Minister asks UAE investors for help with housing crisis in Iraq

Around 2.5 million new homes needed but without help Iraq can build only a fraction of that number.

Iraq’s housing minister has issued an impassioned plea to UAE-based investors to help solve the country’s housing crisis.

The government has a total budget of around US$5 billion to spend over the next three years to attempt to relieve some of the country’s desperate housing shortage, said Mohammed Al Darraji, the Iraqi minister for construction and housing, at the Iraq Housing Summit in Dubai yesterday.

The Iraqi government estimates that Iraq needs to build 2.5 million new homes to accommodate demand by 2016 but that it will only be able to build about 130,000 of these by next year as much-needed overseas developers stay away from the oil-rich but troubled country which faces the aftermath of 40 years of under development and a decade of war.

Mr Al Darraji told the conference that the Iraqi government was paying up to $600 per square metre for new homes which it financed via the country’s $1bn housing fund.

“Investing in housing in Iraq would be a very secure investment for many reasons,” Mr Al Darraji said. “The most important reason is that you are guaranteed to sell your flats for prices which are very acceptable for you. It’s a new area of business. There’s an English expression that there are a lot of people walking around the swimming pool but I’m sure that whoever jumps in first will get the best advantage.”

The offer of rich rewards has already tempted a handful of UAE investors to take the plunge into Iraq. Abu Dhabi-based Bloom signed a deal last September with the Iraq National Investment Commission to build 50 per cent of the proposed $15bn Madinat Al Mustaqbal “City of the Future” scheme of 2,500 homes in Al Duhna on the outskirts of Baghdad. The developer is also working on a 40,000 housing scheme in Karbala, southern Iraq.

Emaar also announced in October that it was planning to develop a $3bn new Downtown project in the Kurdish city of Erbil which will comprise twin towers, houses, shops, offices malls and parks covering a total of 541,000 square metres.

And Damac Properties is also considering developing a luxury tower in Baghdad after signing a memorandum of understanding with the Iraqi government at Cityscape 2012.

Elsewhere, the South Korean investor Hanwha Engineering & Construction signed an $8bn deal to build the new satellite city of Bismayah 10 kilometres south of Baghdad.

“The American media call Iraq the new gold rush,” Luay Khairullah, the chairman Thu Qir Investment Commission told the conference. “In the list of countries ranked by wealthy resources, Iraq comes number nine in the world with reserves of $16 trillion. With a budget of US$138bn this year, that means we have money reserved for the next well over 100 years – just the government.”

But despite the offers of large scale rewards for developers many others remain hesitant, concerned by both Iraq’s byzantine bureaucracy, its sectarian violence and its complicated banking rules.

At least 50 people were killed in a string of attacks on Friday making it one of the deadliest days in the country since the beginning of the year.

“To be quite honest with you, Iraq is no heaven. It is not Dubai, it is not Doha, it is not Geneva. Regardless of what you are seeing in the media, Iraq is one of the most stable countries in the region excluding the GCC. Compared with other countries in the Middle East – Syria, Lebanon and Egypt – Iraq is sustainable politically and economically,” Mr Al Darraji said.

“Of course we see every day in the media car bombs and all these issues. If we compare these activities in Iraq the kind of activities in Nigeria for example, a lot of companies and investors come from Nigeria to Iraq. They say it is safer,” he added. “And a lot of people invest in Nigeria.”

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