most homes for sale are far out of reach for regular workers, whose salaries remain low. Iraq's unemployment rate is at 18% and an additional 10% of the labor force works part-time but is looking for full-time work, according to a United Nations report released last month. "Two or three families will rent one house and share it," Mohialdin said. "The only people who can buy their own homes are army officers or business owners. Not workers." The only long-term answer will come in the form of large-scale housing projects funded by foreign companies, Aziz said. Iraq is struggling just to get its basic infrastructure online after decades of wars and sanctions, he said, so it will be a long time before the housing market is open to all Iraqis. "We need about 3 million homes for the Iraqis right now," he said. "We need big housing projects and big companies. We need foreign companies to invest in this country."


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