Bloom Properties says it has slowed down plans to build 40,000 homes in Iraq because of the current instability.
Bloom, a subsidiary of the Abu Dhabi-based National Holding said yesterday that although it had completed all design work and won the necessary approvals to build the homes in the holy city of Karbala, it had decided to postpone construction until the situation in Iraq had stabilised.
In March 2013, at a ceremony attended by then Iraqi prime minister, Nouri Al Maliki, Bloom signed a contract with the Iraqi authorities to start work on developing the Shores of Karbala housing project.
The development is planned to be divided into four districts and includes hotels, offices, markets, clinics, schools and mosques.
That was in 2013 when the Iraqi government was offering generous incentives to property developers to come and build much-needed housing.
But just more than a year after the agreement was signed, ISIL fighters began a major offensive in northern Iraq, capturing cities including Mosul and Tikrit.
“We are still in coordination with the local government in Iraq on slowing the project down,” said Imad Mroueh, director of construction at Bloom. He was speaking at an event to showcase the developer’s latest Abu Dhabi villa project, the second phase of which is set to be handed over by the end of the this year.
“We will not move before we are making sure that the [Karbala] project is safe and the area is safe. The area is safe overall but the overall situation in Iraq, you see how it is, so we have decided to postpone actual construction,” he said.
When asked how much money it was costing Bloom to keep the project dormant, Mr Mroueh replied that the company was retaining its coordination office in Iraq.
“It costs us, of course, to keep the project alive but this is a project that we wanted, we went after. We have signed an agreement with the National Investment Commission of Iraq,” he said.
“Wars and disturbances tend to increase your construction costs for security issues. If we have to increase our construction costs then our sales strategy and sales prices will be different, so this is why we are slowing down on this.
“We still believe Iraq is a promising market but it requires a bit more stability.”
Bloom was one of a handful of UAE-based property developers to sign MoUs with the Iraqi ministry of construction and housing agreeing to cooperate on real estate projects in the war-torn country on the sidelines of Cityscape 2012 alongside Emaar Properties and Damac Properties, both of which have also invested heavily in projects in Iraq.
That helped Bloom to also secure in September 2013 a deal with the Iraqi government for a US$15 billion housing project on the outskirts of Baghdad, a development which is understood to be on hold.
Under that deal, Bloom agreed to build 50 per cent of the proposed Madinat Al Mustaqbal City of the Future scheme in Al Duhna, 14.5 kilometres to the west of Baghdad city centre. The project was designed to include 15,000 homes and was set to be developed in phases over six years.
Dubai-based Damac started construction on its $100 million, 26-storey Princess Tower serviced apartment building in the centre of Baghdad in May 2013.
At the time Damac said the tower would be completed in 2016. However, the project is understood to also have been put on hold because of the political situation.
And Emaar Properties launched an ambitious $3bn master plan in Erbil in Kurdish Iraqi in October 2013 designed to include 15,000 homes. The company has given few updates on the project since then.
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