Economy, Domestic Economy

Glut of Commercial Complexes

Glut of Commercial ComplexesGlut of Commercial Complexes

A real estate expert opines that due to overinvestment, commercial complexes will experience a challenge similar to what happened in the housing market 2 years ago, that is facing a surplus. Financial advisor to road and urban development minister, Hossein Abdeh Tabrizi, believes that the optimal pattern to finance the housing sector is through providing loans for target groups to purchase particular residential units.

The number of malls in some districts in Tehran is on the rise dramatically, and all these towers are almost in the same stage of physical progress. It is estimated that they will be completed and offered to the market simultaneously.

Megacities are facing surplus not only in constructing luxurious residential complexes, but also in building commercial complexes, according to the expert. “For instance, supposing a survey was conducted in Tehran’s district 22 (in the northwest of the capital) on the number of under construction commercial complexes, we will see that there is one commercial booth either under construction or ready to be used for each 10 to 15 people; needless to say the stalls in newly-built malls will not be sold easily. Logically speaking, it is expected that these units will be vacant for a long time,” he said.

Of course this does not mean that no more malls will be built in Tehran or massive urban projects should not be developed. Tehran definitely enjoys the capacity to have a few large and equipped malls in several districts, yet it is natural that the chain store prices slump gradually. People are encouraged to visit such centers as there are enough parking spaces. “They are suitable both for shopping and having fun, so the abundance of such projects in Tehran and Mashhad does not mean they ought to stop, yet totally commercial complexes are suffering from a price bubble which is about to burst and expectations to sell each square meter of such places from $60,000 up to $100,000 have proved to be wrong,” Tabrizi said.

Some of these towers were on offer months ago; nonetheless, nobody is willing to pay such a huge price as they know it is astronomical to be profitable. Wherever there is such a gap, there is a bubble which will burst. However, smaller cities, intercity roads and newly-built town are amongst places which can attract such investments, the expert said.