KABUL -- Billions of dollars in foreign aid and lucrative reconstruction contracts fueled a housing boom in Kabul for much of the past decade. But the high-rises and pricey mansions that now dot the smoggy skyline belie fears that the Afghan capital is headed for a crash.
The high-end real-estate market -- propped up by wealthy Afghan traders, foreign embassies, and international organizations that jumped in to buy or rent properties -- can hardly be described as robust today.
Kabul realtor Abdul Sami Mirza made a modest fortune selling and renting prime housing in Kabul's affluent Karte-Seh district. But those days are over, he says.
"There are no buyers. They've all disappeared," he says. "The political situation is bad, so people don't have the courage to buy. [Last year] the market was very good. But then the political situation badly affected those looking to buy or sell their homes. Many homeowners are going back overseas and leaving Afghanistan altogether."
The catalyst, Mirza says, is fear.
As tens of thousands of NATO-led coalition forces prepare for a major drawdown in 2014, uncertainty about future security and the country's heavy reliance on foreign aid have sparked an exodus. Demand and housing prices have plummeted by as much as 50 percent in wealthy neighborhoods occupied by Afghan businessman and foreign workers.
Just 12 months ago, Mirza provides as an example, he rented out a large house in Karte-Seh on around 240 square meters of land for around $21,000 a month. But when the lease expired and the British nongovernmental organization that used it as a guesthouse and office left the country, he was stuck with an unrentable property. Even though he has slashed the rental price to $9,000 a month, Mirza laments, he has still been unable to find a tenant.
'No Money In The City'
Abdul Hamid, an Afghan businessman, says he moved from his home in southern Ghazni Province to Kabul five years ago in the middle of the housing boom. Hamid, who says he went on to build dozens of houses, reveals that he is now heavily in debt and will leave the country as soon as he sells his remaining properties.
"Every night, we contemplate whether to stay in Afghanistan. I'm selling my properties because of the economy. Every day people are taking losses on their investments," Hamid says. "There are no jobs, and there's no money in the city. In the past, people trusted the housing market, but not anymore. People are tight-fisted with their money and think about what will happen tomorrow."
An apartment building stands unfinished on a street in Kabul
It's not for lack of demand. In fact, demand for low- and middle-income properties has never been higher in Kabul.
The lack of affordable housing revealed itself as a pressing social problem in recent years when Kabul's population exploded as rural Afghans headed to the capital in search of work. Inflated rental and buying costs meant that many ordinary people in Kabul, whose population rose from 1 million a decade ago to more than 5 million today, were left with few options to keep a roof over their heads.
Thousands erected illegal dwellings on government land. Others constructed mud houses resting precariously on slopes outside Kabul. The most disadvantaged sought shelter in slums and makeshift camps, where they have little access to water or electricity.
They never benefited from the city's previous housing construction efforts, seeing them as catering to the wealthy. And even as they see lucrative properties being vacated, landlords are still looking to maintain prices at levels that are well beyond the average Afghans' reach.
Dependant On Outsiders
Thomas Ruttig, co-director of the Afghanistan Analysts Network, an independent research organization in Kabul, says foreign aid and the forming of a "military and contracting economy" lured many Afghan expatriates and wealthy entrepreneurs back to the country.
That environment lifted many sectors, including housing, to unnatural highs and led to an unbalanced economy, Ruttig explains.
Afghanistan's weak position made it nearly entirely dependant on outsiders. The International Monetary Fund (IMF) estimates that foreign aid accounted for 97 percent of Afghanistan's entire gross domestic product (GDP) in 2010.