Tehran Commercial Property Prices High
While the housing market is struggling with a prolonged recession, commercial property and the luxury homes have seen surge in prices during the past three years.
Hussein Abdo Tabrizi, a senior advisor to the minister of Roads and Urban Development, says the bubble in the commercial real-estate market has not burst yet, though he predicts a drop in prices in the next fiscal that starts in March 2017.
“We do not need more commercial units. In some cities there are five commercial properties for every household. Moreover, new businesses prefer to rent rather than buy. Thus, a drop in prices is likely for the next year,” ILNA quoted him as saying at the weekend.
Abdo Tabrizi also predicted stability in the prices of luxury homes for the next year.
“Basically the government does not want to see the housing market become a tool for [speculative] investment,” the housing expert was quoted as saying.
He said the banking system and the equity market now are offering the highest returns on people’s savings.
Banks are the best choice for small investments ranging from 200 million rials ($6,200) to 300 million rials ($9,400)” he said. “Investment funds offer highest return on savings worth more than 1 billion rials ($31,400).”
A variety of factors influence the price of commercial properties in Tehran, including location, accessibility, parking space, the locality, population density of the area, as well as age and structure of the property.
Inquiries by the Financial Tribune showed that a 15-square-meter shop in Gisha, in the northwest of the capital, is offered at 7.5 billion rials ($235,500). An office space in the same district build almost half a century ago with a total area of 140 meters is priced at 9.25 billion rials ($290,000).
The district has access to three major highways and is located on border of Tehran’s restricted traffic zone. A metro station is also about to be launched in the neighborhood, making Gisha a good choice for an office.
A 15-square-meter jewelry shop located inside a shopping center in Tehran’s Satarkhan Street, also in the west, is priced 5.25 billion rials ($164,900). Offices located in the same street are priced between 50 million-80 million rials per m2, depending on the building location and age. Traffic congestion is a major problem for residents in this area.
A similar shop in the southern Naziabad district is priced at 1.2 billion rials ($37,600), though the area is more expensive than its surrounding neighborhood.
Shops located in the central parts of the sprawling capital are more expensive. A shop in Yousef Abad neighborhood with a 140-meter built-in space comes at 110 billion rials ($3.45 million). Banks, restaurants and auto dealers are potential buyers of such property. The neighborhood is largely inhabited by the middle and upper class.
Shops in Tehran’s Grand Bazaar are traditionally the most expensive in the capital and across the country, with prices ranging from 400 million -750 million rials ($12,500 to $23,500) per square meter. However, the prices are much higher for shops located in the heavily-populated areas of the Bazaar. A 9 square-meter shop in Galoubandak, near the metro station, is priced 3 billion rials ($94,200) per m2.
Shops in Amin Hozour, a prominent area for wholesale home appliances and Ekbatan Street, a major junction for auto parts, both in south Tehran, are being sold at 1 billion-2.5 billion rials ($31,400 to $78,500) per m2. Shops in the high-end neighborhoods of the city in the north, are offered at exorbitant prices. Shops located in Andarzgou Street, one of the most luxurious areas in Tehran, are priced about 1 billion per m2. While banks are the first choice of people wanting to sell shops in Tehran, owners of these properties usually prefer selling their shops to foreign brands, especially auto and apparel firms.