There was no urban change in the city of Karbala during the Ottoman rule of Iraq. None of the Ottoman governors who ruled Iraq for the five centuries of the Ottoman Empire, have cared for this matter, except for the governor "Medhat Pasha" who took power in 1869 AD, and was known for his passion for urban life and reforms, taking the European civilizational development as a way to these reforms.
During his reign, many Iraqi cities had witnessed important architectural reforms, including the holy city of Karbala, which he visited in 1869 AD. He ordered the demolition of part of the wall around it and the modernization of its southern part to clear the way for urban reforms in the city in order to reduce overcrowding and population density experienced by the city in that period.
"Medhat Pasha" brought an urban expansion in the modern style of planning, allowing the city to emerge from its isolation within the wall and to expand freely toward its southern parts.
As a result of this urban expansion, two new areas were added to the old city, namely the Eastern Abbasiyah and the Western Abbasiyah. As they were established on a high level of modern planning, with wide, straight more sophisticated streets, compared to the old part of the city.
Source:
The Karbala's Comprehensive Civilizational Encyclopedia – The Geographical Section: by The Karbala Center for Research Studies Vol. 2.