Investors in real estate in Iraqi Kurdistan need to be selective and avoid sectors where investment is already sufficient, IKG Property group chairman, Mario al-Jebouri, told the MEED Kurdistan Projects conference in Erbil on 8 June.

He said the best opportunities are in high-quality housing, commercial buildings, industrial and logistics projects, high-quality retail developments and undeveloped land.

There is evidence of a looming oversupply of luxury hotel developments.

“We are worried there will be an oversupply of four- and five-star hotel rooms,” said Al-Jebouri.

The key real estate sectors are:

Residential “The residential real estate market is in its infancy, but it has attracted the most investment, particularly from local investors,” Al-Jebouri said. “The first of the new wave of residential projects is going to enter the market in the next 18-24 months.”

He said there would be a huge spike in the number of apartments in 2015 and a significant increase in the number of villas. “A total of about 20,000 apartments are expected to be completed in 2015 and 22,000 in 2016.” Al-Jebouri said. Apartments were now selling at about $2,500 a square metre in Erbil.

“The rental values of apartments and villas within gated communities are expected to rise,” Al-Jebouri said. “Sales prices in these two sectors are also expected to rise. The trend is very healthy.

“We believe luxury, high-quality, gated communities will deliver high returns. There is a shortage of affordable housing and demand for service apartments will be strong.”

Commercial “The amount of commercial office space in Kurdistan is very small,” Al-Jebouri said.

Rental rates for office space in Erbil are higher than in Abu Dhabi. New supply in the sector is expected to be more than 1 million sq m in the next couple of years, Al-Jebouri said.

Retail Al-Jebouri said there are 300,000 sq m of purpose-built retail space in Erbil. “Standards are still not in line with the expectations of international retailers,” he added. However, he expects about 700,000 sq m of retail space would enter the Erbil market soon and that there will be almost 1 million sq m of total available space by 2018.

Industrial The Kurdistan Regional Government (KRG) is now pressing for owners of industrial projects to move into authorised areas, including Erbil’s four industrial zones. “A lot of the current industrial tenants are on unofficial estates and will have to find alternatives,” Al-Jebouri said. “We are beginning to see the start of international and free zone investors coming in. This will be one of the most promising sectors in real estate in the next four-five years.”

Al-Jebouri said warehousing rentals are now $0.5-$2.0 a sq m. “We expect that will remain the same for the foreseeable future due to increase in supply,” Al-Jebouri added.

Hospitality and leisure. Al-Jebouri said Erbil has 1,000 four-five star hotel rooms. This will rise to 3,500 rooms in 2017.

“A lot of investors are now looking to build hotels as part of larger projects,” he said. “Anyone looking at investing in hospitality and leisure should consider furnished apartments.”

Land “Land is extremely interesting as a long-term investment,” Al-Jebouri said. “We are seeing 10 per cent price growth year-on-year and a lot of opportunities in land banks.”