A member of the High Council of Securities and Exchange said Saturday that the council has approved the decision to set up a real estate exchange.
The new exchange market, will be the fifth bourse in the country after the Tehran Stock Exchange, the junior equity market Iran Fara Bourse, Iran Energy Exchange and Iran Mercantile Exchange.
In his tweeter account, Hossein Selahvarzi wrote the “In today’s meeting, the HCSE approved the decision to establish the ‘Real Estate, Properties and Rights’ Exchange”. No details were available.
However, based on what has been stated earlier about the initiative, the bourse will seek to address the unending challenges of the housing sector by making it “competitive” and “improving transparency”.
It is said the market will be launched with a nominal capital of 50 trillion rials ($228 million) half of which is to be put up by investors via subscription, 25% each by government-affiliated entities and private companies.
A real estate exchange is a rather novel move not known in other countries, spawning criticism about the viability of the plan.
Hossein Abdo Tabrizi, a housing expert and one of the opponents of the plan, said it is like “reinventing the wheel,” adding that stock market officials would do better to draw on the existing financial instruments of the stock market than going about adding to the already bloated credit-providing bureaucracy.
“The real estate bourse has no counterpart in the world… it would not be wise to create a market that has not been tried and tested in the world,” he was quoted as saying by the Persian-language economic weekly Tejarat Farda.
“There are also concerns that such a market could emerge as an ‘anti-development tool’ in the absence of adequate feasibility studies,” he warned.
He opined that existing financial instruments such as real estate funds can be tapped into to help lift the key housing industry plagued for years as prices keep on rising at speeds unheard of in the country’s history.
In response to this argument, Rouholla Hosseini Moqadam, a member of the bourse council, underscored the urgency to set up a regulated real estate market to help the credit-starved sector.
Seen as Undeserving
Admitting that specialized home financing instruments do exist in the domestic stock market, he said such instruments get less attention and are usually seen as unhelpful and insignificant investment tools.
Addressing skeptics, Shahin Cheraghi, also a member of the council, said “subject to economic conditions, countries use a variety of instruments to shore up the economy”.
Pointing to the dire circumstances of the housing industry and home prices and rents going up at alarming rates, Cheraghi said major construction projects remain incomplete largely due to the extended inability and unwillingness of state and private banks to lend.
According to Hosseini Moqadam, the main stakeholders of the real estate bourse are the government, builders, banks, state-run entities owning excess properties and utilities. The government, people and builders will be the three main pillars of the bourse.
The plan comes as home prices, real estate and construction costs have jumped up several hundred percent in the past three decades making it almost impossible for wage-earners to afford a decent roof over their heads.
