JLL MENA real estate services in Iraq
The real estate sector in Iraq is currently undergoing a strong reshaping. After staying in the dark for years, Iraq is now breathing life again.
Baghdad, the hub of commercial and social activity, has been torn up by the highly unstable security situation and the uncontrollable chaos prevailing since the 2003 offensive on Iraq. Under such circumstances, private investments could not make their way into the city, leaving the property market in Baghdad in a very underdeveloped stage. Minimal real estate activity has been noticed in Baghdad in the past few years and very limited transactions took place. The poor infrastructure, the low production capacity as well as the lack of legal and regulatory framework have also contributed to the weak structure of the real estate industry in Baghdad. Large scale projects remain almost non existent given the high costs and risk of making investments and developments in the city. Nonetheless, as signs of decreasing violence and enhanced security started to emerge in 2008 following the approval of the withdrawal of the American Army, the city has been propelled under the spotlight and has come on the radar of many local and foreign investors looking to capture some future growth. Foreign investments have started to flourish slowly and private investors are responding positively to the encouraging progress detected. If security prevails, the real estate sector in Baghdad is projected to witness a boom in demand, especially with the return of many Iraqis now in exile. The revival of the oil and gas industry, which benefited also from the reopening of the Northern pipeline to Turkey, will also contribute in raising the investors’ appetite. Investors’ interest has already been manifested with Al Maabar launching a large mixed-used development and the announcement of the opening of some five-star hotels in Baghdad. In December 2008, Rotana hotels, which manage a five-star property in Erbil, signed a deal to manage a luxury hotel in Baghdad, signalling the start of a new era for the property and hospitality market in Baghdad.
While the story of Baghdad was more about agony and resurrection, other regions in Iraq were enjoying a healthy prosperity. The Kurdistan region, located at the North of the country, knew a very different fate than the capital. The region’s stable and more secure environment has resulted in a strong growth and has encouraged the flow of private capitals and foreign investments. The real estate sector has been flourishing supported by a well developed infrastructure. Most real estate projects have targeted housing, hospitality and educational institutions. Some high profile projects, fuelled by foreign investors are also being developed in the region such as Bonyan’s $3Bn investment in Suleimaniyah and Damac Properties' $15m mega project in the city of Erbil.
If the stable security situation is maintained, the country is expected to enter a revival phase, characterized by a healthy economic growth, a recovery of oil and non-oil activities and better standards of living. Nonetheless, a dark shadow is created as the country remains vulnerable to the impact of the global financial crisis and the precipitous fall in oil prices that threaten the external outlook of Iraq.