Iraq's protests deal blow to real estate sector, automobile market in Erbil

ERBIL, Kurdistan Region - Ongoing protests in central and southern Iraq have negatively affected the real estate sector and the automobile market in the Kurdistan Region, according to local business owners. They say this is partly because Erbil auto businesses rely heavily on vehicles imported into Iraq through Umm Qasr Port in Basra, which was shut down for several days due to intense protests.

Protesters first took to the streets of southern and central Iraq on October 1 to demand action on corruption, high unemployment, and the lack of public services. Following a pause in the second week of October for the observance of Arbaeen, a Shiite religious holiday, the protests resumed with widespread demands for a new governing system and the resignation of the president, the prime minister, and the parliament speaker.

"Protests in Iraq, especially this month, have left very negative consequences on the market of vehicles in the Kurdistan Region," Hunar Abdul Latif, general manager of Cihan Motors, told Rudaw on Monday. "The reason why it has affected Erbil is because the relative security Kurdistan has enjoyed in the past years had created an ample atmosphere for the city to become a car trade center for the whole of Iraq. And many traders and car exhibition owners used to buy secondhand and brand new vehicles from Erbil to [sell in] other parts of Iraq."

Abdul Latif stated, "Since the protests have begun, the sale of vehicles in the Kurdistan Region has reduced by 60 percent while in others parts of Iraq by 80 percent." He says the automobile market usually has its strongest performance during the last three months of the year. "Therefore, if the protests are going to continue, it will deal the same blow to our market next month and affect our sales and plans for the new year," he added.

Hussein Hassan owns London Auto, dealing in the general trade of secondhand American vehicles. He echoes the sentiment that the demonstrations have dealt a blow to the auto market. "The extent of the damages incurred to the vehicles is large to the extent that some companies have completely halted purchase and sale of vehicles," Hassam decried.

"The majority of my costumers were Arabs. My company’s sales have decreased by 80 percent,” he lamented. Another car dealer says that lately, there is only a market for low-priced vehicles." [Only] cars whose prices range between eight to 10 thousand dollars are desired.”

Another factor in Erbil’s deteriorating markets is the longstanding weakness of the financial sector in Iraq. A historically fragile banking system has led many in Kurdistan Region to invest their incomes in real estate, vehicles and gold rather than depositing their money in bank accounts. Thus, the breakout of any violence affects all of these markets.

"It has become a tradition among people, when any unstable situation emerges, they withdraw their monies from the markets and immediately change their plans or delay them. Such developments badly damage the real estate sector and vehicles market," Abdul Latif explained.

The real estate sector has plummeted since the demonstrations began, and in some places property sales have fallen by as much as 80 percent. "The protests have directly and indirectly affected the real estate sector in the Kurdistan Region, reducing Arab costumers," said Haji Salam Faqe. He is in charge of the Haji Salam Real Estate Company, which has 16 branches across Iraq. "Another negative side of the demonstrations for us is that it has made people scared of the failure of Erbil-Baghdad relations. Therefore, the purchase of sale of real estate, according to our estimates, has decreased by 40 percent."

Reduced property sales have in turn affected the value of land and homes. "The price of a parcel of land has decreased by 15 percent, buildings and houses by 10," added Haji Salam.  "Those who buy land nowadays want to build houses or buildings, not to make a profit out of the sale or purchase of lands."

Chwarchra Real Estate, which acts as a bourse where daily prices are determined, also echoes the sentiment that the sector is suffering economically. "For example, we have a two story house in Farmanbaran neighborhood. Before this situation emerged, it was worth $90,000. It has now reduced to $70,000 and no one even wants it. In Hasarok 5 neighborhood, a 150 square meter household would sell for $11,000 in the past. It is now on sale for $85,000 and nobody is even interested in it."

At least 320 protesters and members of the security forces have been killed since October 1, and around 15,000 people have been wounded.  Several of Iraq's largest political parties met on Monday evening and agreed to give Prime Minister Adil Abdul-Mahdi a "45 days waiver" to make reforms – otherwise he will be ousted from office.