New Towns Development Company’s Fiscal 2021-22 Budget at $167m

EghtesadOnline: The government has allocated 42,700 billion rials ($167 million) to New Towns Development Company as per the budget bill for the next fiscal year (March 2021-22), a board member of the company told the website of the Ministry of Roads and Urban Development.

News ID: ۷۸۶۱۲۹

01 March 2021

Noting that the company’s budget in the current year was at 27,300 billion rials ($106 million), Yadollah Rahmani added that during the 11 months to Feb. 18, NTDC earned 35,630 billion rials ($140 million,) i.e., 30.5% more than the projected budgetary figure.

“We’ll try to generate 40,000 billion rials [$157.79 million] by the end of the year [March 19],” he said.

Housing inflation in Iranian metropolises has spiked suburbanization over the past couple of years.

A total of 90,000 people moved to new towns in the last Iranian year (March 2019-20), the population of which exceeded one million on average.

Last year’s population shift from central urban areas into new towns was 2.2 times higher than the annual average of the past two decades.

The number of residents in new towns was as low as 58,000 in the year ending March 1997.

On average, a total of 36,000 were added to the number of new towns’ residents annually from the year ending March 1997 to March 2017. The figure increased to 40,000 between the fiscal 1996-97 and 2018-19, but last year the average growth in the population of new town surged to 90,000.

Such a one-year population growth in new towns was also recorded for the Iranian year ending March 2014. New satellite town saw the number of their residents rise by 101,000 then, thanks to the completion of a part of "Mehr Housing Project", a large-scale, still-unfinished construction program initiated in 2007 by the administration of former president, Mahmoud Ahmadinejad, to provide 2.2 million low-income people with housing units through free land and cheap credits.

Many of last year’s migrants to the peripheries of metropolises, however, did not move of their own free will but were forced to do so due to the uneven increase in home prices and rents in big cities, a report by the Persian economic daily Donya-e-Eqtesad reads.

Over the past one and a half years, the average price of a residential property in Tehran registered a twofold increase. Home price rises in new town are typically 30% of that of large cities. In other words, home prices and rents are 70% cheaper in new towns compared with metropolises.

With the planned construction of 13 new towns by New Towns Development Company, the number of Iran's satellite towns will reach 30.

The new satellite towns will be Tis in Sistan-Baluchestan with a capacity of 150,000 residents, Siraf and Pars in Bushehr with 120,000 and 60,000 respectively, Houra in Hamedan with 120,000, Amirkabir in Markazi Province with 100,000, Kharazmi in Tehran with 35,000, Tabnak in Fars with 60,000, Koushak and Mokran in Hormozgan with 120,000 and 200,000 respectively, Samangan in Kerman with 100,000, Sanandaj in Kurdestan with 50,000, Eyvanaki in Semnan with 50,000 and Shahriar in East Azarbaijan with 170,000.

Currently, a total of 17 satellite towns have been created in 11 Iranian provinces.

The next generation of new towns will focus on proportionate growth in infrastructure, substructure and utilities, says Zohreh Davoudpour, another member of the NTDC board.

The towns will have a different topography compared to the existing ones because they will not be built in close proximity to big cities.

What is strongly stressed is that the next-generation towns will be safe, eco-friendly and smart with the belief in and providing opportunities for startup businesses. If the vision for new towns is realized, they will be self-reliant and inculcate a strong sense of community among its residents, something that is conspicuous by its absence in the existing new towns.

Funding for the new projects will be different from the old ones in that the authorities are considering issuing sukuk (Islamic bonds) for securing funds from the private sector rather than begging for money from the government that’s almost always running budget deficits.

"Additionally, BOT [build-operate-transfer] contracts are being considered for a part of the projects in the next-gen new towns. Projects that can create reasonable profit in the foreseeable future can be passed on to investors as BOTs, such as hotels, hospitals and malls, based on feasibility studies," says Sadegh Akbari, another NTDC board member.

The new towns will be resident-oriented, with the government functioning only as the overseer, and the private sector in charge of and responsible for all things related to services, amenities and maintenance.