In postwar Iraq, housing is scarce and pricey

September 24, 2011

The five-bedroom villa has a soaring living room with cathedral ceilings and is shaded by palm trees, but sits on a trash-strewn street that gets about eight hours of electricity a day. Worse yet, bombs still explode in the neighborhood with alarming regularity.

Asking price? $1.4 million.

As Iraq’s economy rattles awake after years of war, the country is experiencing a real-estate boom, with choice properties in Baghdad or in towns such as Karbala or Irbil selling for $500,000 to more than $1 million.

Years of violence, sectarian tensions and international sanctions have left the country with an acute housing shortage that is driving up prices, experts say. The growing country of 30 million needs about 2 million housing units, according to a United Nations estimate, and Prime Minister Nouri al-Maliki has made addressing the country’s housing shortage a top priority.

But change is coming slowly. Iraq is still largely a cash-based society and mortgage programs launched around the country are in their infancy. Its real-estate record-keeping system dates to the Ottoman Empire. And foreign investors leery about the country’s security situation have been reluctant to invest in large development projects — even though the demand is there.

Ordinary homebuyers have been priced out of the current market, bunking with extended family or riding out the boom in cramped rental apartments, feeling trapped and stuck.

“I can buy a house in Paris, but I can’t buy a house here!” lamented Saif al-Khayat, a journalist who works for the state-owned television network.

Mahir al-Sultani, a real estate broker in the Karrada district of Baghdad, said he rarely sees properties stay on the market for longer than 45 days, and the one with the $1.4 million price tag would probably be snapped up before renovations on it are complete.

“Two weeks later from now it will be sold,” he promised one recent afternoon.

‘You need dreams’

Mohameed al-Rubaye, a provincial council member and the head of the city’s Strategic Planning Committee, regularly talks up Iraq’s economic future to a stream of visiting foreign investors and journalists. Rubaye said addressing the housing crisis in Iraq is key to the country’s future .

“People are suffering!” Rubaye said. “Houses are so expensive! That’s why we need to expand!”

He was somewhat cheekily dressed for his interview in his family’s stationery store, accessorized with a blue newsboy cap, an enormous silver tank watch and a gray African parrot screeching at his side. His young nephew sat nearby, playing games on an iPad.

Rubaye recently helped the city strike a $1.5 billion deal with a French company to build a monorail through Baghdad — which, in a place where residents still must rely on generators to help power their homes, strikes many as wildly optimistic.

Indeed, some high-dollar development projects announced by the government in recent months have stalled or fizzled, and even in Iraq’s booming oil industry critics have said the government has overreached. Despite his dream for public transport for the capital, Rubaye concedes that the country’s land transfer laws need to be updated, rampant corruption halted and roads and other infrastructure built before progress can be made.

Iraq’s economy is expected to grow by 9 percent this year, up from less than 1 percent a year ago, making it one of the fastest-growing economies in the world. Yet Iraq remains one of the most corrupt and difficult places in the world to do business.

“We are moving ahead,” said Sami al-Araji, who heads Iraq’s National Investment Commission, which has a goal of building 1 million housing units in the coming months, but has only a quarter of those units under contract. “Sometimes it goes fast, and sometimes it goes slow. You need dreams so you can realize them.”

Real-estate roller coaster

Housing experts at the United Nations and elsewhere say the crunch is the result of a population that has more than doubled in the past 30 years and is expected to keep growing. During three wars and international sanctions, Saddam Hussein built 75 palaces for himself but precious little housing; the housing stock now is dilapidated and overcrowded.

Throughout the country, real-estate price data is hard to come by, although the Ministry of Construction and Housing estimates that an average Iraqi home outside of a city center is worth around $200,000.

Real estate has been a roller coaster over the past eight years, first skyrocketing in 2003 as investors gambled on a new prosperity after the U.S. invasion, then plummeting during the sectarian violence of 2006 and 2007, when many were forced to sell their homes for far less than value and flee.

These days in the predominantly Shiite neighborhoods in Baghdad, houses are snapped up by wealthy exiles returning from overseas, government officials and others who scored big during the war with lucrative contracts with the Americans — and even post-invasion looters.

“Old Baghdadian families find it difficult to accept these newcomers, but money talks,” said Faisal Qaragholi, a Baghdad business consultant. “If you pay the right price, they will sell.” Meanwhile, a quarter of the country lives in poverty, and more than 1 million Iraqis remain displaced from their homes because of the war.

Fruitless searching

Khairallah Fadel, a 49-year-old government contractor who makes $600 a month, lives with his wife, six children, daughter-in-law and an 8-month-old grandson in a tiny two-bedroom apartment in the Karrada district of Baghdad.

They fled here from their old neighborhood at the height of the sectarian fighting, after Sunni insurgents delivered an envelope to their house with a bullet in it.

They are safe but living in a place with no air conditioning above a bakery that can be unbearable during Iraq’s 120-degree summer days.

“I just want to get rid of this hot cave. I’m trying with my fingers and my teeth,” Fadel said. “I collect money and collect money and prices go up and up — and we find ourselves so far from our goal.”

Finding a house has become the central focus of this family’s days. Fadel said that weekend he and his son had visited — and rejected as too expensive — a $141,000 home so derelict it would have to be torn down and replaced. Then they went to visit a dank basement in the bottom of a row house. The price was right — $63,000 — but the family would have to pay thousands more to make the room habitable. His wife thinks the family needs a miracle from Allah to find a home.

Even though the space was musty and ringed with leaky sewage pipes, Fadel was considering buying it. “We just want to have something to be ours,” he said.

Special correspondents Asaad Majeed and Aziz Alwan in Baghdad and researcher Magda Jean-Louis in Washington contributed to this report.

Annie Gowen is The Post’s India bureau chief and has reported for the Post throughout South Asia and the Middle East.
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