July 15th saw the grand re-opening ceremony of the historic Al-Rasheed Hotel, one of the most luxurious and storied buildings in all of Baghdad. The Hotel just received a much needed $65 million renovation, carried out by Britain’s Harlow International. Now that the Al-Rasheed Hotel is back in business it will be managed by Holland’s Kempinski Hotel group.
The Hotel’s renovation was undertaken as a fundamental piece of Iraq’s plan for showing the world that the country is on track and attracting foreign investors.
"The rebuilding of infrastructure, including palaces and airports, is evidence of the ability of Iraqis to achieve what they want, torevive Baghdad again and to encourage foreign investment,” Foreign Minister Hoshyar Zebari said at the Al-Rasheed Hotel’s ribbon-cutting ceremony.
The Al-Rasheed and Baghdad’s five other largest hotels were all closed down last year to allow for millions of dollars in renovations prior to the Arab Summit last March (which ended up being postponed and eventually called off until next year). It is the only luxury hotel located inside the heavily protected Green Zone, a cordon of Baghdad that is protected by large concrete walls and was once used as the US military’s headquarters in the city.
Both the US and British embassies to Iraq are located within the Green Zone, as well as the Iraqi parliament and the prime minister’s office. Foreign business people and other visitors are drawn to the relative safety of the Green Zone from outside attacks, which is good news for the Al-Rasheed as it reopens for business with several luxurious new features.
"Everything has been brought in from the UK," said Mazin Wajih, the managing director of Harlow International. "This has been under the scrutiny of the Kempinski Hotel group, which approved the majority of the designs.”
The renovation costs around $60 to $65 million, with everything from the hotel’s plush carpets to its glittering chandeliers imported from the UK. The Al-Rasheed Hotel will officially open for business sometime in late August or early September, marking the beginning of a new era of promising development in Baghdad.
The Al-Rasheed renovation project comes at the perfect time for Iraq as the country continues to rebuild its infrastructure and attract outside investors. As more and more progress has been made, foreign investors have flocked to the country in search of the many opportunities presented by an oil-rich country like Iraq.
Dunia Frontier Consultants, a consulting firm based out of Washington D.C., estimates that foreign individuals and companies have already been responsible for more than $45.6 billion in investments, service contracts and other business deals in Iraq during the first seven months of 2011. That is already double the amount of foreign investment made in Iraq during the same time span in 2010.
Outside companies have begun to take notice as Iraq resets its foundations. International airlines have begun flying to the country, a positive sign not only for the Al-Rasheed, but also for other hotels in development. Middle East based airlines such as Emirates, Etihad and Qatar Airways all fly to Baghdad now, as well as airlines from other parts of the world such as Austrian Airlines and Lufthansa. This has led to hotel chains such as Rotana, Safir, Best Western, Swiss-Belhotel International and Millennium & Copthorne soon coming to Iraq.
With a population of 30 million residents, a rebuilding infrastructure and the strong potential for an oil-rich economy, Iraq is ripe for development by outside investors that are willing to take on the risk that is associated with doing business in the country. There is a serious need for housing, roads, manufacturing, and consumer services.
“What you have is a country that produces oil, which makes it very attractive for the hydrocarbon industry to invest there. It’s a country with a very large population,” said Daniel Broby, chief investment officer at London’s Silk Invest. “The middle class suffered a lot of problems but they are educated and there is a lot of home ownership, so banking and telecommunications industries are very attractive for foreign investment.”
According to the International Monetary Fund, Iraq’s economy will grow 12.5 percent this year as a result of high energy prices that drive up the value of oil. Iraq’s Oil Ministry said that the country’s petroleum industry brought in $7.17 billion just during the month of June as the price per barrel broke $100.
As Iraq ‘s government starts pulling in more money, increased spending is planned as well. Planning Minister Ali Al-Shukri announced in July that the country hopes to increase its investment budget by 50 percent in 2012, bringing it up to as much as 60 trillion Iraqi dinars ($51 billion).
While Iraq’s oil and gas industries grab the headlines, it is the country’s residential real estate market that has been drawing the most interest from foreign investors. Residential construction accounted for a third of all foreign commercial activity in 2010. The country currently has a need for an additional 1.6 million homes to house its population. Transportation, electricity and general infrastructure projects also garnered significant amounts of foreign investment.