Considering Atconz Group’s role in Kurdistan’s real estate sector, where it is a pretty well known name, how would you define the company’s goals?
We have learned a lot from the market about how to design a business that works for Kurdistan—what are the market needs in terms of individuals and companies, what is available in the market to achieve certain qualities, and what is available in terms of raw materials and marketing tools. We try to mold these together into one model that works. Our ultimate goal is to develop a program for housing in order to participate in resolving the issue of mass housing for the needy.

Can you tell us more about this initiative, and how Atconz is going about executing it?
Iraq needs around three million housing units today, and we would like to be central to meeting that need, because we understand our locality better than most. Ultimately, this issue requires effort between the private and public sector; the two must develop, in a joint effort, a model to resolve this issue together. Because Kurdistan is about 20% of the entire Iraqi market, we are looking at the needs of something like half a million units here in Kurdistan. And, when we speak of affordable housing, we mean decent quality units, not cheap quality.

Tell us more about the product itself—what will the housing developments look like?
“Affordable decent” means meeting the minimum requirements of international standards in terms of sanitation, air quality, insulation, and thermal quality—this is what we would like to achieve. This is our ultimate goal. We hope that we will announce a few programs when the country is ready for it. The study has been done; we have been working on it for the last three years. We even addressed issues of green buildings and sustainability within the program to minimize costs. However, the market is not ready for it, so we are fine-tuning it and hopefully we will come up with a press release when the country is ready—hopefully as soon as possible.

How are some of the key projects at Atconz Group like New Azadi, Piroz, and Dragon Mall developing right now?
With New Azadi, we have handed over phase two and there is one phase to go. We delivered almost 600 units of housing. The New Azadi project is a dynamic process. When we started four years ago, it was a $100 million project. It has since expanded, largely because of the dynamic change in the market. This has altered the phases, and the project is now more than double.

On Piroz, we signed an agreement with Starwood International for a four star chain to be built in a location we have near the airport. It represents an investment of roughly $100 million, including the facilities. We anticipate that both the New Azadi project and Piroz will be finished by the end of 2017.

For the Dragon Mall, we have held back on it for reasons of trade and commerce. We are still doing the feasibility. We do not have a site or airport specified for the free trade zone, so the market is not ready for such operations yet; we are waiting for these issues to stabilize.

What green initiatives are you working on in Atconz’s projects?
As a matter of fact, we can announce to the IIG for the first time that we have recently begun a project of recycling sewage water for irrigation in Kurdistan. We have a system of wastewater treatment contained within it the project, and we are self-sustaining. Also, we are thinking of doing more green initiatives with our Piroz Hotel project. We will probably aim to have the first LEED (Leadership in Energy & Environmental Design) project in Iraq—which will be a major milestone in the country’s history.

On Piroz, we signed an agreement with Starwood International for a four star chain to be built in a location we have near the airport. It represents an investment of roughly $100 million, including the facilities.

What would you say are the key challenges in the market and how are you addressing them?
First of all, the dynamic here is very active, and challenges are related to the geopolitical environment. Second is that Kurdistan is still a cash economy. It is not like a standard economy linked to the stability of the international banking system. Therefore, the risk is higher than other places, but the reward is also higher. Investors with the best chances of success here have better knowledge of this dynamic environment and anticipate and prepare for changes. The Central Bank of Iraq governs the banking system in the Kurdistan Region, with private banks and insurance connected to it. Baghdad, however, does not support private banks to attract more investment, and they are not very good at attracting the insurance companies that allow the banking system to get involved in business. Today we have a retail banking system and a money transaction system, but little else because of regulatory burden from Baghdad (effectively not allowing the existence of mortgage banking). That is one of the burdens that we would hope the new government in Baghdad would pay attention to when it stabilizes, because this is the only way to attract investments into the country to help fixing our development problems.

How does the lack of a mortgage system affect your business?
This is a major problem. Imagine that a project sells units at $800,000 apiece. People bring $800,000 in cash in a sack, pay it, and get a house. This is unheard of in any international operating system. Even $100,000-$200,000 must be financed in cash. Alternatively, people pre-purchase new homes, where the developer takes a deposit of 20%, then 10% every six months and so on, and delivers the house after 4-5 years. As a result of this, we have so far seen building but we have not seen development. Because of scarcity and the cash economy, there is no freedom to put quality into buildings. People accept low quality, because they cannot finance higher quality. Investors and contactors cut corners for the lowest cost. There are no proper feasibility or financing processes, and the results are stunted in terms of quality. There is a fertile market for higher quality development once we have the mortgaging and banking involved, we hope.

What is your key piece of advice as a businessman to foreign companies minimizing risk while doing business in Kurdistan?
Most of the foreign companies did probing before they started to get involved. The best way to probe is to find a local partner. Most of the joint venture projects are more successful than foreign projects. This is because: we are talking investment, not contracts. With a joint venture, you will have the local knowledge, local networks, and local capabilities that will support your cause. This saves you possibly two years of getting along, because the local partner is connected and established. This saves you a lot of money. So joint ventures are a very good idea when you do it with a well-established company within the same field.