Investment Paralysis in Iraq is Fueling the Housing Shortage

With high hopes of owning a home for the first time in his life, Haider Abu Bilal (67), a retired employee of the Ministry of Electricity, signed a contract in 2020 to purchase a horizontal residential unit in the “Al-Firdous” investment housing project in Karbala, southwest of Baghdad. He was supposed to receive the keys in the following year. However, five years have passed, and Haider’s family—who placed all their savings into the investor’s hands—are still waiting to receive their home.

This situation mirrors that of thousands of other families who are still waiting for their housing units from government-licensed and -supported investment projects. Many developers fail to meet delivery deadlines and contractually agreed completion standards, including infrastructure services. Meanwhile, the relevant authorities only issue warnings or extend deadlines—offering no compensation to affected buyers.

Haider, who currently rents a home in the Al-Hussein neighborhood, says he and others were supposed to receive their homes in 2021, but construction remains incomplete, and the investor keeps stalling, year after year, despite several official interventions, including by the local Karbala government.

He explains, “We filed complaints with the Karbala Investment Commission and held several meetings, one of them on May 25, 2023. Based on that, the investor, Hassanain Talib Hashim, who runs the Kan General Contracting Company, pledged to deliver 450 units by July 2023. But he postponed the date again to March 2024—and didn’t follow through.”

Documents obtained by the investigator support Haider’s account. A meeting minutes dated July 24, 2023, of a committee formed to follow up on complaints, shows that an agreement was reached with the investor to schedule delivery of the 450 units of Phase 1 from July through December 2023. The investor also committed to waiving monthly payments for buyers for each delayed month and to expedite the property transfers. Phase 2 was supposed to begin in mid-2024 and conclude by year-end.

With further delays, Karbala Governor Nassif Jassim al-Khattabi stepped in, prompting the investor to issue new promises—this time pledging delivery by September 2024. However, that deadline also passed unmet. Some units remain incomplete structures, others nearing final stages but still undelivered.

Haider, his hand trembling as he held a stack of documents, said, “The investor made us sign contracts with no delivery date. That was clearly a deception—an intentional setup to evade responsibility.”

He added, “After years of waiting, we discovered that our payments were transferred to another housing project the investor was developing in Diwaniyah.”

Complaints from buyers of the Al-Firdous project extend beyond delayed delivery to the quality of construction. The investigator noted visible cracks in walls and ceilings of incomplete and abandoned units due to rain exposure.

With ongoing delays and defects, some buyers were forced to finish construction at their own expense, even without access to basic infrastructure—paved roads, sewage systems, water and electricity networks.

According to MPs and experts, many investment companies in Iraq’s lucrative real estate sector violate contracts with Baghdad and provincial investment commissions. They delay projects, deliver poor construction, and fail to provide infrastructure, rendering some developments uninhabitable.

Violating contracts and government guidelines, some companies also force buyers to pay monthly installments based on the parallel market exchange rate of 147,000–150,000 IQD per USD instead of the official 132,000 IQD.

In this investigation, representatives of 37 affected families from nine residential compounds in Baghdad, Karbala, and Dhi Qar were interviewed. All cited “delayed delivery, poor construction, lack of infrastructure, and the absence of effective government oversight.”

Price Inflation and Unfulfilled Promises

Kan Real Estate Company received Investment License No. 46 in 2014 to build a fully integrated housing city in Karbala—Al-Firdous Housing Project—with 1,360 units of various sizes and layouts, including essential infrastructure.

Over time, contract terms and prices varied. In 2021, the unit price was 65 million IQD, payable in full. In 2022, it rose to 130 million IQD, with a 30 million IQD down payment and the rest financed through the real estate bank.

Contracts also included a clause allowing buyers to cancel their contracts and request refunds. However, the company had the right to accept or reject the request. If accepted, buyers were charged 20% of the total contract value as “administrative fees.” Refunds were only made after the unit was resold to another buyer, and even then, in installments.

In another project, “Al-Zahraa” in Karbala, similar delays and issues were reported. The Provincial Investment Oversight Committee noted in its July 21, 2024, report (No. 310) that the absence of a consulting office led to poor engineering and construction.

The committee also found that infrastructure was missing and work significantly behind schedule. The investor blamed delays on the suspension of real estate bank loans, even though he was obligated to fund 50% of the project from his own capital.

Iraq launched its National Housing Project in March 2010 as part of a post-war economic development plan, starting with the “Bismayah” housing project. However, hundreds of licenses granted under Investment Law No. 13 of 2006 (amended) have faced legal violations and corruption, leaving tens of thousands of Iraqis with unfulfilled promises and undelivered homes.

Delays in Residential Investment Projects

There are numerous stalled housing projects in Karbala, including those with violations that required government intervention. In 2016, the investment license No. 18 for the year 2009, granted to the “Jannat Al-Hussein Residential Project” owned by investor Thaer Ibrahim Ahmed, was revoked due to failure to begin construction.

Despite this, and even with other forgery-related lawsuits filed against the investor, Karbala’s Investment Authority returned the license to him, only to revoke it again in 2021 for the same violation—lack of implementation.

This information is documented in a letter from the Investment Oversight Committee of the Karbala Provincial Council (No. 293, dated June 15, 2024) to the local Investment Authority, which deemed the failure to complete more than 5% of the project in 15 years a “waste of public funds.”

The letter also stated that the investor sold more than 500 residential units to citizens without constructing a single one, labeling it fraud. It strongly recommended the permanent withdrawal of the investment license.

The same committee issued another letter (No. 325, dated July 28, 2024) reporting poor engineering and technical execution during a visit to the “Al-Wafa Residential Complex” in Karbala, along with violations such as “burying the land with rubble and waste.”

In July 2024, the committee announced that 25 investment licenses had been granted for residential complexes in Karbala, most of which were facing “delays and corruption.”

Exaggerated Prices and Legal Violations

Member of Parliament’s Investment and Development Committee, Hussein Al-Saabri, stated that the housing investment sector in Iraq “has shifted from a solution to the housing crisis to a way of making outrageous profits at the citizens’ expense.”

He added that the announced projects “do not target the poor, or even low- to middle-income individuals,” noting that housing unit prices in Baghdad range from 250 to 900 million Iraqi dinars, and though prices are lower in the southern provinces, “they remain high compared to the average income.”

Al-Saabri revealed that around ten investors control major housing projects nationwide, all enjoying political support and significant influence. Smaller investors, he added, “cannot enter this field without backing from political parties or armed groups.”

There are 46 housing complexes in Baghdad, many of which face execution problems or are completely halted, despite their profitability.

The MP accused some investors of financing political parties during election campaigns “in exchange for exceptions to carry out new projects,” which worsens the housing crisis and strengthens corrupt influence.

He further criticized some investors for shirking their commitments with weak excuses to achieve quick gains. “The legal profit margin should not exceed 30%, yet some complexes in Baghdad and other provinces report profits of up to 100%—even 300%—due to a lack of real oversight and accountability.”

Five Million Housing Units Needed

Finance Committee MP Atwan Al-Atwani said investment licenses issued by the National and provincial Investment Authorities “do not align with citizens’ needs or offer real solutions to the housing crisis.” Iraq faces a shortage of approximately five million housing units to meet population growth.

He attributed the issue to several factors, including “excessively high housing prices.” He believes the Investment Authority should “review pricing and implement stricter standards to prevent exploitation.”

Real estate expert Zahid Haleem argued that the government lacks effective tools to address these challenges, particularly due to “corruption within its institutions,” turning residential investment projects into mere profit opportunities for politically connected elites, with no regard for serving citizens or solving the housing crisis.

Property prices in Baghdad, Karbala, and Najaf are extremely high: a 200-square-meter house in central Baghdad may cost up to $2 million. The average price per square meter for apartments in Baghdad is $1,500–$2,000. As a result, many people have resorted to building homes on plots smaller than 100 square meters—an unprecedented trend in Baghdad’s history.

Law in Favor of Investors

Article 3(2) of the amended Investment Law No. 13 of 2006 grants licensed investment projects tax exemptions and additional facilities. Article 9(6) mandates that investors be helped in obtaining necessary real estate for their projects. Article 10(3)(i) obliges local authorities to extend external infrastructure to project borders.

According to Regulation No. 6 of 2017 on the sale and lease of state and public-sector lands for investment, housing project lands within basic designs may be owned by investors at only 2% of the land’s value, provided they build external infrastructure. Up to 10% of the land may be allocated to the original land-owning entity for investment, as long as it aligns with project plans.

For lands outside the basic design, investors can own the land for free, with its value included in the unit sale price.

A research paper by the Integrity Commission’s Research Department (May 2024) found that, despite generous incentives, “only 1% of needed housing units have been delivered through investment complexes.”

The perks offered have depleted citizens’ finances by granting licenses to unreliable, newly established companies with no prior experience. This led to project delays, forcing citizens to bear the costs of these setbacks.

The research paper also pointed out that licensed companies relied on foreign labor instead of local workers. Furthermore, customs exemptions on materials led some investors to import excess quantities and sell them locally, draining foreign currency.

The paper also cited environmental damage from projects near vital areas, which increased traffic congestion, dependency on fossil-fuel transport, and lacked green spaces—contrary to urban plans.

In conclusion, the paper stated that investment companies have not solved the housing crisis. Their projects are overpriced and unaffordable for middle- and low-income families, and there is a lack of pricing transparency.

Large portions of some complexes were sold to other investors or marketing companies without government knowledge, leading to speculative and overpriced sales.

Abandonment and Delays

Abu Jamal (45), a government employee, signed a contract in 2020 to buy a unit in the “Abi Al-Fadl Housing Complex” in Baghdad’s Al-Husseiniya district with Hiran General Contracting & Trading. He paid 35 million dinars upfront, with the remaining 100 million to be paid via bank loans at 500,000 dinars monthly. He was to receive the unit by late 2021.

However, like 1,250 others, he found himself trapped in delays and broken promises.

Three months into his payments, the investor disappeared. Abu Jamal discovered he had moved to Najaf to manage a new 1,000-unit project called Al-Hussein Residential.

In 2022, the investor returned, claiming that the Real Estate Bank refused to grant loans. He offered buyers two choices: cancel contracts or continue monthly payments until loans were released.

But official documents reviewed by the investigation showed loan approvals were granted, including for Abi Al-Fadl complex, contradicting the investor’s claim.

Engineer Najat Hussein, a housing design expert, criticized the project’s lack of green spaces, poor building separation, and absence of AutoCAD in design, resulting in “inaccurate and incomplete planning.”

Documents showed the project was awarded to Hiran Contracting under license No. 100 of 2011, to build on a 200-dunum plot owned by the Ministry of Finance, at a cost of $150 million.

The company began work in early 2021, though it officially signed the land contract on January 3, 2022—an illegal move, according to a legal expert.

A Baghdad Investment Authority document (September 20, 2023) showed only 28% completion.

On November 5, 2023, the State Property Department ordered the land registered under Hiran, but with a no-transfer clause, preventing any sales or tampering without approval.

A source in the investment sector said Hiran was never meant to complete the project. It merely secured the land and license before handing over execution to another company, Tareeq Al-Harithiya, which altered buyer contracts unfairly.

Contracts with Tareeq Al-Harithiya included no clauses holding it accountable for delays and allowed indefinite delivery extensions under “emergency circumstances.”

Despite formal complaints from buyers, Baghdad Investment Authority only revoked Hiran’s license on August 11, 2024, with no fines, legal action, or compensation orders.

Hiran then sued the authority in September 2024. The case is ongoing.

Buyers in Baghdad’s “Zuhur Housing Complex” face the same problems. The project, licensed in 2011 (No. 94), was to be completed in 30 months for $243 million. A decade later, many units are just concrete shells.

Completed units (80–100 m²) are partially inhabited, but lack schools, clinics, parks, and green spaces. Residents suffer from poor construction, garbage, and no electricity grid, relying on costly private generators.

Baghdad Investment Authority ordered the developer, New Life for Real Estate Investment, to complete missing services within two months. This never happened.

The Parliament’s Investment and Development Committee intervened on May 2, 2023, demanding the developer be replaced due to contract breaches and continued deduction of payments despite incomplete work.

On April 21, 2024, the Authority revoked the license, blacklisted the company, and froze the director’s assets. But the investor sued, claiming he completed basic infrastructure.

On February 3, 2025, the Administrative Court overturned the decision, reinstating the license, stating the investor wasn’t given enough time, and the decision lacked board approval.

Investment for the Wealthy

Dawood Abdul Zayer, Chairman of the Iraqi Business Council, states that the Residential Investment Law was enacted to address the housing crisis and provide units for middle- and low-income groups. “However, the law’s practical application veered off course, leading to the wealthy class taking over these projects,” he says.

He adds: “Some investment apartments in Baghdad have reached prices of up to $1.5 million, and others around $500,000 — a clear sign of the misalignment between these housing projects and their intended target groups.”

Ammar Abdul Kareem, Deputy Director General of the Economic Department at the National Investment Commission, defends the Commission’s procedures, saying: “Licenses are now granted only to investors with similar previous projects and a clear financing plan, with funds deposited in an accredited bank. Investors are required to complete the infrastructure entirely, and implementation is monitored by specialized committees.”

The Commission’s Board emphasizes that housing units must be sold at the price listed in the project’s approved economic registry and that penalties will be imposed on violators. They also mandate selling through banks and enforcing Article 28 of the Investment Law, which outlines investors’ obligations, including pricing.

He highlights the importance of citizens submitting official complaints against any investor who “blackmails them or demands illegal additional fees,” noting that collecting monthly payments at the unofficial exchange rate or opening sales offices before completing 25% of the project is a legal violation.

Different Realities and a Powerless Commission

Despite the National Investment Commission’s claims of adhering to the law and taking action against breaches of investment contracts and decisions, the situation on the ground tells a different story.

“Do as you wish” — this is the response residents of the Shanashil Residential Complex in Baghdad reportedly receive from the investing company when objecting to paying installments based on the parallel dollar exchange rate (147,000–150,000 IQD) instead of the official rate (132,000 IQD), according to resident Samar Adnan.

Duraid Jameel, a member of the Parliamentary Integrity Committee, reveals that the state’s losses from investment projects, including residential complexes, are estimated at around 3 trillion dinars. He notes that the committee has opened a file on violations in these projects, including the Iraq Gate Complex in central Baghdad, which illegally took over around 7 dunams of land. The head of the National Investment Commission admitted his lack of control over investments in the provinces.

On December 17, 2024, the Integrity Committee submitted a letter to the Prime Minister outlining recorded violations involving the Assistant Director General of the Legal Department at the National Investment Commission, Saad Jameel Howaidi, including document forgery and accepting bribes in multiple investment projects — one of which is the Al-Rihab Residential Project in Salah al-Din province.

A Crisis of Trust

In 2020, the Investment Commission in Dhi Qar granted a license to build the “Al-Salam Residential Complex” in the Al-Muwahiya area of Nasiriyah, the provincial capital. The project was intended to provide ready-made homes for notary public employees.

For notary Ghazwan Hussein, the project represented a final opportunity to escape the burden of “crippling rent.” However, after years of waiting, his dream of receiving a completed home faded, and he ended up paying far more than planned.

The investor did not adhere to the master plan; instead, he added six more units, raising the total to 122, without improving services or construction quality. The project was supposed to be completed by the end of 2023, but this did not happen. As a result, Ghazwan and other buyers took matters into their own hands and moved into the complex in late 2023, despite the homes being unfinished.

He explains: “We had no other option. We paid 120 million dinars for a house that was supposed to cost only 74 million, according to the project’s feasibility study.” He adds: “We had to complete the finishing work ourselves and spent another 10 million dinars on renovations.”

Unexpectedly, there was no connection to the national power grid, forcing residents to rely on private generators or illegally tap into electricity from nearby informal settlements.

The Al-Salam complex was no exception. Seven other residential complexes in the area face the same problem, including the “Dean’s, Investment Employees, and University Professors” complexes. Ghazwan says that these complexes were entrusted to the investor himself, “rewarding him instead of holding him accountable!” Based on the experiences of many engineers, lawyers, and property buyers contacted, the problem of the investment law’s failure to achieve its stated objectives, despite the support and facilitation provided by the government, is not simply related to limited violations and transgressions committed by some investors, or to the failure to complete and deliver according to the specified terms and deadlines. Ghazwan says that there are clear flaws in “the laws and the way they are implemented, along with rampant corruption that has allowed investors to obtain land and work permits without possessing the necessary qualifications, thus failing to implement their projects according to specifications and contract terms. This has allowed some to accumulate profits while tens of thousands of citizens, whom the law was originally intended to serve, suffer.”