Iraq signed a $7.25 billion deal with a South Korean firm to build a completely new neighbourhood east of Baghdad, officials said on Thursday, in a bid to alleviate a worsening housing shortage. Construction company Hanwha Engineering and Construction will build 100,000 new homes plus accompanying infrastructure for Besmaya, an arid area 25 kilometres (15 miles) from the capital, according to the Iraqi government and the South Korean company.
The project, which will kick off "immediately", will provide housing for 600,000 Iraqis, according to a statement from Prime Minister Nuri al-Maliki's office late on Wednesday. A preliminary contract was signed by Sami al-Araji, the chairman of Iraq's National Investment Commission, and a Hanwha representative. Araji was not immediately available to comment when contacted by AFP.
"This is the largest single deal a South Korean construction firm has ever clinched overseas," a spokesman for Hanwha told AFP. The firm said a final contract could be signed before December. Hanwha will be in charge of engineering, procurement and construction for the town, to occupy a 1,830-hectare (4,520 acre) site. Construction will take seven years, said the firm, an unlisted unit of the Hanwha Group. Last month, Hanwha Engineering won a $1.2 billion deal to build a power station and desalination plant in western Saudi Arabia.