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Cablegate: Real Estate in Fallujah

VZCZCXRO0160
PP RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #2581 2270619
ZNR UUUUU ZZH
P 140619Z AUG 08
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC PRIORITY 8844
INFO RUCNRAQ/IRAQ COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

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

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