The real estate market in Iraq is experiencing a significant transformation, driven by increased foreign investment and a growing population. With a current market value of $1.11 trillion, the sector presents lucrative opportunities for investors. We’ll delve into the current trends, challenges, and opportunities within the Iraqi real estate market, highlighting key data points and the role of real estate startups.

The Iraqi real estate market is undergoing a construction boom, primarily driven by the residential sector. The market is forecasted to grow at a steady annual rate of 4.43% from 2024 to 2028, reaching a market volume of $1.32 trillion by 2028. This growth is fueled by an increasing population, with 57% under the age of 25 and a driving demand for housing.

The real estate market has demonstrated the potential for generating attractive returns on investment (ROI). For instance, a three-bedroom house in the Sultan Complex, Najaf, purchased in December 2023 for 180 million Iraqi dinars (IQD), is now worth 250 million IQD, yielding an impressive ROI of 38.8% in less than a year. Another example is a hotel conversion project in Karbala, where a hotel is being transformed into 11 apartments near the revered shrine of Hazrat Abbas (as). The project had a purchase price of 520 million IQD and renovation costs of approximately 180 million IQD, but the estimated selling price of 1.1 billion IQD will result in an exceptional ROI of 57% in just six months.

Despite the promising growth, the Iraqi real estate sector faces several challenges:

• The market suffers from a lack of reliable information and data, making it difficult for investors to make informed decisions.
• Agents often charge fees to both sellers and buyers, increasing the cost of transactions.
• The process of obtaining necessary permits and approvals for real estate transactions and developments can be cumbersome and time-consuming.
• Infrastructure development is uneven across the country, with some areas lacking basic amenities such as roads, water supply, and electricity.
• The market operates on a 100% cash-based system, which can be difficult for international buyers with large transactions. In the case of international bank transfers, this can be costly in bank fees and causes delays.

Real estate startups are playing a crucial role in the development of the market. Bayt Iraqi, for example, is helping investors source land, build properties, and manage them. Another example is Eqar and Homele, real estate platforms showcasing properties for buying and renting in Iraq.

These startups are providing much-needed services and contributing to the market’s growth by offering transparent solutions and reliable data.

Opportunities for International Investors

For international investors, the Iraqi real estate market offers substantial opportunities for high returns. Investors can engage with estate agents in person, utilise property finding apps and websites, or connect with brokers via LinkedIn or phone. The Iraqi government has taken steps to create a more favourable legal environment for investors, such as ratifying the New York Arbitration Convention for investment disputes and establishing the National Investment Commission to streamline and fast-track new projects.

As the market continues to evolve, investors are encouraged to explore the myriad opportunities available and capitalise on the promising future of real estate in Iraq.