In Somalia's battle-scarred capital of Mogadishu, improving security sparks real estate boom

MOGADISHU, Somalia – Mohamed Nor's phone rings constantly, kept busy by the property hunters who want to own a piece of Mogadishu. Other clients sit on a chaise longue inside his airy office in the battle-scarred Somali capital, waiting patiently for the real estate agent's attention.

"Yes, we have any sort of property," Nor tells one caller. "Come to me today so I can show you some."

This seaside city's real estate market has seen an upsurge in demand over the last two years, thanks in large part to security gains made following the ouster of the al-Qaida-linked insurgents of al-Shabab. Although Mogadishu and other parts of Somalia are still a long way from firm stability and suffer the occasional militant attack, property brokers such as Nor now answer the many calls of ordinary Somalis who want to invest their money at home.

The real estate boom started with the arrival of aid agencies that assisted thousands of famine-hit Somalis in 2011. Those foreign aid workers who briefly moved into Mogadishu paid higher rents. More and more houses are now available for sale or rent, in part because landlords appear eager to tap into the influx of new arrivals from the diaspora.

On a recent morning, as Nor sipped strong coffee in his office, two portly men arrived and asked to be shown around. He stepped out with the potential buyers, pointing here and there at newly built houses for sale. When the men settled on a gritty stone house located near the presidential lodge, negotiations with the owner quickly commenced and a deal was sealed within hours: $900,000.

That figure was unthinkable two years ago, Nor said, estimating that such a house would not have fetched more than $80,000 at a time when the city was largely covered in rubble amid fierce fighting between African Union-backed government troops and al-Shabab fighters.

The $900,000 deal illustrated dramatic changes in the property sector of a country where many still live on less than $1 a day. The appearance of growing security may be encouraging speculation, piling pressure on poor Somali families who cannot afford higher rents. Many have been evicted after failing to pay rising monthly rents.

"We were sadly left at the mercy of merciless landlords," said Sahra Hashi, a mother of six who was forced to move out of her long-time residence after her landlord increased the rent. "Life is getting tougher for us." The monthly rent was raised from $450 to $1,500 — a figure that she believes could only be afforded by expatriates such as the one who has since occupied the house.

Sensing the possibility of higher returns, some landlords are subdividing their properties into smaller units to accommodate more tenants.

Yusuf Abdiqadir, a father of two who pays $500 for a one-bedroom apartment in Mogadishu, said a lack of many housing options leaves some tenants especially vulnerable to landlords who raise the rent on short notice.

One real estate agent, Liban Hashi, said it is simply "good business" that property prices have more than quadrupled in a couple of years in this hardscrabble city.

Both Nor and Liban said they can make up to $10,000 in commissions weekly, about as much as they used to earn yearly when Mogadishu was still in the grip of al-Shabab. The most desirable, and expensive, houses tend be located closer to the sea or the seat of Somalia's government, where security is believed to be tighter, brokers said. Some residential houses have been sold for as much as $3 million, according to Nor.

The brokers owe their success in part to the aura of chaos that still pervades Mogadishu, where it is hard to collect taxes and the economy depends on a thriving informal sector. Properties are not advertised in the media, and real estate agents, who are often middle-aged Somali men, get their information by walking the streets of Mogadishu and seeking out potential sellers. In open restaurants and spots within the sprawling Bakara market, potential buyers meet brokers and consider possible deals.

The informal nature of the property market encourages scams and land disputes, producing dozens of land claimants with title deeds who attend court in Mogadishu each week to settle land disputes.

Halimo Sheikh Ahmed, a Somali-American woman who says she is locked in a dispute with a man who claims ownership of her father's land, described Mogadishu's property market as "complicated."

"They get fake documents and claim your land," she said. "There's no way out, except to fight for your rights."