With the opening of Iran, the country will attract the attention of many economic forces, particularly of the construction industry.  On July 14^th talks about a nuclear deal between the West and the Islamic Republic of Iran came to a conclusion by the two parties announcing a comprehensive agreement. In essence, Iran agrees to turn back its nuclear activities, while the West lifts all nuclear-related economic and financial sanctions. Consequently, with the opening of its borders, Iran will again become an active member of international society. As international trade and investment are projected to take off significantly, there is also speculation of an Iranian construction boom.

1. Iran’s residential real estate industry2. Lacking office spaces in Tehran3. Infrastructure to pave the way4. Outlook for the Iranian construction industry

1. Iran’s residential real estate industry

Iran’s housing industry has been flourishing for a while as a result of increased international investment flowing into the Middle East. With the further opening of borders, these activities in the residential construction sector will continue to thrive as soaring living standards will create demand for modern lifestyle and living. Additional need for housing is derived from an afflux of foreign manpower, as well as an ongoing trend for urbanisation and population growth. To house every one of these, 1.5 million new housing possibilities are required every year. The continuation of those trends will lead to ample opportunities for both, residential construction and development, and interior design studios.

2. Lacking office spaces in Tehran

The case lies differently with Iran’s commercial construction. There is a distinct shortage of modern and state-of-the-art office spaces in Tehran and other major cities. The intermediate solution for many businesses has been to convert residential units into office space. The main problem is poorly maintained buildings and layouts that are hard to reconfigure. Nevertheless, a lack of designated office space can also be seen as a chance. In the prospect of further economic growth and an ever increasing need, architecture bureaus and land developers will take it upon themselves to meet the demand for modern and high-tech office spaces.

3. Infrastructure to pave the way

To carry the country’s economic development and competitiveness it needs a stable and modern infrastructure. For example, Iran’s government has plans to vastly expand its railway infrastructure by 2025. For this endeavor foreign also foreign developers and investors are invited. A deal with Siemens to expand the Iranian rail network has already been signed by Islamic Republic of Iran Railways. Another example comes from Iran’s energy sector where the government tries to increase the development of its infrastructure for a renewable energy source to reduce its dependency on hydrocarbons and fuel the increasing energy demand.

A more robust infrastructure will also benefit a growing tourist industry that requires means of transport, like train stations and airports, hotels and resorts, cultural attractions, and many more. Big architecture studios like ‘Gerkan, Marg and Partner’ (gmp) have brought themselves into position or have already secured their first projects to meet newly arising competitions.

4. Outlook for the Iranian construction industry

Iran’s opening has only just begun. Over the coming years, the country will most likely witness a boom in all sectors of the construction industry. The growth rate of the country’s construction industry is projected at above 3 percent over the following two years, picking up even more pace after 2018. This development offers a promising playground for commercial real estate developers and investors, architecture studios, general contractors, and many more. To be the first to find out about these projects, sign up for the Building Radar platform and get the freshest leads from Iran and the Middle East!

Author: Laurenz Kalthoff