The Kurdish Globe
By Zakaria Mohammed
Recent disputes and disagreements between the Iraqi government and the Kurdistan Regional Government, particularly over oil revenue, Peshmarga forces and finances, are believed to have negatively affected real estate and car prices.
In the past six months, demand for property has dropped dramatically among Kurds due to political tensions between the federal government and KRG.
Amanj Dishad, a real estate agent in Erbil, says that due to the economic law of supply and demand, prices automatically drop when there is less demand for a product.
"Prices for a 200 square meter piece of land in 32 Park Quarter has decreased by about $10,000 in the past six months," explained Dilshad, whose real estate office is in Gulan Quarter in Erbil. He said an equivalent 200 square meter plot of land in Gulan has gone down by $8,000 and land in Havalan has decreased by $20,000.
House prices are also affected. According to information from another real estate agent, Salar Saeed, prices of 125 square meter modern houses in neighborhoods outside the 100 Meter ring road in Erbil, such as Zhyan and Roshnibiri, range from $110,000 to $120,000 per square meter.
Saeed said even Arabs, who used to buy many units in the large residential housing projects in Erbil, are not buying houses like before. "Someone can buy a house in Zhyan quarter for $10,000 less than seven months ago. Despite the [low] price, people don't want to buy houses."
The business slowdown and political wrangling in Kurdistan give people enough reason to be relatively downbeat about the future of the country. After property, cars have been the second most negatively affected item.
"I bought a brand new Toyota pickup truck for $23,900 a few months ago, but no one wants to buy it now, even at $23,000. I am aware that most of the agents who have bought cars before are ready to make big discounts," Nazar Saddeeq, Shwan Car Show salesman in Erbil told The Kurdish Globe. He said overall sales at his showroom in the first quarter of 2012 are 20 to 30 percent less than the same period in 2011.
According to Saddeeq, cars with powerful air conditioning usually get more expensive during the summer, but this year, the political uncertainties have affected the prices of all types of cars.
For those who want to buy less expensive cars, dealerships are listening to their customers and bringing in less luxurious models and brands. MSN Automotive has introduced a JAC saloon model, a compact car from China, to Kurdistan.
Kardo Ahmad, an Erbil resident, bought a JAC car because he didn't want to spend all his money on an expensive car in a foggy situation.
"People would rather keep their money in an account because the future of the country is unclear. The political situation appears to be worsening. If I didn't need a car, I would even buy it," noted Ahmad.
For the economic situation to improve, some economists believe the government and media have to play a role in making the business community invest more.
"We understand that the growth of economy is based on political conditions in any country. Kurdistan has gone through many economic and political crises before. Businesspeople shouldn't fear putting their money in the market because the problems are temporary," explained Muhsin Muhamma, a lecturer at the Economics Department at Salahaddin University.
Despite having to take the risk into consideration, in Muhammad's view, a successful business has to constantly adapt and be proactive in taking the decisions and developing the strategies needed. "The Kurdistan economy still had potential. Kurdistan is really a safe area compared to other parts of Iraq, but we need to make it more open and accessible to investors."