Tehran Home Sales, Prices Rise

EghtesadOnline: The number of home sales in Tehran stood at 11,046 during the third month of the current Iranian year (May 21-June 20), indicating an increase of 80.3% compared with the same month of last year, but a decline of 4.5% compared with the preceding month.

News ID: ۷۵۰۳۱۹

27 June 2020

The announcement was made by the Planning and Housing Economy Office of the Ministry of Roads and Urban Development.

The average price of each square meter of a residential unit in the capital city stood at 190.71 million rials ($968) during the month under review, registering a year-on-year increase of 42.1% and a month-on-month rise of 12.1%.

Among Tehran’s 22 districts, District 1 registered the highest average home price with 424.99 million rials ($2,157) per square meter, followed by District 3 with 332.98 million rials ($1,639) per square meter and District 2 with 289.54 million rials ($1,469) per square meter.

District 18 offered the capital city’s cheapest homes with average per-square meter prices standing at 88.08 million rials ($447), followed by District 20 with 91.82 million rials ($466) per square meter and District 17 with 95.94 million rials ($487) per square meter.

The distribution of dealt properties shows that among Tehran’s 22 districts, District 5 grabbed the highest number of home sales (1,570) with the average price of 235.68 million rials ($1,196) per square meter. It was followed by District 2 with a total of 893 home deals with an average price of 289.54 million rials ($1,469) per square meter.

Districts 19, 9 and 16 registered the lowest number of deals during the month under review with 69, 105 and 120, respectively.

Over the three months to June 20, a total of 23,915 home sales were registered in the capital city, indicating a 9% growth compared with the similar period of last year. The average price of a square meter of residential property reached 172.08 million rials ($873), which show an increase of 37.5% over the corresponding period of last year.

The report added that a total of 5,019 construction permits were issued during the second fiscal month ending May 20, registering a 102% growth month-on-month and a decline of 24% year-on-year.

A total of 7,501 building permits were issued over the two-month period ending May 20, registering a decline of 20.5% compared with the corresponding period of the last year.

Building Permit Fees in Tehran Rise 30%

Building permit fees in Tehran has increased by 30% as of June 21 compared with last year. The decision was approved by Tehran City Council in the final month of last year (Feb. 20-March 19) as per Tehran Municipality’s 2020-21 budget but was not enforced until now due to the coronavirus-related suspensions of housing projects.

Building permit fees depend on floor area, scope of work and the type of building being constructed or altered. They form part of the overall costs incurred during the development of a property.

At present, overall construction costs in Tehran have increased to at least 45 million rials (about $228) per square meter. The average building permit fees hovered around 5-7 million rials ($25-35) per square meter last year. With a 30% increase, permit fees will reach 6.5-10 million rials ($33-50) per square meter. However, a report by the Persian-language daily Donya-e-Eqtesad says, such fees will exceed 20 million rials ($101) in some northern districts of the capital city, particularly for high-rise building projects.

In accordance with a memorandum of understanding recently signed between Iranian Municipalities Organization and Urban Regeneration Corporate Holding Company, affiliated to the Ministry of Roads and Urban Development, building permits in slum areas will be granted free of charge.

According to Deputy Roads Minister Mehdi Obouri, builders who intended to build residential properties in slum areas were previously entitled to a 50% discount in permit fees. The current MoU offers 100% exemption in permit costs.

“Fifty percent exemption in architectural and engineering expenses has also been envisioned in an agreement signed between Iran Construction Engineering Organization and the Interior Ministry’s Development Department to encourage home owners in slum areas to rebuild their homes,” Obouri was quoted as saying by Iran Online.

Before the 30% increase, permit costs accounted for 5 billion rials ($25,380) of the overall costs of developing a typical building in Tehran i.e. a 4-5-story building comprising 8-10 residential units with an average floor area of 80 square meters, constructed on 300 square meters of land) in popular districts of Tehran.

Besides building permit fees, real-estate developers say overall costs of construction are expected to increase on the back of strong growth in the prices of construction materials and land. Costs of construction materials, they say, are now 50% higher when compared with the first half of last year (March 21-Sept. 22, 2019).

The average price of a square meter of land in the year ending March 2020 increased by more than 90% compared with the year before. By June 20, land prices rose by 15% in some neighborhoods compared with March.