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EghtesadOnline: A lack of feasibility studies prior to constructing shopping malls in adherence to regulations in Iranian metropolises in the past few years has made them reach a saturation point, an executive with the Ministry of Roads and Urban Development said.

“These malls have been mostly built in the past 12 years,” Ali Chegini also told the Persian newspaper Sharq, adding that many of them are owned by state-affiliated financial companies and institutions.

According to Chegini, when oil revenues soared under former president, Mahmoud Ahmadinejad (2005-12), a great deal of the financial resources was shifted to the housing sector, leading to the construction of a massive number of large buildings and complexes, leading to the proliferation of shopping malls.

Oil, Iran’s main exported commodity, witnessed an unprecedented rise in prices under the previous administration. West Texas Intermediate posted a record high of more than $156 per barrel in June 2008. Prices remained above $80 for each barrel from September 2009 to July 2014, according to Financial Tribune.

Iran enjoyed sky-high crude prices for a few years, such that oil revenues topped $110 billion in the Iranian year to March 2012.

International sanctions imposed against Iran over its nuclear program and trade restrictions also played a part in channeling investments into the housing sector and building shopping malls in particular.

Municipalities, Tehran Municipality in particular, is said to have generated substantial revenues by charging exorbitant fees in exchange for construction permits it issued indiscriminately.

According to Minister of Roads and Urban Development Abbas Akhoundi, half of Tehran Municipality’s budget for the current fiscal year (March 2017-18) is predicted to come from exclusionary housing policies, based on which TM allowed the construction of multi-story buildings without complying with zoning regulations, such as parking, traffic load and air pollution. 

Blasting Tehran’s governance, Akhoundi said, “The quality of life is subpar in urban areas; moving around is almost impossible in cities and these are the results of the unwillingness of urban management to become accountable.”

It was reported that more than 1 million square meters of shopping area were under construction in September 2016, particularly in the upscale districts.

“Tehran Municipality is granting permits to almost all applicants wishing to construct commercial buildings like shopping malls and office buildings, without paying attention to the real needs of each district and the worsening traffic congestion in the sprawling capital,” the Persian newspaper Iran quoted Mohammad Haqqani, chairman of Tehran City Council’s Health and Environment Committee, as saying during a council meeting last year.

TM is said to have invested heavily in the development of new shopping centers mainly to ensure regular rental income. In other words, the current supply of shopping centers is fueled largely by demand from investors, including TM, and not by the needs of consumers.

The problem of traffic congestion has worsened with the growing number of malls that are being erected at or near major highways and busy intersections.

One notable example of the controversial projects is the Kourosh Complex on Sattari Expressway: a 17-story mall that opened in 2014 with over 500 stores plus 14 cinemas, each with 2,800 seats.

According to urban planning experts, what is visibly wrong with the huge mall-cinema complex is its inappropriate location and shortage of parking space for both shoppers and staff.

Tehran malls Tehran Malls Mushrooming