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Real Estate Wreckers
While Ordinary Basra Families Suffer, A New Upper Class Profits

Waheed Ghanim
Real estate prices in Basra are rising dramatically thanks to the oil industry, the province’s economic prowess and a growing population. Many locals say a new class of corrupt officials, smugglers and…
6.11.2014  |  Basra

After ten years living in the same house, in the Bariha area of Basra, Ahmed Bader and his family of five were forced to leave their home. The landlord had increased the rent to US$1,600 monthly and Bader only earns IQD900,000 (around US$760) each month.

“We had no choice,” Bader says, “we were forced to move to an agricultural area in the Abu al-Khaseeb area outside of Basra, even though that’s a long way from my workplace.”

Bader is not the only local in Basra to be feeling the effects of rising real estate prices. Central areas in Basra are heavily populated and rents for ordinary houses here are as high as US$2,000 while it now costs around US$1 million to buy a 400 square meter property here. This is despite the fact that improvements to infrastructure in central Basra have not kept pace with real estate price rises.

The reason for such price hikes: Basra is one of the centres of Iraq’s burgeoning oil industry and, as local journalist Hashim Luaibi points out, the oil companies can afford to pay these higher rates to provide for their employees. Basra is also a prosperous area and currently, because of its Shiite Muslim-majority population, it is not as troubled as other parts of Iraq by violence caused by the Sunni Muslim extremist group, the Islamic State.

There’s been an influx of Iraqis from other parts of the country to Basra over the past few years but there’s nowhere for them to live, says a local lawyer, Tariq al-Abarsim.

“Displacement and population growth combined with the absence of any real housing projects have led to chaos in the housing sector,” al-Abarsim suggests.

Real estate firms are also to blame, Luaibi adds, noting that some of the big developers have been deliberately slow to build big housing projects which drives the rents up further – this works out to the developers’ and real estate owners’ advantage.

“It’s illegal but there’s no way of holding these companies accountable,” Luaibi says.

One local realtor, Akram Abdul Karim, says that besides a chance to make profits, there has also been a rush on agricultural land around Basra. The increasing business being done in the central city has caused some property owners to sell up at a profit and then move to the cheaper outskirts of the city. Land on the outskirts is also sought after by low income locals.

Additionally, Karim says, the local authorities have increased the land tax on properties in central Basra – which has been translated into higher rental prices by owners.

Meanwhile local authorities say rents are rising so high because a lot of the land in Basra isn’t allocated for residential use. Large parts of the province are allocated for the oil industry and agriculture or are designated historical areas. This is despite the fact that alleged agricultural areas have also been contaminated by salt water or were bulldozed during the years of the Iran-Iraq war.

“About three quarters of Basra’s land isn’t actually residential,” explains Zahra al-Bajari, a senior member of Basra’s provincial council. “A lot of it is unfit for farming or cultivation but it’s still classified as agricultural land. And there are laws that punish anyone who uses agricultural land for residential purposes.”

Local authorities say that to solve this problem they have a number of projects planned, including investing in major residential developments using money from regional development funding.

However those promises may come too late for families like Ahmed Bader’s. For now the chaos in the housing market and profits to be made in Basra’s real estate sector continue to devastate the province.

The result: a new class of wealthy government officials, oil smugglers and contractors is emerging in the Iraqi province that is richest in natural resources.