Iraq should consider financing new affordable housing projects on a public-private partnership (PPP) basis, according to Clyde & Co partner Adrian Creed.
Speaking at MEED’s Iraq Infrastructure Projects 2011 conference in Istanbul, Creed said that Iraq should look at Bahrain’s experience of using a PPP structure to build affordable housing. In doing so, Iraq’s government could avoid paying for necessary housing projects upfront and ensure that operational maintenance is carried out to a high standard.
A small housing PPP scheme could be used to test the market. They could be structured on a build-own-operate or build-own-operate-transfer basis depending on whether the government wants to own the assets. Bahrain’s affordable housing PPP project attracted a lot of interest and according to Adrian Creed, a similar project in Iraq would attract a lot of interest too.
Like in Bahrain, investors in any housing PPP schemes in Iraq would want to avoid collection risk should the units not be occupied. Therefore, the government could allocate the housing for public sector workers. Also, lenders will need assurances that they will get paid in the event of default or termination of contract.