REAL ESTATE IN FALLUJAH

UNCLAS BAGHDAD 002581 SIPDIS E.O. 12958: N/A TAGS: ECON INV EFIN IZ SUBJECT: REAL ESTATE IN FALLUJAH ¶1. (U) This is an Anbar ePRT reporting cable. ¶2. (U) Summary: Household wealth in Fallujah city is likely approaching U.S. levels based on appreciating real estate prices and low levels of debt. On the other hand, the commercial real estate market remains an eyesore in Fallujah as many of the buildings remain neglected from lack of capital investment as the citizens anxiously await GOI payment of the $87.45 million for 3,000 individual industrial compensation claims. End Summary. ¶3. (U) Real estate prices in Fallujah city are normalizing and are approaching parity with U.S. prices, based on conversations with Fadhil Mijbil Ali, Manager, Property Registry Directorate, Fallujah branch. Dr. Fadhil is a lawyer by trade and holds a doctorate in Heritage. Although he would not offer the average selling price of a home in Fallujah, he provided significant detail on selling prices per square meter. Approximately 40 percent of the homes are sold at prices at or above IQD 250 million or approximately $208,000, especially in Hey Al Dubat and Al Muallimeen areas. ¶4. (U) At IQD 250 million, a home buyer will typically purchase 250 square meters under the roof; resulting in a price of IQD 1 million per square meter or approximately $78 per square foot. This price holds constant for lower priced homes down to the range of 50 square meters, according to Dr. Fadhil. For homes larger than 250 square meters, the price increases to roughly IQD 1.2 million per square meter or $94 per square foot, reflecting a greater number of amenities. For example, 600 square meters of living space costs between IQD 700-750 million or approximately $600,000, according to Dr Fadhil. The median price per square foot of floor space in new one-family houses in the U.S. sold for $85 in 2007, according to the National Association of Home Builders. The median selling prices for existing and new homes in the United States were $213,800 and $230,900, respectively, in July 2008. ¶5. (U) It is likely the wealth of the average Iraqi household is on par with the United States. Many Iraqis completely own their homes. This is due to many factors, to include religious as well as a poorly developed mortgage market. In the United States, the average homeowners' equity - the market value minus mortgage balance - was 47.9% by the end of 2007 according to the Federal Reserve - the lowest level since record keeping began in 1945. Approximately 30 percent of American households own their homes without a mortgage. ¶6. (U) The commercial real estate market is not the only eyesore in Fallujah as many of the buildings remain neglected from lack of capital investment as the citizens anxiously await GOI payment of the $87.45 million for 3,000 individual industrial compensation claims. CROCKER