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Massive foreign investment in Iraq real estate set to continue

Since April 2003, more than a hundred private investors from 26 foreign countries have announced projects in Iraq. UAE based companies and funds are the largest investors in Iraq by value, having committed more than $31 billion since 2003, representing 50% of all investments in value terms, according to research by Washington based Dunia Frontier Consultants.

Private US companies are in second position with more than $10.2 billion invested since 2003. UK private investors are in third place, having invested some $6 billion across six mega-projects since 2003.

Iraqi residential and commercial real estate has attracted more investment since 2003 from private overseas investors than any other sector. Mega projects in real estate dominated all investment in Iraq.

Two massive projects by Damac Properties and Al Maabar accounted for 75% of all investment in Iraqi real estate. Meanwhile, US investors Summit Global Group announced a high-profile $100 million investment in a new five-star hotel in central Baghdad.

The real estate investment boom looks set to continue into 2009, with $620 million in foreign backed real estate announced in January alone, and estimated upper-range investment of $35 billion in 2009 and $40 billion in 2010.

This is based on the expected construction of 350,000 new housing units in 2009 and 400,000 units in 2010 with an average investment of $100,000 per unit coupled with a severe decrease in viable real estate opportunities in the GCC region over the same period.

In February, at least $618 million in investor capital was announced for real estate projects across Iraq. These investments have a much wider geographical footprint than before, with investors seizing on previously overlooked opportunities in north-central and south-central Iraq, the report says.

Political stability will help the real estate sector. 'The provincial elections that took place on 31 January point to a strong and continued showing by Prime Minister Nuri Al Maliki's Dawa party and his governing State of Law Coalition, auguring positively for a stronger central government and greater political stability in Iraq; barring any wide scale breakdown of relations with the Kurds,' Dunia said.

'Combined with national elections scheduled for the end of the year, a steady drawdown in US troops, and relatively strong real GDP growth forecast, 2009 should be an important year for investment in Iraq,' it added.