Economy, Business And Markets

Residential Rents Rise in Tehran

Residential Rents Rise in TehranResidential Rents Rise in Tehran

The average cost of renting a house in Tehran stood at 230,330 rials ($6.5) per square meter in the first quarter of the fiscal year (March 20–June 20), marking a year-on-year growth of 12.1%.

The latest issue of Housing Economy Quarterly report, released by the Ministry of Roads and Urban Development, indicates that average rents during the Q1 were 0.3% lower compared with the previous quarter.

The report shows that even neighborhoods with lower prices recorded a higher rise in their rents. District 18, located in southwest Tehran, and recorded the highest annual surge in rents at 15.4%. The area is known to have the cheapest homes in the capital.  

The average rent in District 1 in upscale northern Tehran was 401,000 rials ($11.2), the highest across the city. Its rents grew by 6% during the three-month period.

Recovery in Sight

As the number of people looking for home deals increase, the head of Tehran Association of Realtors says the rise–reflected in the growing number of people visiting real-estate agencies–“raises hope" that home sales in the capital will pick up in the coming months.

 “Although demand for houses has increased in recent months, the market has yet to fully exit recession. Buying a home is a time-consuming process. Therefore, we expect a surge in home sales in the months ahead,” Hesam Oqbaei was also quoted as saying by Fars News Agency on Sunday.

The housing market has been in recession since November 2013 but recent figures point to an uptick in both prices and home sales, stirring hope that a recovery is at last within reach.  

The total number of home sales in Tehran reached 15,000 during the month ending July 20, marking an annual growth of 27.6%, according to data released by the Central Bank of Iran.

Residential units were sold at an average price of 42.3 million rials ($1,200) per square meter, an increase of 4.4% against the previous year.

 “We cannot declare that the market has escaped recession,” Oqbaei said.

Reiterating that the market is already in the so-called "pre-boom stage", the realtor predicted that the market would reawaken in the second half of the current fiscal year in late September.

The realtor, however, noted that housing starts had halved since March year-on-year.

“Builders will notice the surge on the demand side of the market,” he said. “This would prompt them to start building new homes once again.”

The number of construction permits issued in Tehran Province reached close to 5,000 in the year that ended March 2016, down from 15,000 a year ago.

“At present, builders are constructing smaller apartments,” Oqbaei added.

Central Bank of Iran’s latest data show buyers mostly favor flats with a built-in area of 70-80 square meters, which accounted for 15.7% of the sales.