BAGHDAD (AFP) — Property prices in Baghdad's residential districts have soared in the past year as security has improved, and estate agents say the trend is set to continue, given a serious shortage of homes.
"The price per square metre in the Zayuneh district has risen from 500 dollars in 2005 to more than 1,000 dollars today," says Abu Abbas, owner of Zayuneh estate agency in an upmarket area of Baghdad on the east bank of the Tigris.
"Sellers have become even greedier since the ratification of the security agreement with the United States," he said, referring to the pact setting a timetable for US forces to leave Iraq by the end of 2011.
"Many friends living in Arab and European countries have called me in recent days to ask me to find them a house. They say they want to return," Abbas said.
Although property prices are plunging in many other cities across the world amid the global economic crisis, the return of Iraqi refugees to Baghdad -- which has long had a housing shortage -- could unleash a ballooning of demand.
Several hundred thousand Iraqis are estimated to have fled since 2006 to escape vicious sectarian violence that erupted between members of the majority Shiite community and Sunni Arabs in the aftermath of the 2003 invasion.
For the moment, the numbers returning are still small.
"The square metre price has risen from 400 dollars in 2003 to 900 today," although paradoxically the number of sales is falling, said Abu Mustafa, who runs the Mustafa agency in the Karrada business district.
Most in demand are small properties and units of large converted houses, as potential buyers are mainly civil servants or people who work for foreign companies.
"We are dividing up each big house or plot because it is impossible to sell to one occupant. Even to rent out an apartment or house is an achievement as the rent for an average apartment is around 500,000 dinars (416 dollars) a month," Mustafa said.
The average salary in Iraq is 585 dollars a month.
Baghdad has around one million homes for its seven million inhabitants -- the municipal authorities do not have exact figures -- mostly individual homes as the city has relatively few apartment blocks.
In the Salhiya neighbourhood of central Baghdad, property prices have doubled in two years and rents have jumped by the same proportion, estate agent Iyad Abu Mohammed told AFP.
In the smart area of Mansur in the west of the city, Omar al-Ani, head of "Sun Eyes" agency, said it is mostly Sunnis, having fled Shiite districts, who are making purchases despite the rising prices.
Rental prices are 600 dollars a month for an average house and 400 dollars for an apartment, he said.
The buying process has become a real headache for would-be home owners.
"For two months I have been looking for a house in Rusafa (on the east bank of the Tigris) but prices continue to rise and each time I check they have gone up again," complained Oum Anmar, a 38-year-old woman.
"I have 140 million dinars (188,000 dollars) available and I can't buy a decent 150 square-metre house in the centre of Baghdad. Even if I buy part of a house, I would have to pay 12,000 dollars to build a kitchen, a bathroom and stairs," she said.
Bayan Dazai, the housing and construction minister, estimates that Iraq will need 2.5 million new homes by 2015.
"We must build 200,000 homes a year and that can only be done by private investors," the minister said.
The ministry is working on 28 residential developments across Iraq. "Is that enough? No. What we are doing is only a drop in the ocean in solving the problem," Dazai said.
Copyright © 2009 AFP. All rights reserved. More »
