So you want to buy a house, maybe do a little interior design work on it and flip it for a profit? The property market may not be looking too good for that in the United States these days, but in Baghdad real estate is –- amazingly –- red hot.
House prices are shooting up like Florida condos and southern California McMansions did two years ago -– with one major difference. There is no brewing sub-prime mortgage crisis in Baghdad. There is no mortgage market here at all. People buy and sell houses for cash. Quite a lot of cash.
Today, Haji Ramsi, an infectiously good-humored man who has been buying and selling houses in Baghdad for 38 years, took me to see a spacious seven bedroom, four bathroom property in Jadriyah, one of the best neighborhoods in the center of Baghdad, quite close to the Tigris River. Six months ago the house was worth $900,000. It is now on the market for $1.5 million -- and he already has two bidders. Want a regular three-bedroom property in a good, relatively safe area? Prices start at $400,000.
Did anybody notice there is still a war going on here?
Well, yes, but as the level of violence comes down and Iraqis slowly regain some hope for the future, people are starting to invest in property again. Since the 2003 invasion, Haji Ramsi had not been too busy -– until last year.
Then, people with money, many of them living overseas, began approaching him for houses. Companies have started looking for land to build new hotels, as Baghdad is woefully under-supplied with hotel rooms. And there are no shopping centers here at all -– in a city of 6 million people.
Not only is there pent-up demand that is just waiting for enough security to begin major development, but there is also virtually no new construction going on, so supply of properties is limited. And with oil at $130 a barrel, compared to $50 a barrel last year, Iraq is not short of money.
Haji Ramsi says the deals are coming fast these days. Typically a contract is drawn up by lawyers in Baghdad, but the financial transaction is done between banks overseas, usually in Amman or Dubai. And the purchase price is delivered in full, so foreclosure is not a possibility. One of his friends just bought a house for $900,000, did some cosmetic work on it and sold it a month later for $1,100,000 –- a smooth $200,000 profit minus labor costs.
When I told him U.S. realtors would weep to hear about such deals these days, he chuckled and said, “Just give them my number. I can help them out here.”