- For $2.1 million, the palatial estate on Abbassi Real
Estate's website seems to offer everything a buyer could want.
-
- Included in the price are eight bedrooms, marbled baths
with gold-plated taps, an indoor swimming pool and a spacious lot in a
swanky neighborhood of a bustling metropolis.
-
- The only catch: It's in Baghdad. And the very motivated
seller is hoping to unload it before some of the city's well-documented
stray gunfire and civic unrest finds its way to his own family.
-
- To Mustapha Abbas, the British-born son of Iraqi immigrants
who manages the Abbassi website, the idea of using the web to sell real
estate in his parents' homeland seemed like a logical idea a year ago.
Under Saddam Hussein's regime, few foreigners were able or willing to invest
in Iraqi real estate, and citizens were eager to sell properties at any
reasonable price.
-
- Now, more than a year after Saddam's ouster, Abbas concedes
he's seeing a bit of a real estate bubble. Prices in some neighborhoods
have gone up 500 percent since last summer. Foreign companies and Iraqi
citizens who fled the country under Saddam's regime are eagerly eyeing
land and buildings in central locales.
-
- "Everyone's got this idea in their head that despite
the craziness, the properties in the prime locations in Iraq are worth
a lot to foreign businesses," said Abbas. "You can say to someone
that there's so much instability and violence in their area. They say,
'So what, it's going to calm down.'"
-
- Since starting the website a little more than a year
ago, getting new listings has been a slow business. In a typical week,
Abbas, who also runs an import-export business, adds only about two listings.
-
- Given that the post-Saddam real estate market is quite
new, Abbas said it's difficult to establish what a typical home costs.
That said, he's had little trouble finding apartments in Baghdad's better
neighborhoods for around 50,000 pounds ($91,000) and high-quality homes
for between 100,000 pounds and 200,000 pounds ($182,000 to $364,000).
-
- As far as bargain-hunters are concerned, Abbas cautions
would-be investors to consider the difference in comforts one can expect
in Iraq compared with real estate in Western countries.
-
- First off, there's the matter of toilets. Beware, Abbas
warns, of homes listing only an "Eastern toilet," which is essentially
realtorese for a hole in the ground. Those who want a fixture that actually
flushes will have to pay a premium for listings that feature a "Western
toilet."
-
- There are other drawbacks as well.
-
- "Of course, water from the tap will make you very
ill unless you've gotten used to it," Abbas warns. Electricity works
about half the time, and nearly every Iraqi family who can afford it owns
a backup generator. Air conditioning isn't up to Western standards, and
phone service is notoriously unreliable. Ensuring that the property owner
is who he or she claims to be is also a tricky business, requiring some
investigation by the buyer or buyer's agent.
-
- Other inconveniences -- such as stray gunfire, kidnappings
and roadside bombings -- are well-documented in international headlines.
-
- Despite the political turmoil, it's not surprising that
real estate prices in Iraq have risen sharply following Saddam's departure,
said Stephen Malpezzi, director of the Department of Real Estate and Urban
Land Economics at the University of Wisconsin-Madison.
-
- According to Malpezzi, it's common for real estate prices
to surge in countries that have undergone a change in government that opens
up property markets to more foreign investors. In Russia, following the
fall of the Soviet Union in the early 1990s, properties frequently sold
for between 15 and 20 times the annual income of a typical Russian family.
A similar phenomenon occurred in parts of China following economic reforms.
In the United States, by contrast, families can buy a home in most of the
country for about three times their annual income.
-
- "There's often a period of price discovery where
people don't know what things are worth," Malpezzi said of emerging
real estate markets. Additionally, foreigners can expect to be quoted higher
prices than natives.
-
- For would-be investors in Iraqi real estate, the online
pickings remain quite slim, particularly those listed in English. In addition
to Abbassi, Viviun, an international real estate website, contains seven
properties for sale in Iraq, ranging in price from $250,000 to $1.5 million.
At aliraqmarket.com, a website with listings in Arabic and English, homes
with prices listed range from $250,000 to more than $600,000.
-
- For now, much of the demand for residential property,
according to Abbas, is coming from Iraqi citizens who fled the country
during Saddam's regime and are now thinking about returning. Developers
are also eyeing raw land, envisioning hotels and other large projects in
and around Baghdad.
-
- Abbas believes real estate prospects are also promising
in Karbala and Najaf, holy cities for followers of Shi'ite Islam that have
made headlines in recent months for violent standoffs. Once the fighting
ends, he believe the price-appreciation potential will be comparable to
the Saudi Arabian cities and Muslim holy sites of Mecca and Medina, where
real estate "is worth a hell of a lot because you're guaranteed a
tourist income."
-
- For now, Abbas says many Iraqi ex-pats are looking to
buy land, rather than an existing house, in their native country. With
land, they spend less up front and can oversee the building of a home that
meets their specifications.
-
- But while it may be tempting to look for a choice parcel
before prices rise further, Abbas believes most investors need not hurry.
Particularly when safety is a concern, he thinks it's better to buy under
calmer conditions.
-
- "My own mother has asked me to find a plot of land
in Najaf so she can retire there," he said. "Due to current conditions,
I've actually advised against it and asked her to wait a little."
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