At the projected growth rate, almost 2 million housing units will be needed by 2015.
The government estimates that 85% of home building will be carried out by the private sector.
Iraq’s reconstruction has created a huge demand for construction expertise and capital. The real estate development, construction, and building material industries are all ripe for investment. The large number of construction projects in industrial sectors and infrastructure will require vast amounts of building materials, design capacity, and construction expertise. Opportunities are available across all geographic areas and the already high demand will continue to grow.
Private sector investment dollars as well as expertise are greatly needed in all sectors to augment the Government of Iraq’s (GoI's) efforts. Prospects exist to provide for the great number of over-crowded existing households, rehabilitation of transportation infrastructure and the ever growing need for development of the industrial base. This will substantially increase the demand for efficient designs and competent completion of sizeable construction projects from a large number of industrial sectors. The huge long-term business potential, coupled with the real need for outside capital and expertise, promises unique investment opportunities for those who pioneer the construction sector.
Iraq formerly produced a significant range of minerals used for basic building materials such as gypsum and cement, and composite materials of glass, tile, piping, and bricks. Today most building materials are imported by multiple and unorganized traders with little government control on quality and proper labeling. Distribution channels are non-existent and inefficiencies exist throughout the entire sector from extracting the base material, production, or importing and distribution, and create market distortions and little reliability for builders needing supplies. As a result, efficiency is poor, quality is questionable, and domestic producers cannot keep pace with existing demand, let alone the demand expected in the near future.
As a result of domestic bottlenecks, Iraq imports most building materials. Most cement comes from abroad, mainly from Turkey, Iran, and other nearby producers. It is estimated that demand for bricks exceeds local supply fourfold.
The post-2003 reconstruction was dominated by large, foreign builders, who have played a major role in rebuilding the Iraq’s power and water facilities, bridges, roads, schools and other infrastructure. A domestic construction sector has begun to grow alongside the large foreign builders, but few have developed the capacity for the kind of large scale development that will be needed. Estimates of reconstruction expenditure in Iraq run into the tens of billions of USD, with USAID conservatively estimating at least $150B USD.
The development needs of Iraq run across the spectrum of construction projects; small to mega projects including new dams and considerable additional infrastructure. Modern office buildings, industrial parks, new universities, sports stadiums, municipal buildings, port facilities, and regional development hubs are all part of the national development plans in Iraq.
Housing is a key need for the Iraqi people and will be a key driver of the construction boom. Iraq is facing a serious housing shortfall due to:
At present rates (2.6% annual growth), the population of Iraq will reach 40 million by 2025, creating a need for almost 2 million new housing units.
The United Nations has estimated that 0.5 million of the 4.2 million refugees will return by 2010 if stability continues.
Internally displaced families will need new housing.
Oil revenues, agricultural surpluses, and Iraq’s various conflicts have all hastened the trend toward migration to the cities, especially to Baghdad and Basrah.
The GoI built some housing projects in the 1970s and early 1980s, and has also granted land, but most residential development has since been led by fragmented, small-scale builders. These builders have not yet developed the financial and technical wherewithal for the large-scale development now needed to satisfy rising demand. Housing prices and rents have been rising, especially in Baghdad, defying global trends. Demand for housing is growing apace, with the need estimated at more than three million homes nationally over the next five years.