Bloom Properties, a developer based in Abu Dhabi, is in talks with the government of Iraq to build a multibillion-dollar property development in Karbala.
Karbala is one of the holiest cities for Shiite Muslims and it drew two million pilgrims to the Imam Hussein and Hadrat Abbas shrines last year.
Bloom’s proposed investment would be the latest in a series of major developments launched over the past few years by UAE firms in Iraq to take advantage of the country’s economic growth after years of war and civil strife.
Emirati investors were responsible for future spending commitments of US$37.7 billion (Dh138.47bn), or nearly a quarter of all investment pledged to Iraq this year, a report from Dunia Frontier Consultants shows.
“The UAE is leading the pack so far,” said Kyle Stelma, the managing director of emerging markets at Dunia.
Dunia values the Bloom project, called Al Madeena Al Jadeeda City, at $18bn, which would make it one of the largest property developments ever announced in Iraq.
Officials from Bloom declined to comment. The company is the property development arm of National Holding, a conglomerate owned in part by members of the Abu Dhabi Royal Family.
Iraqi authorities had previously announced plans for a project the size of a small city just west of the old city, near the Al Razzaza lake. Karbala is the site of a battle in AD680 that resulted in the death of Hussein Ibn Ali, the grandson of the Prophet Mohammed.
Other multibillion-dollar property projects in Iraq have been launched by Bonyan International Investment Group, Damac Properties and Al Maabar.
But after the global credit crisis, some of these projects have been delayed. Damac’s Dh55bn Tarin Hills project is one, government officials in Iraq say.
Many regional developers have been looking at Iraq for investments. More than six years after the US-led invasion, stability has started to return to sections of the country.
And with oil revenues expected to rise thanks to foreign investment, the government is expected to spend on infrastructure, housing and industrial projects across the country.
“If the Iraq government and major corporate groups are looking for partners to rebuild the country, it is only logical that they look at groups within the UAE, who have experience with large-scale construction and infrastructure work,” said Blair Hagkull, the head of the MENA region for the property consultancy Jones Lang LaSalle.
Other major UAE companies to invest in Iraq include Crescent Petroleum and Dana Gas, which are working on gas projects in the Kurdistan region in the north of the country.
South Korea and the US are ranked as second and third for foreign capital commitments to Iraq, the Dunia report says.
Next year could be even bigger for economic development if the Iraqi elections go smoothly and the government starts to allow deals to go through, Mr Stelma said.
“If elections go well, we expect upwards of $50bn worth of investment in oil and gasfields alone,” he said. “You are going to see two other big things: a massive investment in residential, low-income housing and opportunistic investments in large-scale agriculture projects.”
Much of investment committed this year has been directed towards the south of the country in areas such as Basra and Anbar, which is an important sign that stability is spreading across Iraq, Mr Stelma said.
In previous years, most investments were made in Kurdistan, which enjoyed greater security after the war.
The National