The construction sector has plunged into recession, the latest data of Iran Chamber of Cooperatives on Purchasing Managers’ Index for the sector indicate.
The index settled at 37.09 in the seventh month of the current fiscal year (Sept. 23-Oct. 22) down from 42.69 in the preceding month (Aug. 23-Sept. 22), indicating a 13.11% decrease.
PMI is an indicator of the health of economic sectors and provides information about business conditions to decision-makers, analysts and purchasing managers.
Raw material inventory, employment conditions, new orders, supplier deliveries and export/production conditions are among the criteria quizzed, yielding a final score of between 1 and 100.
If a business scores 50, it means that no change has been perceived compared to the previous month, while scores higher or lower than 50 indicate that the business is expanding or contracting respectively.
The survey includes 12 business criteria and any changes, whether it be improving, no changes or deteriorating. It is measured through a monthly survey sent to senior executives of 100 companies active in the real-estate sector.
It is based on five major survey areas: "new orders" with a coefficient of 30%, "raw material inventory" (10%), "production" (25%), "supplier deliveries" (15%) and "employment" (20%).
The "new orders" sub-index stood at 31.72 in the month ending Oct. 22, indicating a 27.61% decline compared with 43.82 in the month ending Sept. 22.
The "supplier deliveries" sub-index, which measures how fast deliveries are made, decreased by 4.29% from 48.87 in the month ending Sept. 22 to 46.77 in the month ending Oct. 22.
The "raw materials (construction materials) inventory" sub-index declined by 9.44% from 62.92 in the month ending Sept. 22 to 56.98 in the month ending Oct. 22.
The "employment" sub-index declined by 1.1% from 50.56 in the month ending Sept. 22 to 50 in the month ending Oct. 22.
To calculate housing PMI, seven secondary criteria were also surveyed by ICC, including "raw material purchase prices", which stood at 46.06 in the month ending Sept. 22. The sub-index declined by 1.95% to stand at 45.16 in the month ending Oct. 22.
"Warehouse Inventory" decreased by 5.9% to reach 62.9 in the seventh Iranian month from 66.85 in the sixth month.
The "exports" sub-index settled at 46.23 in the month ending Oct. 22 from 42.69 in the month ending Sept. 22, registering an 8.29% increase.
"Prices of products and services" declined by 9.47% to stand at 37.63 in the month ending Oct. 22 from 41.57 in the previous month.
"Fuel consumption" decreased by 16.53% from 40.32 in the sixth month of the current fiscal year to 48.31 in the seventh fiscal month.
"Sales" fell from 41.01 in the sixth fiscal month to 32.79 in the seventh month.
The sub-index of "performance expectations for the following month" settled at 36.55 in the month ending Oct. 22 from 46.06 in the previous month, showing a 20.64% decrease.
CBI on Tehran Real Estate
Data released by the Central Bank of Iran on Tehran’s housing market show a total of 5,416 homes were sold during the current Iranian year’s seventh fiscal month, registering a 10.2% fall compared to the previous month and a 1% decrease compared with the corresponding month of the previous year.
The average price of each square meter of a residential property in Tehran stood at 437.24 million rials ($1,237) during the month under review, registering a 38.2% rise year-on-year.
Home prices in the capital city increased by 1.2% compared with 432.16 million rials ($1,223) in the sixth month of the current fiscal year (ended Sept. 22).
During the month ending Oct. 22, residential properties up to five years old constituted the biggest proportion of homes sold (1,551) or 28.6% of deals, down by 4.4 percentage points compared with the same month of last year.
The lost share was added to homes with a lifespan of 11-15 years and over 20 years. They accounted for 16.2% and 21.1% of total deals compared with the same month of last year’s 13.7% and 13.1% respectively.
The distribution of sold properties indicates that among Tehran’s 22 districts, District 5 grabbed the biggest share of total sales with 15%, followed by District 10 with 9.3% and District 2 with 8.7%.
All-in-all, 10 districts (5, 10, 2, 4, 14, 7, 8, 1, 15 and 11) grabbed the lion's share of sales with 74.4%, with the remaining 12 districts holding a 25.6% share.
Among Tehran's 22 districts, District 1 registered the highest average home price of 883.3 million rials ($2,500) per square meter. District 18 offered the capital city's cheapest homes with an average per-square meter price of 213 million rials ($602). The aforesaid figures show a respective increase of 26.8% and 40.7% YOY.
Residential units with an average price range of 300 million rials ($849) to 350 million rials ($990) per square meter were the most popular in Tehran during the Iranian month under review, as they accounted for 12.2% of all deals. They were followed by units priced at 250 million rials ($707) to 300 million rials per square meter with a share of 11% and homes priced at 350 million rials to 400 million rials ($1,132) per square meter with a share of 10.9%.
From the total number of deals, 56.1% belonged to homes cheaper than the average per-square meter price of the city (i.e., 437.24 million rials, or $1,237).
Residential units with a floor area of 50-60 square meters registered the highest number of sales, with a 15.2% share of the total.
Units with an area of 60-70 and 40-50 square meters ranked second and third with a respective share of 14.7% and 11.8%. All-in-all, residential properties with an area of under 80 square meters had a 56.8% share of total deals.
The data indicate that Tehran’s homes worth between 10 billion rials ($28,304) and 15 billion rials ($42,456) were the most popular with a share of 14.6% of the total deals. These were followed by homes with a price tag of between 15 billion rials and 20 billion rials ($56,609), as well as those priced at 20 billion rials to 25 billion rials ($70,761) with a respective share of 12.8% and 9.5% of total deals.
Collectively, homes valued under 30 billion rials ($84,913) had a 50.3% share of total home deals in Tehran during the seventh month of the current year.
The central regulator also reported changes in tenancy prices in the capital city and across urban areas.
According to CBI, residential rents in Tehran and across urban areas increased by 40.9% and 46.8% respectively during the sixth fiscal month year-on-year.
SCI’s Account
The annualized inflation of residential buildings in Tehran reached 32.4% in the month ending Oct. 22, according to the Statistical Center of Iran.
Year-on-year and month-on-month inflation reached 44.7% and -0.1%, respectively.
The report has put the average price at 464.79 million rials ($1,315) per square meter, noting that among the capital city’s 22 districts, District 1 registered the highest average price of 995.41 million rials ($2,817) while District 18 had the lowest rate of 226.89 million rials ($642) per square meter.
The SCI data also show a total of 4,830 residential properties were sold during the month under review across Tehran, down from 5,159 in the preceding month.
District 5 saw the highest volume of housing deals with 729, while District 19 had the lowest figure with 31.
Tehran Construction Material Inflation at 36.7%
The general price index of construction materials for residential properties in Tehran, using 2011 as the base year, grew by 36.7% during the four-quarter period ending Sept. 22, which marks the end of the second quarter of the current Iranian year, compared with the previous year's corresponding period.
The annual inflation of construction material was 44.8% in Q1.
The price index stood at 1,491 in Q2 (June 22-Sept. 22), according to the Statistical Center of Iran's latest report published on its website. Compared with the previous quarter, which ended on June 21, the index registered a 3.4% fall.
In the first quarter of the current Iranian year (March 21-June 21), the construction material price index stood at 1,544.2 and registered a 26.3% quarter-on-quarter growth.
The index rose by 29.3% in Q2 compared with last year's corresponding quarter (year-on-year). In Q1, the year-on-year index growth was 43.4%.
Compared with the previous quarter, the category of “building painting” registered the highest growth among all categories of construction materials with a growth of 9.9%. This is while the “cement, sand and gravel” index declined 15.4% compared with the preceding quarter.
“Glass” witnessed the highest year-on-year inflation with 83.3% while “ironware, rebar, profile for doors, windows and fences” declined by 0.4% year-on-year.
The highest annualized price hike was registered for “glass” with 85.2% and the lowest was posted for “ironware, rebar, profile for doors, windows and fences” with 18%.
