Office market in Tehran is affected by different conditions. As economy of Iran is a relatively oil dependent and close economy, therefore main large companies have a state based nature, as the budget of these companies is related directly or indirectly to Oil revenues, they tend to buy their offices even it is not the best decision. In the other hand, as inflation rate in recent 40 years always was double digit especially in real estate price growth rate, the companies tend to buy lands and building to change their cash money to a more profitable asset and keep their asset safe. Such a big fever of purchasing land and property prevented companies from leasing their office area and moved them to have their own buildings. Therefor most of big domestic companies in IMI500 list don’t lease their office area.
Meanwhile, political issues which seem to be always with Iran economy during the last 40 years, made obstacles for foreign companies to have a significant role in Iran’s business. It made Iranian Office leasing market more limited and also kept this market far from international standards.
Iranian construction market always suffers from a periodical boom and recessions, which are mainly related to the housing market as the biggest part of construction industry. The former president Mahmoud Ahmadinejad started the biggest aspirational project during the history of Iran in Housing Industry called Maskan Mehr in order to make a permanent influence on economy as well as the political atmosphere of the country. Running Maskan Mehr in all cities of the country in addition to making a large 45% inflation rate, after a transient boom in construction market, caused the Residential market an unprecedented recession from 2011 up to now. Also during era of Ahmadinejad, Iran had an amazing revenue more than USD 800 billion which by some mistakes and also corruption, was related to government receiving large amount of loans with a tendency toward construction market specially in Office and commercial market.
Nowadays by searching around the city, so many projects are visible whose speed of construction is kept low awaiting for a good time for completion and sale. This behavior is especially because of hopes to opening the market after JCPOA. It is estimated more than 2 million sqm Gross Floor Area in office area will be building in the next 3 years.
FAR Law Firm