Despite criticisms by financial and housing experts, a member of the Securities and Exchange Organization’s high council has revealed details on the launch of a real-estate bourse in Tehran, saying that the controversial plan will soon be implemented in two phases in Tehran.
Proponents hope that the market will boost the privatization process.
Mohammad Reza Pour-Ebrahimi said to implement the plan, no permission is needed from the high council as “Iran Mercantile Exchange is the only entity in charge of providing necessary platforms to implement the project,” Mehr News Agency reported on Wednesday.
“For the first phase, the real-estate bourse will consist of large public housing projects, including those offered by municipalities, banks, Islamic Revolution Mostazafan Foundation, Headquarters for Executing the Order of the Imam and Social Security Organization,” he said.
“IME has already prepared for implementation of this phase. Then, smaller projects, offered by the private sector and mass builders in major cities, can be traded in the market. This could help improve market transparency.”
He said he believes real-estate agents can then be engaged in the process to act as a broker in terms of arranging housing deals.
Officials hope an organized real-estate exchange market can help lower prices in a largely unofficial market plagued by preferential trading and substantial broker commission fees. Currently, the real-estate market is dependent on a construction fund, which is the only existing credit support tool. The fund, called Nasim, seeks to financially support construction companies help strengthen supply side of the housing market.
“A real-estate bourse can provide a boost to investment, as construction companies could more easily sell their projects to investors and buyers while creating transparency and price balance in the housing market,” he added.
Nonetheless, some officials and economists have criticized the idea of organizing real-estate trading through the stock market.
Hossein Abdoh Tabrizi, a financial and housing expert, told the Financial Tribune that real-estate trading normally does not happen in the stock market as the assets traded in the real-estate market, are not homogenous in value.
House prices are affected by external factors rather than only by supply and demand, he said. “That makes the property’s price fluctuate unexpectedly.”
Experts argue that it could lead to the rise of speculative activities, making the market unstable and eventually leading to a decline in home ownership.
