Iraq property value soaring

Baghdad property booms as speculators gamble on war

By Philip Sherwell in Baghdad and Olga Craig in Kuwait City


Iraq is enjoying an unexpected property boom as canny Arabs snap up undeveloped sites in the most desirable areas of Baghdad and Basra.

Iraqis, and their neighbours in Kuwait, are gambling that when Saddam Hussein has been deposed the sites will become prime development sites for hotels, clubs and luxury homes.

Last week, empty plots in Baghdad were selling for $250 a square metre (£15 a square foot) - an increase of 20 per cent in recent months - as hopes rise that the wars and sanctions that have crippled the economy will come to an end after more than two decades.

In the past year, prices in some of the city's more upmarket suburbs, where foreign diplomats, businessmen and United Nations officials would live in a post-Saddam Iraq, have risen by up to 50 per cent. A six-bed villa in the Mansour district now costs up to $250,000.

Riad Shaban, who has worked as an estate agent in the Baghdad property market for 30 years, says that he cannot find enough property for aspiring clients.

"Land is the best investment because buildings can suffer things like rockets and missiles," explained one of his clients over sweet tea in Mr Shaban's Baghdad office.

If his clients could not find land, Mr Shaban said, they invested instead in upmarket houses. These sell for about $350 a square metre (£20 per square foot). Similar houses in central London cost about £800 a square foot.

While Iraqi buyers will not say openly that the property boom is based on the hope that Saddam will go, it is their unspoken belief. "Things are going to get better but I cannot tell you why," said another estate agent. "I am too scared to say such things."

Before becoming a pariah nation after the invasion of Kuwait, Iraq - where alcohol is permitted - was the playground of rich young Arabs from Saudi and Kuwait.

They flocked to its clubs and casinos, eager to avoid the strict Islamic controls of their home states. Along the boulevards and bustling streets of Baghdad and Basra they partied hard by night before slipping back across the border to the strict austerity of their daytime lives.

Now, wealthy Kuwaitis are again bidding for property just across the Iraqi border, even though the area around Basra will form the front line of any military action.

"At the moment Kuwaitis go to London and Beirut to buy apartments," said Waleed Al-Karim, an estate agent in Kuwait City, where the economy is booming. "But after Saddam has gone, they will buy in Basra. It is only 90 minutes' drive from here, ideal for a second home."

Mr Al-Karim said that Kuwaitis were becoming more reluctant to buy property in London because of increasing Western prejudice against Muslims.

"In a new Iraq they would have the weather they want, the liberal Western way of life they seek on holiday and, of course, the added attraction that they can speak their own language," he said.

On Baghdad's Arasat Street, where upmarket boutiques jostle for space with the city's best restaurants, there is little sign that war is imminent. By day, the city's wealthy elite shop for designer clothes and electronic gadgets; at night, diners search for parking spaces for their Mercedes and Chevrolets.

A construction boom is under way all along the street. The Nabil restaurant opened just two months ago and is already doing a brisk trade.

Its owner, Nabil Hanna, an urbane 40-year-old who also runs a chain of clothes stores on the street, laughs when asked if he ever contemplated postponing the project because of the threat of war.

"After 20 years of war and sanctions, we don't expect anything anymore. We just get on with our lives," he said.