Ten kilometers southeast of Baghdad, just off the Baghdad-Kut highway, a whole new city is under construction. 100,000 residential units are planned to accommodate around 600,000 Iraqis in the biggest development project Iraq has ever seen. The project has received praise from numerous Iraqi figures, including former Prime Minister Nouri al-Maliki, who described it as a “dream” which “reflects our hope to provide housing units for all the Iraqi people who were deprived of their right to live in decent housing.”

The National Investment Commission (NIC) of Iraq is developing the Bismayah New City Project, with design and construction being handled by one of Korea’s leading engineering and construction companies, Hanwha E&C Corporation. A host of companies have been delegated different roles on the project. A gas-fired, 3,000-megawatt plant is currently being built by the Turkish Enka Insaat company, with the company’s chairman Sinan Tara quoted as saying that it would be financed by Mass Global and some Iraqi lenders. Hanwha E&C are currently building 14 sub-plants for the production of different construction materials including precast concrete.

The city will come equipped with all the necessary amenities, including schools, law enforcement and sports facilities . Bismayah is spread across a total area of 1,830 hectares, and will contain a sprawling infra-network, which will include a good supply of electricity and water, and a water & sewage treatment plant. The new city will also have a well-constructed road network, which will be linked to the nearby highway, connecting Bismayah to the nearby capital. Residential units will come in two types: traditional (living room is independent of the other rooms); and modern (kitchen and living room are interconnected). The units will also come in three different sizes: 100m2, 120m2, and 140m2. The price per square meter is uniform across the units at 630 USD/m2.

Most aspects of Bismayah project are unique in Iraq, including the availability of financing. Smaller scale housing projects have been built across Iraq, especially in the north, but had traditional Iraqi financing – one hundred percent cash. Bismayah is different, offering western economy style mortgage options. Take the 100m2 unit as an example. The unit costs 63,000 USD. Iraqi consumers will have the following four options for purchase:

These financing options make it affordable for citizens to purchase their own home without having to go through the traditional route of borrowing from friends and family. Given that the banking system in Iraq is maturing at a slow pace, mortgages are not yet available and so this is an attractive option.

The first 10,000 units are expected to be completed towards the end of 2015. However, while Hanwha appears to be on track to meet its targets, the Iraqi government, which is tasked with building the utilities infrastructure, including electricity and water, appears to be falling behind. Bismayah represents a crucial test of Iraq’s ability to successfully coordinate and implement a major infrastructure development project.