Construction in Iran

In recent years, Iran's construction market has been thriving due to an increase in national and international investment to the extent that it is now the largest in the Middle East region. The Central Bank of Iran indicate that 70 percent of the Iranians own homes, with huge amounts of idle money entering the housing market. [ [http://iran-daily.com/1385/2740/html/economy.htm Iran Daily - Domestic Economy - 12/23/06 ] ] [ [http://iran-daily.com/1386/2812/html/economy.htm Iran Daily - Domestic Economy - 04/09/07 ] ]

The annual turnover in the construction industry amounts to US$38.4 billion. Statistics from March 2004 to March 2005 put the number of total Iranian households at 15.1 million and the total number of dwelling units at 13.5 million, signifying a demand for at least 5.1 million dwelling units. Every year there is a need for 750,000 additional units as young couples embark on married life.

At present, 2000 units are being built every day although this needs to increase to 2740 units. In addition, Iran’s geographical position over a seismic belt necessitates the reinforcement and renovation of housing. This is possible only through a boom in real-estate development and foreign investment.

Restoration of old buildings is one of the priorities for the Government of Iran. Estimates show that about US$143 billion needs to be allocated in the next 10 years for restoration of 14,000 meters of critically decaying buildings. The government will earmark 11.5 per cent of the funding while the rest will be supplied by public investment and bank loans.

Competitive environment

The housing industry is one of the few segments of the Iranian economy where state capital shares as little as two per cent of the market, and the remaining 98 per cent is private sector investment. There is little red tape or hurdles and, as a result, through launching mass development projects, the use of new technologies and fast-pace project execution, a larger portion of the housing market is accessible. This is also true for new construction materials and technological advances. Thousands of foreign firms, mainly Chinese or European, have established agents in Iran or partnerships with domestic manufacturers, both investing directly in the housing market and targeting other Persian Gulf markets.

Facts & Figures (2003)/(1379-1380)

Construction is one of the most important sectors in Iran accounting for 20 – 50% of the total private investment. One of the prime investment targets of well off Iranians as tangible.

Housing:

*Iranian year 1379: 60m square meter of buildings have been constructed
*Construction is mainly concentrated on urban areas and Tehran
*1379: approx. 170,000 new urban construction projects
*1379: investment of $3.6 bn into urban housing
*Housing Bank: US$ 1.3 bn for 217,000 loans

Industry:

*1379: 9,000 establishment permits for new industrial units plus expansion;
*1379: 3,236 operation permits;

Government:

*Development budget 1380: $ 6.7bn (US$ 3bn construction, US$ 1.7bn machinery, US$ 2bn Others)
*Iran is among the world's largest dam builders [ [http://iran-daily.com/1385/2720/html/economy.htm Iran Daily - Domestic Economy - 11/29/06 ] ] .

Construction Material:

*27m MT cement (2m MT export), steel, tiles, stones, fixtures, etc.According to the Industries and Mines Ministry, the current cement production in 2006/07 is over 40 million ton which 13.5% increased comparing with 2005/06 .

Problems:

*Despite increase in budget: insufficient support of government
*Specifically: lack of mass housing due to sharp increase of urban population
*Lack of financial facilities

Latest development:

*Government/municipalities taking active steps to encourage private and foreign investment
*Introduction of housing bonds
*Emphasis on private sector; governmental companies to large extent bared from urban housing projects
*Government puts main emphasis of unfinished projects
*Reform of standards & regulations
*Better statistics & transparencies

Opportunities for foreign companies:

*General: Iran has capable construction and engineering companies; social status of engineers; smaller housing projects: bad quality
*Mass housing
*New technology
*Large projects (dams, tunnels, industrial projects, oil industry)
*Joint projects in Irak, Afghanistan (past: limited extent in Azerbaijan)
*Construction related machinery
*Requirements: Foreign financing required (ECGD)
*Team up with local partners required; local contentThe Iran construction market is potentially ripe for the import of construction material to accommodate local demands.

According to the statistics presented by the Iran Imports Book, which is published by the Islamic Republic of Iran Customs Office, Iran’s major imported items include:

*iron and steel (iron slabs and steel, iron and steel bars, rolled iron and steel wares)
*pre-fabricated buildings
*elevator wares
*block and tackle
*road-building machinery
*digging and excavation machinery
*cranes
*hygenic products made of plastic and china
*stonewares
*plaster and cementOther imported items are: glass, timber flooring, lighting, paint, electrical and electronic fittings and accessories, lock, key hardware and aluminum for façade design.

ee also

*Economy of Iran
*Iranian architecture
*Transportation in Iran
*List of reservoirs and dams in Iran
*Water supply and sanitation in Iran
*Earthquakes in Iran
*Health care in Iran

External links

* [http://www.austrade.gov.au/Construction-to-Iran/default.aspx Construction to Iran- Australian Trade]

References