Baghdad not so bad?

Baghdad may not spring to mind as a holiday or investment destination, but the property market is undergoing a dramatic revival thanks to a drop in violence in the city.

Last year, when sectarian killings raged in Baghdad, it seemed unlikely that the stability would return to the city to the extent where the property market would be able to get back on its feet.

But now, property prices have doubled in some areas of Baghdad in recent months and many properties sell or are leased as soon as they hit the market. This is mainly due to the dramatic fall in violence in the city, which hit a four year low earlier this month.

The pattern has shifted from being a glut of property for sale and no buyers to snap it up, to a glut of buyers with no property to snap up.  

In turn, the Government is urging millions of Iraqis to return home, sometimes even sponsoring flights to bring them back. There are 2.8 million people displaced in Iraq. Most are from Baghdad, and fled a wave of violence that followed the bombing of a revered Shiite shrine in 2006.

The property market in Baghdad is extremely divided, with Shiites and Sunni Arabs having reserved districts so that they do not have to mix.

Thus, the new resurgence in the market means that attempts at reconciliation between the two sects are doomed to failure.

Shiites want to live in the relatively small district of Rusafa, so property prices there have risen with demand.

The security improvements in Baghdad are dramatic, so investing in property in the city could be a good long-term bet.