The general price index of construction materials for residential properties in Tehran stood at 536.5 in the first quarter of the current fiscal year (March 20-June 20).
During the four-quarter period ending June 20, the index grew by 29.3% compared with the previous year's corresponding period, according to the Statistical Center of Iran's latest report published on its website.
Compared with the previous quarter, i.e. the fourth quarter of last year (winter), which ended on March 19, 2020, the index saw a 17.3% rise. The construction material price index stood at 457.4 in last year's Q4.
The index rose by 31.9% during the first quarter of the current Iranian year that ended on June 20 compared with last year's corresponding quarter.
The category of “services” with a price growth of 25.8% compared with last year’s Q4 and a coefficient of 25.55% gave the biggest boost to the overall index in Q1. The index for this category stood at 435.1. The category witnessed a price hike of 27.1% compared with the previous year’s similar quarter. Its price index grew by 24.7% during the four-quarter period ending June 20.
"Cement, concrete, gravel and sand" ranked second in inducing growth in the construction materials’ index with a price rise of 19.1% over the previous quarter and a coefficient of 15.01%. The category’s index hit 481.2 in Q1, which was higher by 34.4% compared with the same quarter of last year. During the four-quarter ending June 20, the growth rate of this category's price index was 42.7%.
The category of “ironware, rebar, profile for doors, windows and fences” was the third group with the biggest impact on the overall residential construction material price index in spring. In Q1, the group's index stood at 611.6, which was higher by 10.8% compared with the previous quarter and 50.8% year-on-year. In the four quarters ending Q1, the group experienced a growth of 29.4% in its price index. The category has a coefficient of 18.15%.
In Q4, the categories of “glass”, “house paint” and “plasterwork” had a minimum impact on the index.
The category of “services” with a price growth of 25.8% compared with last year’s Q4 and a coefficient of 25.55% gave the biggest boost to the overall index in Q1
“Glass” price index stood at 460.8, which was higher by 14% compared with both the previous quarter and the same quarter of last year. In the four quarters ending Q1, the group experienced a growth of 16.9% in its price index. The category has a coefficient of 1.31%.
“House paint” price index stood at 681.6, which was higher by 8.1% compared with the previous quarter and 11.6% year-on-year. In the four quarters ending Q1, the group experienced a growth of 20.7% in its price index. The category has a coefficient of 1.5%.
“Plasterwork” price index stood at 524.4, which was higher by 19.6% compared with the previous quarter and 30.1% year-on-year. In the four quarters ending Q1, the group experienced a growth of 33.5% in its price index. The category has a coefficient of 0.96%.
The growth in prices of construction materials in the capital city was 1.5% above the overall inflation rates during the period under review.
The overall average goods and services Consumer Price Index in the 12-month period ending June 20, which marks the end of the third Iranian month, increased by 27.8% compared with the corresponding period of last year, latest data released by the Statistical Center of Iran show.
SCI had put the average annual inflation rate for the preceding Iranian month, which ended on May 20, at 29.8%.
The consumer inflation for the month under review (May 21-June 20) registered a year-on-year increase of 22.5% compared with the similar month of the previous Iranian year. The year-on-year inflation of the month ending May 20 was at 21%.
The overall CPI (using the Iranian year to March 2017 as the base year) stood at 214.2 for the month, indicating a 2% rise compared with the month before.
Building Permit Fees in Tehran Rise 30%
Building permit fees in Tehran have increased by 30% as of June 21 compared with last year. The decision was approved by 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 now due to the coronavirus-related suspensions of housing projects.
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 (about $225) per square meters. The average building permit fees hovered around 5-7 million rials ($25-35) per square meter last year.
With a 30% increase, permit fees will reach 6.5-10 million rials ($32-50) per square meter. However, a report by Persian-language daily Donya-e Eqtesad says, such fees will exceed 20 million rials ($100) in some northern districts of the capital city, particularly in 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 planning 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 by Iran Construction Engineering Organization and the Interior Ministry’s Development Department to encourage homeowners 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 ($25,000) of the overall costs of developing a typical building in Tehran i.e. a 4-5-story building comprising 8-10 residential units with an average 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 strong growth 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.
