By John Lee.
Iraq’s Minister of Construction and Housing has admitted that the country is likely to complete only 5 percent of the 2.5 million homes it needs to build by 2016 to satisfy demand.
Mohamed Sahib al-Daraji [Mohammed Al-Deraji] (pictured) told Reuters that only 130,000 of those homes would actually be built: 30,000 by the government and a further 100,000 by the private sector.
“That’s why I say it’s a crisis … Unless there’s direct investment from foreign investors there won’t be a solution. We’ve had a problem for the last 40 years. I’m not going to solve it in 2-3 years.
“Unless we attract foreign companies we don’t know when this crisis will end.
“Some provinces haven’t spent more than 25 percent of their budget because of a lack of contractors. The number of contractors is limited and the amount of work is more than they can take. It’s a golden opportunity to enter Iraq.“
The private sector is expected to account for up to four-fifths of new builds in Iraq, with the bulk of this investment coming from abroad.
According to the Reuters article, potential home owners struggle to get mortgages at reasonable interest rates from commercial lenders, while state-backed finance schemes are chronically under-funded relative to demand.
The state-run Real Estate Bank provides home financing, but its annual budget is only 50 billion dinars ($43 million), “which covers nothing” said general manager Hussein Tohme; “With the current funds we can only cover 1,000 houses (yearly)“.
Minister Daraji also estimates that the country needs to build 500 new bridges, which would raise its total to 1,700, while it also requires 7,000 kilometres of new roads.
He added that Iraq will spend around $10 billion on infrastructure projects this year, with the country aiming to increase this to more than $15 billion annually by 2016.