Bigger Loans for Real-Estate Developers

EghtesadOnline: Bank Maskan, the state-run agent bank of housing sector in Iran, granted 4,834 construction loans worth 3,659 billion rials ($31.95 million) to real-estate developers during the month ending Aug. 22, which indicate 82% and 33.7% growth in number and value respectively compared with last year's similar month.

News ID: ۷۴۸۶۳۰

06 October 2019

According to Mohammad Hassan Alamdari, an official with the bank, 9,820 construction loans worth 9,537 billion rials ($83.29 million) were taken out by home builders across the country in the first five months of the current Iranian year (started March 21), Hibna reported.

West Azarbaijan, East Azarbaijan and Kerman received the highest share of construction loans, in terms of number, among Iranian provinces during the period.

A total of 417.06 billion rials ($3.64 million) worth of loans were handed to applicants in West Azarbaijan, 507.31 billion rials ($4.43 million) to those in East Azerbaijan and 483.7 billion rials ($4.22 million) worth of banking facilities were given to real-estate developers in Kerman, according to Financial Tribune.

The bank granted a total of 165 construction loans to applicants in Tehran Province.

Bank Maskan’s facilities are chiefly granted for home purchases and home constructions in various forms, including bond facilities and savings funds.

Latest data show the bank paid 162,600 loans worth 70,620 billion rials ($616.76 million) during the four months ending July 22 to register a 5.4% rise in value year-on-year.

During the month to July 22, a total of 60,000 loans worth 27,540 billion rials ($240.52 million) in loans were paid, indicating an increase of 7% in the value of facilities compared with the same period of last year

Bank Maskan’s Housing Savings Account comprises 12% of the total resources of Bank Maskan.

HSA is the bank’s primary and most successful initiative created nearly four years ago, which requires applicants to make down payments and wait for a year to become eligible for the home loans.

Target applicants mostly constitute first-time prospective homebuyers.

The scheme requires applicants to make an initial deposit and wait out the one-year maturity period for credits, plus the depositor’s down payment.

When the scheme was first launched, interest rate on the loans was set at 14%. In February 2017, after a directive by the Money and Credit Council, they were reduced to 9.5% in general cases and 8% for those who wanted to buy a home in rundown neighborhoods of the cities. These interest rates make HSA loans the cheapest in the country.

HAS is said to be a self-sustaining fund since all the resources it absorbs are redirected to boost the financial strength of Bank Maskan for it to be able to support prospective homebuyers.

Rise in Number of Construction Permits

The Statistical Center of Iran's latest report shows the number of permits issued during the fourth quarter of the last fiscal year that ended on March 20, 2019, increased significantly both compared with the preceding quarter (Sept. 23-Dec. 21, 2018) and the same period of the year before.

According to SCI, a total of 114,614 building permits were issued by municipalities across Iran’s urban areas in Q4, indicating a 50.1% increase compared with the quarter before and an increase of 23.9% year-on-year.

The average number of residential units to be built as part of each permit issued in Iran stood at 2.5 and the average floor area of units per permit was 466 square meters.

In the capital city, a total of 18,953 building permits were issued by Tehran Municipality in Q4, indicating a quarter-on-quarter growth of 12.5% and a year-on-year increase of 25.4%.

The average number of residential units per permit issued in Tehran was 7.1.

In Tehran, the total floor area of units in buildings with permits in Q4 was at 3,552,000 square meters, registering a 5.4% rise QOQ and a 29.8% increase YOY.

The average floor area of units per permit was 1,329 square meters.

Inflationary Recession

Iran's housing market has been bracing for inflationary recession amid a widening home supply deficit, Fardin Yazdani, the Comprehensive Housing Plan’s deputy for research, said.

Referring to increasing home prices in line with a decline in the number of home deals, Yazdani said the main reason for this is that the housing sector has failed to boost production.

"In other words, despite strong demand in the housing market over the past year, the supply side has failed to catch up," he was quoted as saying by the news service of the Ministry of Roads and Urban Development.

The Statistical Center of Iran's latest report shows the average price of each square meter of residential floor area surged by 82.2% in Q1 (March 21-June 21) on a year-on-year basis.

Compared with the previous quarter, prices registered a 20.7% growth.

The minimum price of each square meter of residential floor area in Q1 stood at 1.06 million rials ($9.29) with the maximum price registered at 668.18 million rials ($5,802).

The average price was about 35.31 million rials ($309).

In terms of the number of deals for residential floor areas, the current year’s Q1 saw a decline of 24.6% compared with Q1 last year.

Against Q4 of last year, the number of home deals saw a decline of 13.2%.

SCI put the average dealt floor area at 106 square meters while putting the average age of residential units at 12 years.