Friday, May 27, 2011

Iraq inks $7.25bn housing deal with S. Korea firm

Iraq inks $7.25bn housing deal with S. Korea firm

Iraq signed a $7.25 billion deal with a South Korean firm to build a completely new neighborhood east of Baghdad, officials said on Thursday, in a bid to alleviate a worsening housing shortage.

Construction Company Hanwha Engineering and Construction will build 100,000 new homes plus accompanying infrastructure for Besmaya, an arid area 25 kilometres (15 miles) from the capital, according to the Iraqi government and the South Korean company.

The project, which will kick off "immediately", will provide housing for 600,000 Iraqis, according to a statement from Prime Minister Nuri al-Maliki's office late on Wednesday.

A preliminary contract was signed by Sami al-Araji, the chairman of Iraq's National Investment Commission, and a Hanwha representative. Araji was not immediately available to comment when contacted by AFP.

"This is the largest single deal a South Korean construction firm has ever clinched overseas," a spokesman for Hanwha told AFP.

The firm said a final contract could be signed before December.

Hanwha will be in charge of engineering, procurement and construction for the town, to occupy a 1,830-hectare (4,520 acre) site. Construction will take seven years, said the firm, an unlisted unit of the Hanwha Group.

Last month, Hanwha Engineering won a $1.2 billion deal to build a power station and desalination plant in western Saudi Arabia.

In 2009, the builder secured a $750 million order from Saudi Arabia to build a power plant.

After decades of war, sanctions and under-investment, Iraq is experiencing a major housing shortfall, and the difficulty in finding a home was one of the reasons protesters took to the streets in rallies nationwide earlier this year.

The announcement of the contract comes with just two weeks to go before a 100-day deadline issued by Maliki to his cabinet expires, with the premier having called on ministers to make improvements or face the sack.

Around 57 percent of Iraq's urban population lives in "slum-like conditions", according to a report published this year by the United Nations.

The report noted that 13 percent of houses in urban areas have more than 10 people living in them, with 37 percent holding three or more people per room.

"Overcrowding will only increase as the population continues to expand due to high fertility rates and a growing youth population," the report said. "A range of housing solutions will need to be provided at different price levels."

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