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Bleak outlook for Baghdad real estate
An arrow in central Baghdad points down a side-street to a glass door with a sign that reads: "Ali's Office".
- AP
- Published: 23:47 October 16, 2008
Baghdad: An arrow in central Baghdad points down a side-street to a glass door with a sign that reads: "Ali's Office".
That's where real estate broker Hadi Abbas Ali has greeted clients for 25 years. Now Ali is witnessing a boom of sorts in the Iraqi capital, where real estate prices have doubled in some areas.
But a sectarian shadow hangs over the boom. Buyers don't look for a river view or simply the best deal in town. Safety-conscious Shi'ites seek housing in walled-in areas dominated by their sect, and Sunnis stick to their own as well.
With little new construction afoot, there are far more buyers or renters than available homes in places like Karradah, a mostly Shi'ite area where Ali is hard-pressed to shrink his waiting list.
"The business in the area is not so good now because there is high demand but not much supply," said Ali. He noted that the monthly rent for a two-room apartment in Karradah, where attacks still occur, is about $400 (Dh1,470), double the price in 2006.
The vast majority of sales are strictly cash deals between buyer and seller since Western-style mortgages are unavailable here.
In the US-protected Green Zone, which houses the US Embassy and Iraqi government offices, there are plans for luxury hotels, a shopping centre and even condominiums, but uncertainty about Iraq's future will hinder full-bore development for now.
Property agents enjoyed a price surge after the US-led invasion in 2003, but insurgency quashed that. Anyone trying to sell a house in Baghdad could become a target of attack. If word got out that a property was on the market, a militia or gang might hunt for the owner in hopes of grabbing the payment. Militias often became landlords themselves, collecting rent.
The recent decline in violence has caused prices to rise again, as have the city's new concrete blast walls that help keep neighbourhoods safe and segregated.
Prices are higher now than they were before the US-led invasion. Under Saddam Hussain, Iraqis could buy property in Baghdad province only if they or their parents were registered there as residents in a 1957 census. Today, people can move and purchase more freely.
Generally, the most coveted areas are in eastern Baghdad, where Shi'ites have a majority and most Sunnis have left. A small house in Hurriyah, a neighbourhood to the northwest, costs about $42,000, nearly twice as much as a year ago. Rents there have increased by a similar amount.
The housing shortage is a national problem as well. US Major General Michael Oates, whose troops are responsible for areas south of Baghdad, said that there was a shortage of eight million homes in Iraq.
The Housing Ministry's current plan is to build a tiny fraction of that number, and Oates said Iraqi provinces should be given leeway to develop housing.
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