Better security lifts housing market in Iraq
2009/02/25, 4:39 pm
Filed under: 1 | Tags: , , , ,
BAGHDAD — Mohammed Aziz remembers back when he would come to his office and spend days without a single customer opening the door.

The real estate broker would sit in the office with colleagues and relatives, wondering when the raging violence outside would ease up enough so people would get back to buying and selling homes.

“In 2005 and 2006, it looked like a ghost city,” said Aziz, pointing out toward the street bustling with reopened shops and heavy traffic. “Nobody came. We would come and sit and read newspapers.

“Now,” he says, smiling, “it’s very good.”

In contrast with the rest of the world, parts of Iraq are experiencing a rare real estate boom thanks to the dramatic improvement in security here during the past 18 months, Aziz and others say. Home sales and prices have shot up in the past two years as wealthy Iraqis who fled the country during the worst years return, and those who stayed behind feel comfortable enough to open their wallets again.

For example, Aziz said a 4,300-square-foot home in Baghdad’s Mansour neighborhood — an upscale area that is home to Sunni and Shiite Muslims and saw some of the worst violence between the two sects — has doubled in price from about $170,000 in 2005 to $340,000 in 2008.

There are no reliable nationwide data in Iraq for housing prices, and officials at Iraq’s finance ministry declined requests for comment. Yet many neighborhoods of Baghdad are lined with “For Sale” signs, and real estate broker Saab Abdul Razak says they’re finding an audience: “People are buying,” he said with a grin.

Despite the progress, the threat of violence still affects business.

Three months ago, members of the Abdul Khadr family finally felt that the price offered on their home in the upper-class, Baghdad neighborhood of Yarmouk was high enough. After years of depressed prices, they sold the house in the religiously mixed area for $280,000.

The three siblings — Hussein, Mohammed and Lamia — said they took their share of the profit to move to Tikrit because it was a predominantly Sunni city and they would feel safer there.

Other obstacles are just now being removed. In Iraq, it is customary for people to purchase homes with cash. Buyer and seller usually meet at a real estate broker’s office to sign some documents, and money changes hands.

Razak, who works with properties in Yarmouk, said people were scared to even enter his office because insurgents would follow people out, knowing a large sum of money was there for the taking.

“They were afraid to bring the money here,” Razak said.

Many Iraqis were forced to sell their homes or risk losing them to squatters or insurgents. During the height of the sectarian violence, Sunnis fled Shiite neighborhoods, Shiites fled Sunni neighborhoods and some left the country altogether.

The fleeing homeowners, combined with low home prices due to the raging violence, actually created a unique business opportunity for Iraqis who were out of the country, Razak said. They bought up the homes to either flip when the market improved or to rent out as an investment property.

Unis Mohammed Emin, a civil engineer who has worked outside of Iraq for several years, snatched up a 5,800-square-foot house in the western neighborhood of Ghazaliya in 2005 for $220,000. Emin bought the house from a Christian family who fled to Stockholm to avoid being targeted. He rents it out.

“It was like gambling,” said Razak, the broker. “You were standing on the edge of a mountain.”

On a recent day, Razak showed off a home he was selling. The refurbished home has four bedrooms, three bathrooms, a balcony and garden, sits across the street from a mosque and is in walking distance of a good private school, markets and restaurants.

Razak received an offer of $350,000 for the house last month, but the family unflinchingly turned it down, wanting at least $380,000. Razak said he was certain there would be a higher offer.

For those with less money, the story is less rosy.

Nowzad Mohialdin, a retired Baghdad banker, said most homes for sale are far out of reach for regular workers, whose salaries remain low. Iraq’s unemployment rate is at 18% and an additional 10% of the labor force works part-time but is looking for full-time work, according to a United Nations report released last month.

“Two or three families will rent one house and share it,” Mohialdin said. “The only people who can buy their own homes are army officers or business owners. Not workers.”

The only long-term answer will come in the form of large-scale housing projects funded by foreign companies, Aziz said. Iraq is struggling just to get its basic infrastructure online after decades of wars and sanctions, he said, so it will be a long time before the housing market is open to all Iraqis.

“We need about 3 million homes for the Iraqis right now,” he said. “We need big housing projects and big companies. We need foreign companies to invest in this country.”

Contributing: Khalid D. Ali


US real estate a bargain for Chinese
2009/02/17, 3:31 pm
Filed under: 1 | Tags: , ,

With U.S. home prices so depressed, the Chinese are coming
The Associated Press
updated 1:37 p.m. ET, Thurs., Feb. 12, 2009
BEIJING – Beijing lawyer Ying Guohua is heading to the United States on a shopping trip, looking not for designer clothes or jewelry, but for a $1 million home in New York City or Los Angeles.

He expects to get a bargain. Ying is part of a growing number of Chinese who are joining tours organized especially for investors who want to take advantage of slumping U.S. real estate prices amid a financial crisis.

“It’s a great time to buy because of the financial crisis, and houses in large cities like New York and Los Angeles will definitely go up in a few years,” Ying said. The home is an investment, but he’s also planning long-term: He hopes his 5-year-old son might use it if he goes to college in the United States.

While China’s ultra-rich have been buying property in the U.S. for years, the buying tours are new, made attractive by still-rising Chinese income levels and American real estate prices that have been falling for two and a half years.

More than 100 Chinese buyers have joined such tours since late 2008, according to Chen Hang, the China-born vice president of real estate at Fortune Group. The Pittsburgh, Pennsylvania, company shows foreclosed commercial property to Chinese buyers.

“The Chinese are going to seize the opportunity to take advantage of some great deals,” Chen said.

Ying, the Beijing lawyer, is one of 40 investors going to New York, California, Boston and Las Vegas on a Feb. 24-March 6 tour organized by Beijing-based SouFun Holdings Ltd., a real estate Web site. SouFun plans to show participants foreclosed properties priced at $300,000 to $800,000.

“We never thought these tours would garner such interest, but we’ve had an overwhelming response,” said SouFun CEO Richard Dai. “Before, we heard of Chinese or Hong Kong movie stars buying homes in the U.S., and now more and more Chinese can afford to have the same.”

The home-buying opportunities mirror a larger trend. Cash-rich Chinese companies are looking to buy resources made suddenly cheaper by the downturn or companies suffering under the global debt meltdown. On Thursday, the Aluminum Corp. of China, also known as Chinalco and the world’s leading aluminum producer, invested $19.5 billion in debt-burdened global miner Rio Tinto Group — China’s biggest overseas investment to date.

Because the authoritarian government has imposed controls limiting China’s exposure to international capital flows, the country has largely avoided the worst of the global financial crisis. Meanwhile, high-level incomes have continued to rise. China had the world’s fifth-largest population of millionaires in 2008 with 391,000, up 20 percent from the previous year, according to Boston Consulting Group.

But Chinese with money in the bank have few good investment options at home. Real estate prices have cooled and stock prices peaked in October 2007 after a two-year boom that saw shares rise six-fold in value. After years in which foreign money poured into China to take advantage of the hot economy, economists estimate that tens of billions of dollars began leaving the country in the last three months of 2008 as Chinese investors began bargain-hunting.

Chinese buyers are looking at both commercial property and homes to rent out or use on business trips. And the U.S. has plenty of unsold homes to offer — 3.67 million as of the end of December, according to the National Association of Realtors.

Many buyers are unfamiliar with U.S. markets, so they focus on well-known ethnic Chinese neighborhoods, according to John Wu, president of the Chinese American Real Estate Professionals Association in San Gabriel, Calif.

Lion’s Property Development Group in New York City organizes Chinese groups to visit New York homes. The company also treats visitors to Broadway shows and famous restaurants in hopes that they will take to the city and buy a $1 million to $2.5 million home.

Trips are pricey. Ying, the lawyer, paid $2,200 — nearly the equivalent of the annual income for many Chinese — plus airfare.

Participants in a 10-day January tour organized by Beijing-based Environment International Travel Agency had to show proof of an annual income of at least $30,000 and that they owned a car and property in China.

A real estate developer from the southern city of Changsha said he spent $3,500 for the 10-day trip to view $500,000 to $1 million homes, and it worked.

He found a house in California’s Silicon Valley that he planned to buy for his 20-year-old daughter, a university student in Boston who plans on attending graduate school in the Bay area.

“My daughter’s monthly rent is $1,000, so it makes sense to buy a place, because I’m getting a return rather than throwing money away,” said the developer. He would talk on condition that he be identified only by his surname, Zeng.

The price of the house, he said, was $1 million, compared with $1.3 million before the crisis in early 2007.

“The price is low now, but it’s in a good neighborhood with breathtaking views, so it will definitely appreciate,” he said.