The Paradox of Residential Investment in Iraq: Free Land and High Unit Prices – A Study in the Application of Investment Law No. (13) of 2006

Abstract

In Iraq’s housing investment sector, where the government grants land to investors free of charge under Investment Law No. (13) of 2006 with the aim of reducing housing unit prices, yet prices continue to rise to levels far beyond citizens’ purchasing power. Although land historically represents about 25–40% of total project cost, exempting it has had only a very limited effect on final prices, with its actual impact not exceeding 12.7%. The data further show that investors have increased their profit margins to more than 25%, instead of the fair margin of 10–15%, resulting in the complete absorption of government support.

The study also highlights several economic and legal factors contributing to the problem, including rising construction material costs, weak price-regulation mechanisms, the absence of legal provisions that impose profit caps or require the allocation of subsidized housing, and financing obstacles that increase the financial burden on citizens. These issues have exacerbated the housing crisis, reduced the proportion of units affordable to low-income groups, and increased the spread of informal settlements.

The study proposes a set of reforms, most notably limiting profit margins to a maximum of 18%, allocating 30% of units at subsidized prices, providing government-backed loans with interest rates not exceeding 3%, and establishing a national authority for pricing housing units. Analytical results indicate that implementing these measures could reduce housing unit prices by up to 18%, restoring the law’s social role in achieving housing justice.