Capital Rides Property Boom

The rapid and dramatic rise in Baghdad real estate prices is one of the more unexpected side-effects of the new Iraq, offering profitable opportunities for some people, but frustrating the ambitions of many others to buy a home.

Land prices in the capital have rocketed by an estimated 200-300 per cent in just six months mainly because land ownership in the capital is now unrestricted and open to all.

In 1994, the government of Saddam Hussein passed a decree preventing the purchase of land in the capital by anyone not registered as a Baghdad resident on the country’s 1957 census.

That decision was supposedly intended to stem the flow of migrants into the capital from the surrounding countryside, but in practice it allowed Saddam and his cronies to buy up the city.

The law specifically singled out the Salaheddin governorate – which includes Saddam’s hometown of Tikrit – as part of greater Baghdad. That allowed Salaheddin residents to scoop up prime Baghdad real estate in the restricted market.

Saddam also freely distributed plots of land to members of his defence ministry and intelligence services.

But all that changed last September when Iraq’s Governing Council issued a new decree cancelling Saddam’s restrictions on land-ownership.

Taking advantage of the newly-liberated market – and driving up prices – is an influx of wealthy buyers from the Kurdish north and the Shia south, along with international organisations and returning Iraqi exiles.

Imad Ahmed Al-Jibori, owner of the Al-Burak estate agency, estimated that a house which last year would have sold for 20 million Iraqi dinars – around 10 million US dollars – now goes for 75 million dinars.

Imad said rental prices for houses and apartments have also rocketed, by some 50 per cent.

While few people criticise the ending of Saddam’s restrictions on the housing market, many express reservations about the long-term impact of the boom in prices.

School principal Ali Jabur said the sudden elimination of property restrictions will cause an uncontrolled rise in the capital’s population, and strain the already overburdened public services.

Jabur also fears that the flow of people, money and resources toward Baghdad will create comparative neglect elsewhere in Iraq. “The rebuilding will be concentrated in Baghdad only, and we don’t want that,” he said. “We want rebuilding all over Iraq.”

Others fear the sudden inflation of land prices will divert investment funds into a real estate bubble that will burst, squandering fortunes and depressing the market.

The most emotional complaints, however, come from aspiring homeowners who suddenly find themselves frozen out of the unrestricted property market.

“We have lost any hope of having a house in Baghdad for me and my family,” said civil servant Basim Waheed Jouny.

“I have four children and we live in a small room, and the high property prices are preventing us from buying a house and achieving our dreams.”

Jasim Karim Al-Taei is an IWPR trainee journalist in Baghdad.