Shafaq News/ In Iraq, real estateinvestment has become a common method for laundering money, especially afterinternational money transfers faced increased scrutiny from US authorities.
Corruption and Flawed InvestmentLaws
The shift has led many to cleantheir funds by buying and investing in property, according to economicresearcher Ahmed Eid.
Eid, speaking to Shafaq News Agency,explained that Iraq’s investment law faces significant challenges. It conflictswith other investment regulations and does not adequately protect investors.
“Although Investment Law No. 13holds legislative priority in principle, it fails to protect investors’funds—both Iraqi and foreign. The law requires investors to disclose theirfinancial status, meaning those who invest under these conditions often buildrelationships with influential entities based on mutual interests,” explainedEid.
He also noted that the growingpopulation and urban expansion have driven a surge in housing projects.However, these projects have not resolved the housing crisis. Cities likeBaghdad are overcrowded, and there is a pressing need for more housing units.
“The housing projects do not addressthe growing housing crisis in Iraq,” Eid asserted, “with more than 4 millionslums and a need for over 4 million housing units.”
Eid highlighted that corruptiontaints many housing investments. Some companies involved in these projects havequestionable practices and use substandard materials.
“Some residential projects wereawarded to companies with ties to influential entities, but the quality oftheir work and materials falls short of expectations. The minimal constructioncosts do not align with the exorbitant sale prices,” said Eid.
Ultimately, ordinary citizens do notbenefit from these investments, as they are controlled by profit-drivencompanies and political groups lacking expertise.
Real Estate Investment Surges
Real estate investment now makes up80% of all investments in Iraq, overshadowing other important sectors likeindustry, agriculture, and tourism. These sectors traditionally provide jobsand help reduce the budget deficit.
Despite this, real estate remainsthe primary focus, affirmed economic expert Mustafa Al-Faraj.
Al-Faraj told Shafaq News Agencythat while there is a critical need for new housing due to Iraq’s fast-growingpopulation, real estate projects mainly benefit wealthy individuals, leavingordinary citizens and low-income workers out.
“This does not solve the housingproblem but rather deepens it.”
He attributed the heavy investmentin real estate to widespread corruption, weak enforcement of laws, and lack ofaccountability. Real estate offers high commissions and low costs forinvestors, who receive generous government support, often ignoring the needs ofpoorer people.
Residential investment drives uphousing prices
In Iraq, most investment is focusedon residential properties due to their high returns, leading to pricemanipulation by investors, according to Suzan Mansour, a member of theparliamentary investment committee.
Mansour told Shafaq News Agency thatapartments in Baghdad cost between $300,000 and $500,000, making themunaffordable for average workers. Even with a mortgage limited to 120 milliondinars, many cannot buy these homes.
She recommended that instead ofoffering exemptions for residential projects, the government “should supportlocal industries and revive agriculture to create jobs and boost the economy,especially with oil prices dropping.”
As per an informed source, risingproperty prices are due to two main factors: the Central Bank's increase inmortgage limits, which has led sellers to raise prices, and increased domesticproperty purchases as a method for laundering money.
“This shift from international moneytransfers to local real estate is partly due to pressures from the US to combatmoney laundering.” The source said.
The source also noted that moneylaunderers mistakenly believe that buying property will clean their illicitfunds. However, the funds remain tainted because they originate from illegalactivities, contributing to the high property prices in Iraq.