Departure of foreigners collapses housing market for Kabul's mega-mansions
Stars and Stripes March 15, 2015
KABUL, Afghanistan — As the number of foreigners in Afghanistan’s capital continues to dwindle, “House for Rent” signs have become a common sight on the palatial mansions that dot its upscale Sherpur and Wazir Akbar Khan neighborhoods.
The candy-colored villas are known locally as “poppy palaces” because of the widespread suspicion that the money for them came from heroin and opium, Afghanistan’s largest export. But analysts say they are paid for with proceeds from activities both illegal and legal, including some of the hundreds of billions in foreign aid and investment that have flowed into Afghanistan in the past decade.
This includes Afghanistan’s pervasive culture of corruption — the illegal siphoning off of government and foreign aid funds — but also income from the sky-high rents that foreigners have been willing to pay for luxurious accommodation here over the past decade.
“Most of Kabul’s mansions, palaces and huge buildings are built with illegal money, either from drug business, corruption, human trafficking” or other criminal activities, said Sayed Masoud, an economics professor at Kabul University.
In the past, such mansions — often surrounded by high, fortified walls and multiple steel gates — could easily be rented out to foreign diplomats, nongovernmental agencies, news organizations and security companies for between $30,000 and $80,000 a month.
An investment of several million dollars of questionable origin could be recouped within three or four years through the exorbitant rents, which were usually paid into “clean” accounts abroad.
“Money laundering is like drinking water in Afghanistan. It is very easy,” Masoud said.
But as the U.S.-led international force in Afghanistan started drawing down from a high in 2011 of 140,000 troops to just 12,000 at the end of last year, thousands of foreign contractors, security personnel, aid and reconstruction staff and diplomats also left the country.
Suddenly, people who had been willing to pay top dollar for luxurious — and heavily fortified — accommodations in Kabul were no longer there, and the property bubble burst.
‘Narcotecture’ boom The poppy palaces have been part of a building boom in the capital since the overthrow of the Taliban regime in 2001. Dozens of high-rises have also gone up, often in odd places such as narrow alleys without sidewalks or parking spaces. On a hillside opposite the civilian terminal at Kabul’s international airport, apartment blocks have replaced the mud-brick shanties that once occupied the area.
Many of the mansions were built in a garish hodgepodge of architectural styles, ranging from classical Greco-Roman and ancient Egyptian to ultramodern. The grandiose buildings in crayon colors are lampooned here as examples of “narcotecture” in a rapidly expanding city characterized by unpaved roads, open sewers and low, mud-brick houses.
Mohammad Sadiq, a civil engineer, said that rich Afghanis had always liked “palace-type” houses and that the jumble of styles was the result of owners trying to outdo their neighbors.
“In our history, palaces were places for the rich and powerful. So now, those who make a lot of money or those who have political power are trying to emulate that,” he said. “And since no Afghan likes to have the same house as his neighbor, he will definitely try to make it bigger, better and more colorful.”
Narcotecture is not unique to Afghanistan. The term was first used to describe the palaces built by Colombian cocaine cartel head Pablo Escobar in the 1980s. Since then, nouveau riche businessmen and oligarchs have embraced it wholeheartedly. Such sprawling, ostentatious mansions and cemetery shrines can also be found in locations ranging from Russia and Ukraine to the Balkans, the Persian Gulf and Mexico.
Prices plummet Over the past two years, prices for the big mansions in Kabul have nose-dived. Rents are said to be a third of what they used to be — when renters can be found. Most of the mansions remain occupied by either their owners — usually senior government or military officials — or embassies, other foreign missions and foreign agencies.
“When I started building this place in 2011, the market was still very strong,” said the owner of a multistory villa that now stands empty. “But as the pullout of foreign forces neared, demand dried up as most foreign civilians also left Kabul.”
The owner, who did not want to be named because he feared it could have a negative effect on his business, said the $2.5 million for the building came from bona fide businesses in the United Arab Emirates and had nothing to do with illegal funds.
“If I can’t rent it out, my family will move in and live here,” he said.
In addition to nearly 100 mansions, a number have been left unfinished. Most are likely to remain on the rental market, though at reduced rates. Others may be sold.
In addition to the drawdown of international forces, a string of high-profile attacks on foreigners in recent months has convinced many it is time to move on. One of the worst was a commando-style attack in January 2014 on the Taverna, a Lebanese restaurant popular with the expatriate community, in which 21 people died.
That was too much even for some foreigners who had established successful businesses in Kabul. Saska Galic had run a Dalmatian seafood restaurant, Zadar, blocks from the Taverna, but closed it last year after 10 years in Kabul. She returned to Croatia, where she was reached by phone.
After the Taverna attack, she said “most internationals realized it was just too dangerous to remain in Kabul.”
Zubair Babakarkhail contributed to this report.