3.5% Rise in Building Permits in Fiscal 2019-20

EghtesadOnline: The Statistical Center of Iran has published its latest findings concerning building permits issued in Iran, especially in the capital city Tehran, during the last fiscal year that ended on March 19, 2020.

News ID: ۷۵۱۲۳۶

11 October 2020

Last year, municipalities across the country issued a total of 147,005 building permits, registering a 3.5% year-on-year increase.

A total of 382,565 housing units are expected to be built as a result of the permits issued across Iran’s urban areas, indicating a 1.6% increase YOY.

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

Across the country, the total floor area of units authorized in building permits was at 70,593,000 square meters, posting a 2% decrease YOY. The average floor area of units per permit was 468 square meters.

Iin the capital city, a total of 9,013 permits were issued by Tehran Municipality last year, indicating a 17.7% decline compared with the year before.

A total of 63,398 homes are expected to be built as a result of the permits issued last year, indicating a 17.1% decline year-on-year.

The average number of residential units per permit in the capital city was seven.

In Tehran, the total floor area of units in buildings with permits issued last year stood at 11,676,000 square meters, registering an 18.6% decline YOY.

The average floor area of units per permit in the capital city was at 1,295 square meters.

“The first half of the current Iranian year [March 20-Sept. 21] registered a 38% decline in the number of permits issued,” says the head of Construction Engineering Organization of Tehran Province, Saeed Saeedian, adding that this has heightened concern about job losses in engineering and construction.

“As the largest organization affiliated to the private sector, the Construction Engineering Organization of Tehran Province has 120,000 members, of whom 70,000 are licensed builders,” he was quoted as saying by ILNA.

Noting that the outbreak of coronavirus accelerated the shift to online services, Saeedian said his organization now offers 90% of its services electronically.

Building Permit Fees in Tehran Up 30%

Building permit fees in Tehran has increased by 30% as of June 21 compared with last year.

The decision was approved by the 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 recently due to the coronavirus-related suspensions of housing projects.

Building permit fees depend on the 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 built asset.

At present, overall construction costs in Tehran have increased to at least 45 million rials ($150) per square meter. The average building permit fees hovered around 5-7 million rials ($16-23) per square meter last year.

With a 30% increase, permit fees will reach 6.5-10 million rials ($21-30) per square meter. However, a report by the Persian economic daily Donya-e Eqtesad shows such fees will exceed 20 million rials ($66) 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 ($17,793) of the overall costs of developing a typical building in Tehran, i.e., a 4-5-story building comprising 8-10 residential units, each with a 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 a steep rise 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.