Iraqi Housing Crisis Beckons

Foreign investment needed to revive floundering social housing construction programme.

Iraq may face a major housing crisis in the next few years unless it takes steps to encourage foreign investment in the construction of homes for the growing population.

The government, it seems, needs to battle corruption, bureaucracy and improve security in order to complete a development plan, designed back in 2006, that envisages the construction of two million housing units.

In 2006, Iraqi’s ministry of construction and housing announced it would pay for 300,000 housing units while, due to budgetary constraints, foreign investment funds would be sought for the additional 1.7 million units – all to be built by 2016.

Out of the 300,000 units, only 7,000 have been built so far with a final completion date for the rest set for either 2017 or 2018, two years behind schedule, Istebraq al-Shauk, senior deputy minister for construction and housing, said.

Meanwhile, around 20 per cent of Iraqis are either squatting, homeless or at risk of being made homeless, although exact figures are unavailable, Abdul Zahra al-Hindawi, spokesman for the Iraqi central bureau of statistics, said.

Building affordable housing units was one of the key demands made by Iraqi protesters in demonstrations throughout the country in February.

Last year, in a move interpreted as an attempt to attract foreign investors, parliament passed a law regulating investment procedures in Iraq, with the accent on curbing corruption and red tape.

However, investors and business leaders feel more needs to be done to establish political stability, tackle corruption, introduce reforms and improve security.

Basim Antwan, an Iraqi investor who has business interests in the Gulf, said, “It is a risk to invest money in Iraq, not only the housing sector, but in general because the political and security situation is so unstable.”

Basim Jamil Antwan, who serves as the deputy head of the Iraqi businessmens’ union, agreed, “Instability resulting from security and political tensions leads to paralysis of the economy as a whole. Investors will not risk investing their money here.”

Antwan also said the attitude of officials and unhelpful legislation put off investors.

“Bureaucracy and our current laws do not make for a healthy business environment. For example, a businessman needs several months to register his company or investment in Iraq,” he said.

He added that corruption may also be a factor in deterring investors.

Mahma Khalil, a Kurdish legislator who serves as a member of the parliamentary committee on economics, said, “We are still late in terms of [delivering pro-] investment legislation, we need to do more.

“We have the intention to amend several laws to attract investors to housing projects.”
Analysts also warn that the number of housing units proposed is insufficient, with demand outstripping supply at the population’s current rate of growth.

Al-Shauk anticipates that the population will grow between 2.7 to 3.2 per cent annually. According to United States statistics, Iraq’s population is estimated to be around 30 million people and will reach the 35 million mark by 2016.

Asaad al-Aqoli, an economic expert, said, “The housing crisis in the country is getting worse at a time when Iraq’s population growth is getting higher. The number of housing units needs to be revised and increased, but the need is out of control.”

Under current plans, around 150,000 housings units are earmarked for Baghdad, where the need is greatest. The same number would be spread across Iraq’s provinces.

“We think the problem can be solved within several years, as we expect more investors to come to Iraq as the security situation starts to improve,” Salar Abdullah, the deputy head of the Iraqi national investment commission, said.

In Najaf, a stark reminder of the country’s housing crisis is the 50 or so families that are living the in the city’s cemetery.

Jabbar Ghait, 49, his wife and nine children have move into one of the large tombs in the graveyard because as an incense seller he doesn’t make enough money to rent a house.

“The living conditions [here] are kind of scary,” he said. “Two of my daughters decided to leave the family and move to their grandfather’s house.”

At night, he and his wife take turns to watch over the children and guard the entrance of the tomb.

“There is no electricity, no sewage system, no waste disposal - there is only one hole in the wall to allow air to get in,” he continued. “It is too hot here in summer, it’s hard to sleep the whole night.”

In Baghdad, the average cost of a two- or three-bedroom housing unit in a downtown area, such as Bayaa, is between 120,000 to 200,000 US dollars while in more affluent suburbs similar-sized homes can go for millions of dollars.

On the outskirts of the capital, thousands of squatters either occupy abandoned buildings or live in shanty towns, often facing the threat of eviction.

Basim Qasim, a 31-year-old father of three, lives in an illegal squatter camp in the east of the city, which is home to around 300 families, who have no electricity, running water or functioning sewage system.

He said he and his family had no other option but to live there.

“Where can I go? I am a poor, broken guy,” Qasim said. “I swear I do not have any money in my pocket, apart from one thousand Iraqi dinars (less than one dollar).