Plans to Construct 40 Towns in 14 Provinces on Gov’t Agenda

EghtesadOnline: The government plans to build 40 residential towns in 14 provinces, of which two will be located in Tehran Province, a deputy roads and urban development minister said.

News ID: ۷۸۶۹۰۱

28 August 2021

“In Tehran Province, 16,670 units will be built in two towns with a total area of 1,438 hectares and a population of 55,000 people,” Habibollah Taherkhani was also quoted as saying by Tasnim News Agency.

He added that in Alborz Province, 7,880 units will be constructed in a town with an area of 300 hectares and a population of 26,000.

He added that 8,790 units will be built in a town spanning 1,459 hectares and a population of 29,000 people in Isfahan Province and seven new towns will be built in Fars Province while a single town will be built in South Khorasan Province.

According to the official, the construction of 8,180 units has already begun in a town with an area of 403 hectares and a population of 27,000 people in Kurdestan Province.

“Ten new towns with a total area of 737 hectares and a population of 60,100 people in 18,210 units will be built in six counties of Mazandaran Province,” he said.

“In Golestan Province, seven towns will be built in seven counties with a total area of 1,820 hectares and a population of 88,500 people in 26,820 units.”

Taherkhani noted that building two towns in East Azarbaijan Province are also on the agenda: A town is under consideration, in addition to another with an area of 269 hectares and a population of 25,800 people in 7,820 units.

The new town construction plans also include two in Hormozgan Province with a total area of 865 hectares, a town in Kerman Province with an area of 359 hectares and a town in Ardabil Province with an area of 285 hectares. The total population of these towns will be 75,852 people.

Three towns in Yazd Province and a town in Semnan Province are also on the agenda.

Housing Inflation and Suburbanization

Housing inflation in Iranian metropolises has resulted in an unprecedented rise in suburbanization over the past couple of years.

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

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

Notably, 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 the 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. A new satellite town saw the number of residents rise by 101,000 then, thanks to the completion of a part of the so-called "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 hike 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 increased twofold. Home prices and rents are 70% cheaper in new towns compared with metropolises.

Characteristics of Next Generation Towns

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, superstructure 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 the big cities but rather in the coastal areas of southern Iran.

What is strongly stressed is that the next generation towns will be safe, eco-friendly and smart, providing opportunities for startup businesses. If the vision for the 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 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(s) that are almost always in the red and 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 a reasonable profit in the foreseeable future can be passed on to investors as BOTs – projects like building hotels, hospitals and malls, based on feasibility studies," says Sadeq Akbari, another NTDC board member.

The next 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.

NTDC’s Fiscal 2021-22 Budget at $158m

The government has allocated 42,700 billion rials ($158 million) to New Towns Development Company as per the budget bill of the next fiscal year (March 2021-22), Yadollah Rahmani, a board member of the company, told the news website of the Ministry of Roads and Urban Development.

Noting that the company’s budget in the current year was 27,300 billion rials ($101 million), the official said during the 11 months to Feb. 18, NTDC earned 35,630 billion rials ($131 million), i.e., 30.5% more than the projected budgetary figure.

“We’ll try to generate 40,000 billion rials [$148 million] by the end of the current [fiscal] year [March 20, 2022],” he said.