During a conference unveiling a new multi-billion dollar development to go up in the Kurdistan region’s capital, Erbil, last month, Emaar chairman Mohamed Alabbar said they hope to ‘close similar deals with the country’s government in the future’, building on it’s already growing economy.
But many who hear of the project have questioned the decision to develop in a country whose economic prospects have, on numerous occasions, been tarnished by the outbreak of war.
But fast-forward to 2013 and while much of the developed world struggles to drag itself out of recession, Iraq recently recorded double digit growth.
According to the International Monetary Fund’s World Economic Outlook Database for April 2013, Iraq has been noted as one of the top ten fastest growing economies in the world — landing at number seven with a GDP growth of 9.043 per cent.
In a country that may have its problems, economic growth is not one of them, and Alabbar has called the new $3 billion Downtown Erbil development a “unique project for the Middle East”.
During its 16 years in operation, Emaar has built some of the world’s most iconic landmark’s including the world’s tallest building, Burj Khalifa, and to strengthen its global brand and facilitate the company’s expansion, it set up Emaar International in 2004, which plays a key role in identifying untapped, emerging and growing markets.
Economic milestone for Erbil
With Emaar at the fore of global property development, the choice to construct such a mammoth, 541,000 square meter mini city in the heart of Iraq’s oil-rich Kurdish region is a sure sign the economy is growing there, and Kurdistan’s prime minister Nechirvan Barzani has called the collaboration an ‘economic milestone’ for Erbil.
“Emaar is one of the best developers in the world and the fact it has selected Kurdistan as an area to build in shows the economy is growing strong here,” he said during the conference.
According to local Erbil property agent and CEO for Elite Homes Ali Asad, the real estate market has been slow in the area ‘for quite some time’ and is a little saturated due to ‘a lack of confidence with local developers’.
“To have such an international brand like Emaar coming in is a big step up for the development of the area and it will surely create confidence,” he told Khaleej Times.
Asked why he thinks one of the world’s biggest property developers have chosen to develop in Erbil, rather than Baghdad, where property prices are higher, he said it was simple.
“If they want a footstep into Iraq, Erbil is the perfect place, because it’s secure,” however Asad did mention the Downtown Erbil development will undoubtedly create inflation in the area, as listed prices are already considerably higher than similar developments in the area.
“The rental return on average (for Downtown Erbil) is about 10 per cent. So if a property is worth $300,000, it’ll make $3,000 a month in rent, and that’s a lot more than the normal return anywhere else,” he said.
Asad added that per square meter, property space in Erbil sells for about $1,800, but Emaar are selling for around $2,400, which is a ‘considerable markup’.
But this doesn’t mean buyers are necessarily being ripped off, he said.
“Emaar mainly only deal with the end user, they don’t deal with other property agents. This is a good thing for buyers because many agents hike the original property price just to get a good return on their product.”
However property agents and developers in the area will not benefit directly from Emaar’s Downtown Erbil project, he said.
“The only positive impact it will have on us is that the market picks up,” he said, adding there are similar developments going on in the area, including Park View by Ilci holdings, and Empire World, which will see a quicker return on investment.
“You’ll wait at least two years to see a return with Downtown Erbil, these other projects are nearer to completion, so that’s where my company would invest.”
Over recent years, the oil-rich Kurdish region has become a small hub for tourists and business visitors despite ongoing political problems following the fall of Saddam Hussein.
Emaar’s new development has been initiated to create an integrated lifestyle community and will host three world-class hotels, Erbil’s largest shopping mall, its own business district as well as educational and healthcare centers.
In line with the property giant’s ongoing mission to create unique and captivating skylines, Downtown Erbil will be home to two twin towers hosting residential apartments — the defining feature of the city center. With a boulevard acting as the central hub of the development, the whole area will be in keeping with the city’s architectural heritage, and is strategically located along Gulan Street — an area locally known as the ‘million-dollar mile’.
And although not directly benefitting local property companies in the area, the project will be a major source of income for many residents, with up to 45,000 jobs to be created as a result.