This piece first aired in July, 2009, as part of the show, “Northern Prospects.”
- HOST: Though Iraq’s economy is still floundering, there is one region that has flourished since 2003: the autonomous Kurdish North. The economy in Iraqi Kurdistan has been so successful that Kurdish cities like Erbil are being transformed by a wave of construction. Kyle Goeckner-Wald brings us more on how stability and oil wealth have been fueling a real estate boom in the Kurdish region of Iraq.
KYLE GOECKNER-WALD: Damac Properties, an international real estate company, has recently released a promotional video of one of its newest projects: Tarin Hills.
TARIN HILLS PROMOTIONAL VIDEO: Tarin Hills is an ultramodern mixed use master-development that offers you the ultimate living experience, nestled amidst nature’s beauty. A gated community offering a delightful mix of Mediterranean style villas, town houses, and apartments that evoke the relaxed ambiance of the Italian countryside and the rolling hills of Tarin. This is the ideal choice for those who seek exclusivity.
KYLE GOECKNER-WALD: From the promotional video, one might expect Tarin Hills to be the latest subdivision in Florida or Southern California. But it’s not. Damac properties is headquartered in Dubai and its new ‘master-development’ is in the Kurdish region of Iraq.
Tarin Hills is just one of the many new real estate developments in Iraqi Kurdistan. In 2008 the Kurdish government estimated that the region’s real estate market was worth 10 billion dollars. Western-style subdivisions with names like ‘Dream City,’ and ‘American Village’ are sprouting up all over the region, along with the ubiquitous shopping malls and office complexes of suburbia.
Herish Mohammed is chairman of the Kurdistan Regional Government’s Board of Investment. He says that after years of repression and isolation, the region’s economy is thriving thanks to political stability and oil wealth. Now upwardly-mobile Kurds are demanding accomodations that reflect their new prosperity.
HERISH MOHAMMED: Now that economic development in this area is become to grow very fast, families are being expanded, so they need more houses. That’s why the need for the houses has been identified to need 135 thousand units in the next five years. This a part of the strong purchasing power within the community.
KYLE GOECKNER-WALD: Much of the real estate development is funded by foreign investors. Companies from the Persian Gulf, Europe, and the United States are all big players. Even Turkey, which makes no secret of its opposition to further Kurdish autonomy, is an eager investor.
Mr. Mohammed says that all this foreign investment is due in large part to a generous 2006 investment law. Foreign real estate investors can receive public land for free if they promise to develop the property and are also entitled to other rare privileges.
HERISH MOHAMMED: We are giving land for free according to the law and we allow foreigners for free home registration. We allow foreigners to have free ownership and full ownership of the properties and the activities. We provide ten years tax holiday, five years exemptions for all customs and duties for all the imported material. We are also allowing repatriation of capital anytime the the investor wants to do it. We are also allowing the investors to sell the property and take the money back to the country.
KYLE GOECKNER-WALD: Despite all these incentives, Mr. Mohammed admits that there are challenges to investing in the region. For one thing, the banking system is still very weak after years of isolation.
HERISH MOHAMMED: Well, the banking system is a problem. Not only for having the banks. We have the banks but the system is not decent. The banks operating in Kurdistan are mainly working on cash transfer and financing some small projects.
KYLE GOECKNER-WALD: Real estate development in Kurdistan has also been hampered by some of the more mundane aspects of life in Iraq. A spotty electrical grid and water system stand in stark contrast to the new ultra-modern developments. Tiina Kantola is a spokeswoman for the SterTower Project- a new office complex meant to house multinational corporations. She says that her company has had to compensate for the region’s poor infrastructure.
TIINA KANTOLA: For this kind of big office building it is necessary to have a very strong backup of generators. And that is why we are having two very high capacity generators. The one is idle and the one is always going on. So that is the only possibility to do it at the moment. Many of these features we must be responsible for ourselves.
KYLE GOECKNER-WALD: Another downside to the building boom is that those who already have money to invest inevitably have an advantage. Dr. Jaafar Khidir, a Political Science lecturer at Salahaddin University, is quick to assert that the development is benefiting all Kurds. However, he adds that the rich and well-connected are more capable of exploiting the real estate market.
JAAFAR KHIDIR: Only people who have large money, experience, could go to investment board to tell them, “oh, I want to build 2000 houses, please give me land.” Only rich people could do this. So we will see rich people getting richer and those people who are in vicious circle cannot break the circle because they are poor and it is not easy to make anybody rich. But the general income is higher, including those who are poor.
KYLE GOECKNER-WALD: Though the political future of Iraqi Kurdistan is still up in the air, the recent real estate expansion at least indicates that investors are hopeful about the Kurdish regions economic future.
For War News Radio, this is Kyle Goeckner-Wald.