Foreign Investors Flock to Iraq

Iraq’s oil and gas sector drives the Iraqi economy, but residential real estate is the biggest target for foreign investors. According to the Dunia report, it accounted for a third of all foreign commercial activity last year. Iraq has a shortfall of 1.6 million homes. Transportation infrastructure was next followed by electricity and manufacturing.

“A lot of the money going in is going into things as a result of the Iraq’s oil business,” said the editor of Iraq Business News, a portal dedicated to keeping foreigners abreast of business in the country. The site was launched in February 2010 and since then the number of subscribers to its weekly newsletter has jumped to 9,000 from 3,000.

“The bulk of the deals announced are in real estate,” he told The Media Line. “So much needs to be done there in terms of infrastructure. The government plans to build one million homes financed by oil revenues … Then you’ve got other stuff related to that, shopping malls and so on.”

The revival of the Al-Rasheed is only one example of how Iraq is turning into an investment magnet – and how investors have to take special precautions to make sure their business ventures literally don’t blow up in their faces.

In Al-Rasheed’s case, the hotel is situated in the Green Zone, an area that once served as the U.S. military’s Baghdad headquarters and is now favored by foreign business people and other visitors because it is cordoned off by concrete walls to protect it against attacks.

Business people coming to Iraq have to take unusual measures to ensure their personal safety and that of their property.

Businesses that can keep assets out of Iraq usually do, although the government is trying to bring an end to the practice, say investment advisers. One company with a franchise to import vehicles, keep the cars parked in a lot in neighboring Kuwait and deliver them to its Iraqi customers once the price is paid in cash. Except for relatively peaceful Kurdistan, a semiautonomous region in the north, even a single expatriate will travel in a convoy of three or four vehicles.