BAGHDAD A city pockmarked by bombed-out buildings and blighted by daily power cuts may be an unlikely place to launch an upmarket estate agency, but Malik Khafoury is confident that Baghdad can be profitable.

A Hispanophone Iraqi who used to deal in luxury villas in the swish Spanish resort of Marbella, Khafoury acknowledges that the postwar lawlessness of the Iraqi capital and the lack of most basic services make it "20 times harder" operating there.

But he says he already has a steady stream of custom from diplomats and international organisations keen to set up shop in the new Iraq, and is confident that as the reconstruction process takes off, the initial trickle will turn into a flood.

Khafoury's company, Diplomats' Services Office, offers all the additional services any wealthy expat wanting to set up home here will need armed guards, emergency generators and water supply, satellite telephones, and 24-hour access to western-standard health care, should the worst arise.

"We are giving a complete service; we've got generators, we've got bodyguards, everything," Khafoury says.

Khafoury works out of a plush villa in Baghdad's wealthiest residential district, Mansur, where the mansions of long- established Iraqi families nestle alongside the homes of import-export merchants and security men who served under Saddam Hussein.

In the past, the presence of neighbours well connected to his regime provided its own protection. But the collapse of Saddam's army has seen much of its huge arsenal pass into civilian hands.

"These days everyone has weapons," Khafoury says ruefully. "But Mansur is well protected. We have approximately 150 people with guns."

For the time being, Khafoury can offer only homes for rent with the collapse of the government and the looting of much of its archives, there is no land registry left to legalise any sale.

However, he has a large list of properties from family and friends to let, and a few belong to people who have fled the violent crime terrorising much of the city.

Most people, he says, simply want to live in smaller homes.

"In Mansur there are many houses which are very big, and it is difficult to maintain them."

Khafoury himself has eight luxury homes around Mansur and was working on another when war broke out. Despite its huge plate glass windows, the only damage it sustained during US bombing was one small crack.

"I was not intending to work in the property business here, I just bought houses for my family.

"Friends from abroad were asking me to help find them homes or offices, and after doing it once or twice, I suddenly realised that there was a business in it."

Khafoury says that he already has half a dozen satisfied lessees, and about two dozen more have engaged his services. He has taken on more than 20 staff members to supplement the services of his 50strong family, and already sees it as a "long-term business".

Prices start at $20000 a year for a furnished two- or three-bedroomed house, rising to $200000 for a 10-bedroomed luxury mansion "better than any hotel".

But he warns that with the sharp postwar rise of the Iraqi dinar against the greenback, dollar prices are going up all the time.

From a rate of 3500 dinar to the dollar at the end of the war, the unit has risen to less than 1000 dinar, but still suffers wild daily fluctuations.

Khafoury says that the soaring value of the currency is part of the reason he got up and running so quickly.

"All my savings are in dollars, but I have to pay wages in dinars."