As Iran's economy is buffeted by inflation, the country's homeowners are fast becoming richer in a real estate bubble that is driving affordable housing beyond the reach of ordinary citizens. A luxury 1,400-square-metre penthouse sold recently for 21 million dollars at 15,000 dollars per square metre in swanky northern Tehran - yet the average monthly salary of Iranians stands at 300 to 460 dollars.
With the housing market of Iran's arch-foe America facing trouble, prices in Tehran's affluent suburbs have gone up by at least 10 million rials (more than 1,000 dollars) per square metre over three months. Property prices there compete with upmarket neighbourhoods in Paris at a range of 60 to 100 million rials per square metre (6,500 to 10,700 dollars).
"You have to spend at least a million dollars to buy an apartment in northern Tehran where the average property is 200 square metres," says real estate agent Ali Meshkini. With a stagnant stock market and a hesitant industry, property remains a privileged means to absorb liquidity, which has been flowing into the economy through windfall oil earnings.
Facilities such as swimming pools, sauna, jacuzzi and health clubs have become a usual feature in newly-built upmarket homes in a bid to lure wealthier buyers. An opulent residential tower in northern Tehran even comes with a heliport while another has an elevator to take cars up to the apartments.
The housing boom is not confined to the hot uptown market. Average neighbourhoods in the capital, as well as in Iran's other large cities, have been affected. Prices have doubled within a few months in satellite town of Parand and Hashtgerd, 50 kilometres (30 miles) from Tehran, while in Isfahan, Mashhad and Tabriz property values have doubled in a year.
"Property has become the only profitable investment," says Meshkini. "Prices have risen by over 100 percent within a year and they will continue to go up. No other sector makes such profit."
Several entrepreneurs echo the same view including the owner of a popular fast-food place in Tehran who complained he had made only "six percent net profit in the busy months of January and February, when sales were surprisingly high." For an Iranian industrialist, who had to shut down two chemical import companies mainly due to unsteady prices, property investment proved a successful way to save his business.
"We had lost about 800,000 dollars over a year," he said. "We invested in land around Tehran and in two months we made a profit equal to our losses." Many industrialists now prefer to place part of their capital in properties rather than reinvesting it all in the same sector.
While, some observers predict the current speculative bubble will burst, others believe it will keep going. Commentators on both sides say the soaring prices have been partly caused by some public companies and private banks property investments.
President Mahmoud Ahmadinejad has also been blamed for injecting excessive cash into the economy to fund local infrastructure projects, causing an increase in money supply and directly triggering an inflation spike. In Iran, where banks do not provide significant housing loans, apartments are generally bought by paying 30 to 40 percent of the total price before construction, with the rest to be paid within three years.
The housing boom may have put a smile on many faces but it is bad news for 40 percent of 70 million Iranians struggling with ever-increasing rents, whose dreams of a roof of their own are becoming less and less achievable. Mohammad, a single 46-year-old employee of a private company, has been looking for a month for a one-bedroom apartment in middle-class western Tehran.
"I am paying the equivalent of 900 dollars a month now for a 145-square-metre apartment," he said, explaining that his landlord has been tempted to sell by an attractive 5.5-billion-rial (591,000 dollars) offer. "I can only get half that size for the same price now," he said. "This is madness."
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