The Market
According to a report by the Economist, Iran has been ranked 39th for producing $23 billion of industrial products in 2008. From 2008 to 2009 Iran has leaped to 28th place from 69th place in annual industrial production growth rate. A recent report by the World Fact Book ranks Iran 3rd among “emerging industrial powers” in the world after China and India in terms of its industrial growth. According to the report, Iran’s industrial sector grew by 4% in the year 2009. Iran was ranked 13th among emerging economies in 2006. Overall, Iran is ranked 31st in the world in terms of its industrial production growth rate.The government of Iran has plans for the establishment of 50-60 industrial parks by the end of the fifth Five-Year Socioeconomic Development Plan by 2015. Iranian contractors have been awarded several foreign tender contracts in different fields of construction of dams, bridges, roads, buildings, railroads, power generation, and gas, oil and petrochemical industries. As of 2011, some 66 Iranian industrial companies are carrying out projects in 27 countries. The availability of local raw materials, rich mineral reserves, experienced man power have all collectively played crucial role in wining the international bids.
Iranian Building and Construction Sector
In recent years, the construction industry of Iran has been thriving due to an increase in national and international investment to the extent that it is now the largest in the Middle East region. The Central Bank of Iran indicate that 70 percent of the Iranians own homes, with huge amounts of idle money entering the housing market. The annual turnover in the construction industry amounts to US$38.4 billion. The real estate sector contributed to 5% of GDP in 2008. Statistics from March 2004 to March 2005 put the number of total Iranian households at 15.1 million and the total number of dwelling units at 13.5 million, signifying a demand for at least 5.1 million dwelling units. Every year there is a need for 750,000 additional units as young couples embark on married life.At present, 2000 units are being built every day although this needs to increase to 2740 units. In addition, Iran’s geographical position over a seismic belt necessitates the reinforcement and renovation of housing. This is possible only through a boom in real-estate development and foreign investment.
The Central Bank of Iran indicate that 70 percent of the Iranians own homes, with huge amounts of idle money entering the housing market. The housing industry is one of the few segments of the Iranian economy where state capital shares as little as two per cent of the market, and the remaining 98 per cent is private sector investment. There is little red tape or hurdles and, as a result, through launching mass development projects, the use of new technologies and fast-pace project execution, a larger portion of the housing market is accessible. This is also true for new construction materials and technological advances. Around 3 to 6 percent of housing units constructed yearly are solely for renting purposes. Around 20 percent of housing units in urban areas are rented. The average annual increase in house prices has been around 20 percent over the past ten years with a peak reached between 2006 and 2008. At present, the average price of a housing unit in urban areas is about 10 times the annual income of an urban household. Average construction cost for 1m² of urban residential buildings in the first half of 2008 was $350 dollars. In 2011, Iran implemented a national electronic system for the registration and tracking of real estate transactions in order to bring more transparency to the market (97% of real estate transactions and ownership changes have been recorded in the new system).
Opportunities for foreign companies
Thousands of foreign firms have established agents in Iran or partnerships with domestic manufacturers, both investing directly in the housing market and targeting other Persian Gulf markets.
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Iran has capable construction and engineering companies |
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Mass housing. In 2010, five foreign companies from Turkey and South Korea have concluded contracts to build 40,000 houses in Iran in relation to the "Mehr national housing plan". Previously, companies from Malaysia and South Korea have won development contracts under the Mehr Housing project. |
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New technology. |
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Large projects such as dams, tunnels, industrial projects, oil industry. There are hundreds, perhaps thousands, of big tunnels in Iran. |
