January 12, 2011 / 2:13 PM / 7 years ago

Iraq needs billions to meet growing housing shortage

BAGHDAD (Reuters) - After another sleepless night drenched by winter rains, Nahla Kadhim spent the morning scooping water off the floor of her two-room shack in the Iraqi capital’s northeastern slum of Sadr City.

The makeshift hovel is made of bricks and cinder blocks, topped with a piece of corrugated metal. A tangle of electricity wires hangs on the walls. The windows have no glass, and the kitchen has no door. It has no running water or a sewage system.

Kadhim, her husband, and their 10 children are squatters. They are among two million Iraqis who were displaced during the highpoint of Iraq’s deadly sectarian strife in 2006 and 2007. Around 600,000 people were driven out of their homes by violence or fear in Baghdad alone, the United Nations says.

Some of those displaced found shelter with relatives. Wealthier ones rented or bought new homes.

But Kadhim’s Shi‘ite family had little money when they fled from a Sunni area north of the capital to the sprawling Baghdad slum of Sadr City. In the absence of affordable public housing, they squatted on public land and built their ramshackle house.

“I swear, last night we had to sleep standing up (because the floors were so wet),” said Kadhim, 50.

“We’re tired. We’re poor. We need God’s help and the government’s help,” she said. “I just want them to pay attention to us and our children and find us a place to live.”

As it emerges from the sectarian warfare triggered after the 2003 U.S.-led invasion, and the three decades of economic decline under Saddam Hussein’s dictatorship that preceded it, Iraq faces an acute housing shortage.

The government’s five-year plan says two million new homes are required and some experts put the shortfall at three million. Billions of dollars are needed to build them and despite its vast oil wealth, Iraq has nowhere near enough funds.

Those numbers are bound to rise; the national population of around 30 million is growing by about three percent a year, said Mahdi al-Alak, head of statistics at the Ministry of Planning.

“This is a human tragedy which should be resolved,” said Salam al-Khafaji, deputy minister of migration and displacement, adding the exact number of displaced who ended up as squatters in someone else’s home or on public lands was hard to gauge.

Iraq hoped for a tide of foreign investment as the bloodshed subsided in the last two years, but bureaucracy, red tape and outdated land ownership laws have put off investors.

Continuing violence as a stubborn Sunni Islamist insurgency keeps up a steady stream of bombings and shootings is also a deterrent to foreign investors.

The government has offered many projects for investment.

The National Investment Commission, or NIC, in early 2010 said it was looking for bidders to build one million new housing units, valued at an average of $50,000 each, for a total value of $50 billion.

It then considered raising its target to two million houses due to what it said was a high level of interest from foreign companies.

But despite much public fanfare and the grandiose aspirations, progress on the ground has been thin.

Amman-based Iraqi firm Amwaj International unveiled a $238 million housing and hotel project in the heart of Baghdad last May during a high-profile ceremony attended by Prime Minister Nuri al-Maliki, but construction has yet to start.

In November, the NIC said it signed a memorandum of understanding with a South Korean group to build 500,000 housing units. The Korean companies, however, said they had done nothing of the sort.

Emirati companies have won contracts to build homes in Baghdad and in southern provinces. Iraq awarded a $30 billion housing project to the Abu Dhabi-based Bloom company to build a whole new town near Kerbala in southern Iraq. That project has been on the drawing board since 2009.

The companies say legal snags are the problem.

Iraq’s parliament in 2009 passed laws allowing foreign investors to buy land, a measure seen as vital to ensuring that the country could meet its housing needs. But the law did not set out how to determine what price to put on public lands sold or leased to private investors.

“The investor can’t start digging or put one brick on the ground if the land is not registered in his name,” an Amwaj executive said on condition of not being identified.

Officials said regulations for public land sales and rentals will be issued by the Iraqi cabinet soon. Iraq finally received a new government on December 21 after nine months of political bickering and factional horse-trading after an election.

“This (the absence of the sales and rental regulations) is the main reason for delays. God willing it will be issued in the coming days,” said Shaker al-Zamili, head of the Baghdad Investment Commission.

Istabraq al-Shouk, deputy minister of construction and housing, said Iraq’s housing problem began in the 1980s, when the last new housing compound was built.

Plans for further construction between 1980 and 2000 had to be shelved because of years of war with Iran, the invasion of Kuwait and the economic sanctions that followed.

The massive internal displacement due to sectarian violence has exacerbated the housing crunch as certain areas became off-limits to residents of other religious groups.

“The housing sector was totally neglected in that period, so the problem grew and grew until it reached the level we have today. We don’t expect to be able to solve the housing crisis overnight,” Shouk said.

The housing ministry has started about 40 housing compounds since 2003. Some of them have been finished. The total number of housing units in the projects is around 20,000, which Shouk says amounts to “no more than one percent” of the actual needs.

The deputy minister said the government allocates around 270 billion Iraqi dinars annually (around $230 million) for housing projects, a figure he viewed as clearly insufficient.

In addition to funding for these projects, Shouk said 15,000 new homes had been build with the help of the state Housing Fund Office, which was set up in 2005 and provides soft loans for the construction of new homes or expansion of old ones.

But it’s still not enough to meet the growing housing needs.

“There is no other way but for the private sector and investors to cooperate with the state to provide housing units,” Shouk said.

The city of Baghdad hopes to spend $10 billion alone, over 10 years, for 150,000 new homes in Sadr City, where untold millions live, many in squalor. The plan has been labeled the “10 by 10” project.

It has short-listed bids from three consortia -- one led by a Turkish corporation, another composed of Iran’s Kayson company and affiliate Dasht Shayan Tosee, and a Mivan Thailand-led group, city officials say.

But Kadhim has little faith in the project.

“We heard about the 10 by 10 project, but who will look after us and give us a flat in that project? I do not think they will. I do not have any relatives in the government. I have only God to help us,” said Kadhim.

Editing by Caroline Drees and Michael Christie

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