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Housing Starts Down...So What?


Real estate investors, why the long face? Pack a bag and head to a place where the real estate streets are paved with gold...


Housing starts came in yesterday at a seasonally adjusted annual rate of 1.47 million, down 2.1% from the downwardly revised April estimate, the Census Bureau said. On a year-over-year basis, the May housing starts dropped 24.2%.

This comes a day after the National Association of Homebuilders said its builder confidence index fell to the lowest level since 1991.

Real estate investors, why the long face?

Pack a bag and head to a place where the real estate streets are paved with gold:


In "The Other Iraq", development is booming.

Take a look at what Bob Simon had to say about it on "60 Minutes":

Irbil's Dream City ("The Most Elegant Square Kilometer in Iraq"), will include about 1,200 houses priced between $180,000 and $700,000, as well as three schools, a supermarket, a restaurant, recreation areas, a casino and a mosque, according to Amer Ibrahim, the project's manager and architect.

Andrew Wylegala of the U.S. Commercial Service says, "When you get here, you can't help but be bullish about Kurdistan-as a market in itself, as a gateway for getting into the rest of Iraq, and as a motor that's going to drive the rest of Iraq."

New Kurdish construction

Lieutenant Colonel Jim Bullion, of the Multinational Security Transition Command in Iraq, says, "The business opportunity in Kurdistan is more attractive than China was in the early 1990s. What is needed are astute investors who can see an opportunity in its infancy and who can move quickly to take advantage of it before others do."

Kurdish government officials talk about challenging Dubai as the Middle East's main transportation and business hub.

Herish Muharam, chairman of the Kurdish government's Board of Investment, says, "We're not saying Kurdistan is heaven. But we're telling investors that Kurdistan can be that heaven."

New houses in Dohuk

"The image that people have of Iraq around the world is violence in the city of Baghdad. [But] Kurdistan is an area where there is security, where there is economic activity, where there is prosperity," says U.S. Ambassador to Iraq Zalmay Khalilzad. "To the businesspeople around the world, I say, come and satisfy the market in Kurdistan."

In fact, Kurdistan wants Western enterprise so badly, they're opening up their own versions of it until it actually arrives:

"One Big Mi, please."

"One Big Ma, please."

Domino's isn't there yet, either-at least not officially…

"Do I get unlimited pita sticks with that?"

More than 5,800 companies have been registered over the past few years, of which 1,900 are foreign. The regional parliament passed an investment law not long ago to lure foreign capital to Kurdistan, which gives such incentives as a 10-year tax and customs holiday, full ownership of land to foreign investors, full repatriation of profits and free land plots for projects.

The Irbil International Hotel, owned by the Sumer Group, a subsidiary of Nasri Group of Companies, and managed by Sheraton

Halor Sherkar, a member of the Sulaymaniyah Chamber of Commerce, has lost track of how many projects are rising from the foothills of the Zagros Mountains, close to the border with Iran.

"In five years' time, it'll look like Paris," he says.

Sulaymaniyah in five years? Uh, maybe six…

Sulaimaniya will also soon be home to the American University of Iraq.

For the first five years of the university's existence, degree programs will focus on subjects crucial to the country's development: business, petroleum engineering and computer science.

"We want them to study the ideas of Locke, the ideas and writings of Paine and Madison," said Azzam Alwash, executive secretary of the university's board of directors said. "We want them to understand what democracy is."

It's not really that far-fetched. They seem to like Americans in Kurdistan:

A restaurant in Irbil

To facilitate Kurdistan's entry into the 21st century, South Korean mobile phone manufacturer LG has introduced the first cellular phone that supports the Kurdish language.

"We have a great deal of interest in exploring and investing in this market," said LG Sales Director Gu Wang.

However, all that glitters isn't necessarily gold.

The Kurdish government has hired lobbyists in Washington to help promote its development agenda, urging the State Department to change its travel warning for Iraq to distinguish Kurdistan from the rest of the country. Iraqi officials regard the travel warning as an impediment to investment and tourism.

Douglas Layton, director of the Irbil office of the Kurdistan Development Corporation, says, "I'd much rather walk down the streets of Irbil than walk down the streets of Detroit, New York, Washington, and Chicago."

According to The New York Times, Layton stations bodyguards outside his office and keeps a Kalashnikov against the wall behind his desk.

Details, details…
No positions in stocks mentioned.
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