Economy, Business And Markets

Plan to Launch Real–Estate Bourse Attracts More Controversy

Plan to Launch Real–Estate Bourse Attracts More ControversyPlan to Launch Real–Estate Bourse Attracts More Controversy

As more details emerge on how the yet-to-be launched real-estate bourse will operate, opinions grow more divisive over the initiative.

Tehran Association of Realtors is among the notable detractors. Hesam Oqbaei, the head of the association, told Donyay-e-Eqtesad newspaper that the concept of establishing a real-estate bourse violates the realtors guild rules.

As to the benefits of a real-estate bourse in preventing scams, Oqbaei rejected such a notion and said that after the launch of the Real-Estate and Property Recording System in 2008, through which every transaction could be tracked, “the probability for scams are near zero.”

“It has been announced that the equity market intends to sell public companies’ property but this is against the rules since brokerage is not within the jurisdiction of the stock market,” Oqbaei said.

He added that state institutions are banned by Iran’s Constitution to engage in business ventures.

Oqbaei predicted a dismal state for housing prices once a real-estate bourse is launched, claiming it would open the doors to speculators and shrewd brokers, sending residential prices soaring.

His worries, however, are not restricted to exorbitant housing prices. He expressed concern about the threat that launching a real-estate bourse poses to the job security of realtors.

“This goes against the convention of business and will create problems for the 600,000 people working at real-estate agencies,” Oqbaei warned, echoing fears that private property and residential homes would soon follow suit and make a move toward the equity market.

The initiative to launch a real-estate bourse, mediated by the stock market, is hoped to prop up a market suffering from one of its longest bouts of depression in recent Iranian history with stalling price growth and lukewarm investor interest. Some pundits, however, strongly oppose it.

Earlier, 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 market are not homogenous in value.

“House prices are affected by external factors rather than only by supply and demand”, he said. “That makes a 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.

However, Mohammad Reza Pour-Ebrahimi, a member of the High Council of Bourse, disagrees.

He revealed earlier this week that officials are set to launch the bourse in the first phase by offering a list of property of major institutions such as municipalities, banks, Islamic Revolution Mostazafan Foundation, Headquarters for Executing the Order of the Imam and subsidiary companies of the Social Security Organization.

Pour-Ebrahimi elaborated on the many upsides inherent in creating a housing bourse: transparency in dealings and prices, financing for construction projects, preventing bubbles and speculative investment and managing cash flow.  

“In some instances, the same piece of property has been sold to 10 different people resulting in thorny legal cases but with the launch of a real-estate bourse, all this will end,” Pour-Ebrahimi said, referring to phantom real-estate bids that have been a common form of scam in recent years.