Bigger Loans Granted for Modern Home Construction in Iran

EghtesadOnline: Loans worth 1,700 million rials ($13,000) will be granted to home builders who choose to use non-traditional construction methods based on new technologies this year (March 2019-20).

News ID: ۷۴۹۳۰۷

28 December 2019

This marks a 54% growth in value compared with the loans offered to builders last year, a statement by the Central Bank of Iran reads.

Almost all residential units in Iran are built using conventional site-built construction methods.

“The average lifespan of homes in Iran hardly exceeds 25-30 years,” according to Fardin Yazdani, a housing expert and the official in charge of Comprehensive Housing Plan of the Ministry of Roads and Urban Development, while industrially built homes can last for up to 100 years, Financial Tribune reported.

Prefab technologies can be used to build homes quickly and cost-effectively, especially as traditional construction costs continue to rise, the Persian-language daily Shahrvand quoted the official as saying.

Noting that modular homes offer many advantages over site-built homes, Yazdani said the use of prefabricated components in home building, those manufactured off-site in advance, usually in standard sections that can be easily shipped and assembled, will improve the quality of buildings and help control the costs.

Iraj Rahbar, vice president of the Association of Builders, said homes built in Iran not only have a very short lifespan, but the environmental impact of their building materials is also harmful.

“A modular home might take a few days to assemble whereas the time needed to build a residential unit employing traditional methods might take up to two years,” he said.

“For example, one of the modern methods is tunnel construction that allows the contractor to cast walls and slabs in one daily operation.”

Estimates by the Ministry of Roads and Urban development show traditional approaches to real-estate development incur losses worth 40,000 billion rials ($307 million) annually, mostly because they unnecessarily waste energy.

Decline in Construction Permits

The Statistical Center of Iran's latest figures concerning building permits show the number of permits has decreased across the country in the first quarter of the current fiscal year (ended June 21) compared with the preceding quarter (Dec. 22, 2018-March 20, 2019).

A total of 15,127 permits were issued by Tehran Municipality in Q1, indicating a 20.2% quarter-on-quarter and 23.1% year-on-year decline.

The average number of residential units per permit in Tehran was 6.9.

A total of 2,204 housing units are expected to be built as a result of these permits in Q1, registering a 17.5% QOQ and 27.9% YOY decrease.

In Tehran, the total floor area of units in Q1 reached 2,781,000 square meters, registering a 21.7% QOQ and 21.4% YOY decrease.

The average floor area of units per permit in the capital city was 1,262 square meters.

In the first quarter of the current year, municipalities across the country issued 95,697 building permits, which indicates a 16.5% decline QOQ but a 5.5% rise YOY.

The average number of residential units per permit across the country was at 2.6.

A total of 36,537 housing units are expected to be built as a result of the permits issued across Iran’s urban areas in Q1, indicating a 21.7% QOQ, but an increase of 6.6% when compared with the corresponding quarter of last year.

Across the country, the total floor area of units with building permits in Q1 was 17,540,000 square meters, registering a 19.3% decline QOQ but a 0.6% increase YOY

The average floor area of units per permit was 480 square meters.

Q2 Tehran Construction Material Prices Rise 29% YOY

The general price index of construction materials for residential units in Tehran rose 29% during the second quarter of the current Iranian year (ended Sept. 22) compared with last year's corresponding period.

According to SCI's data, the index stood at 407 during the period.

The figure indicates almost no change compared with the previous quarter, i.e. the first quarter of current year (spring) that ended on June 21.

Q1 construction material price index stood at 406.9.

During the four-quarter ending Sept. 22, the index grew by 49.2% compared with the previous year's corresponding period.

The category of “cement, concrete, gravel and sand” with a price growth of 13% compared with Q1 of the current year and coefficient of 14.72% gave the biggest boost to the overall index in Q2. The index for this category stood at 404.4.

The category witnessed a price hike of 60.9% compared with last year's similar period. Its price index grew by 45.4% during the year ending Sept. 22.

The category of "stone" ranked second with a price growth of 3.9% compared with the previous quarter and a coefficient of 9.79%. The category’s index hit 340.4 in Q2, which was higher by 35.1% compared with the same quarter of last year. During the year ending Q2, the growth rate of this category's price index was 41%.

The category of “masonry, earthenware and brick” was the third group with the biggest impact on the overall residential construction material price index in summer. In Q2, the group's index stood at 347.2, which was higher by 5.3% compared with the previous quarter and by 60.8% year-on-year. In the year ending Q2, the group experienced a growth of 53% in its price index. The category has a coefficient of 5.19%.

The category of “ironware, rebar, doors, windows and fence profiles”, with a 9.2% decline in price index and a coefficient of 18.42 and the “lumber” category with a 2.6% decrease in price index and a coefficient of 7.79, were the main laggards to the overall index growth.

In Q2, the ironware, rebar, doors, windows and fence profiles’ index was registered at 368.3, which was lower by 0.6% YOY. In the year ending Q2, the group experienced a growth of 45% in price index.

The lumber group index stood at 550.1 in Q2, registering a 35% growth compared with the same quarter of last year. The group’s price index grew by 91.5% during the year ending Sept. 22.