EghtesadOnline: The general price index of construction materials for residential properties in Tehran grew by 59.6% in the four-quarter period to Dec. 20, 2020, which marks the end of the third quarter of the current Iranian year (Sept. 22-Dec. 20, 2020), compared with the previous year's corresponding period.
The index stood at 850.1 in Q3, according to the Statistical Center of Iran's latest report published on its website.
The average annual inflation of construction material was 40.8% in Q2 (summer).
In the second quarter, the construction material price index stood at 698.8 and registered a 30.3% quarter-on-quarter growth.
The index rose by 101.6% in Q3 (fall) compared with last year's corresponding quarter. In Q2, the year-on-year index growth was 71.4%.
Compared with the previous quarter, the category of “cement, concrete, gravel and sand” registered the highest growth among all categories of construction materials with a price growth of 48.2%.
Services recorded the lowest index growth with 5.5% compared with the preceding quarter.
“Ironware, rebar, profile for doors, windows and fences” witnessed the highest year-on-year and annual price hike with 163.5% and 105.5%, respectively. Services registered the lowest year-on-year price growth with 40.3% and glass posted the lowest average annual growth with 25.5%.
Building Permit Fees in Tehran Rise 30%
Building permit fees in Tehran increased by 30% as of June 21 compared with last year. The decision was approved by Tehran City Council in the final month of last year (Feb. 20-March 19) as per Tehran Municipality’s 2020-21 budget but was not enforced until recently due to the coronavirus-related suspensions of housing projects.
Building permit fees depend on the floor area, scope of work and the type of building being constructed or altered. They form part of the overall costs incurred during the development of a built asset.
At present, overall construction costs in Tehran have increased to at least 45 million rials ($161) per square meters. The average building permit fees hovered around 5-7 million rials ($18-25) per square meter last year.
With the 30% increase, permit fees will reach 6.5-10 million rials ($23-35) per square meter. However, a report by the Persian-language daily Donya-e-Eqtesad shows such fees will exceed 20 million rials ($71) in some northern districts of the capital city, particularly for high-rise building projects.
In accordance with a memorandum of understanding recently signed between Iranian Municipalities Organization and Urban Regeneration Corporate Holding Company, affiliated with the Ministry of Roads and Urban Development, building permits in slum areas will be granted free of charge.
According to Deputy Roads Minister Mehdi Obouri, builders who intended to build residential properties in slum areas were previously entitled to a 50% discount in permit fees. The current MoU offers 100% exemption in permit costs.
“Fifty percent exemption in architectural and engineering expenses has also been envisioned in an agreement signed between Iran Construction Engineering Organization and the Interior Ministry’s Development Department to encourage homeowners in slum areas to rebuild their homes,” Obouri was quoted as saying by Iran Online.
Before the 30% increase, permit costs accounted for 5 billion rials ($18,000) of the overall costs of developing a typical building in Tehran, which is a 4-5-story building comprising 8-10 residential units with a floor area of 80 square meters, constructed on 300 square meters of land) in the popular districts of Tehran.
Besides building permit fees, real-estate developers say overall costs of construction are expected to increase on the back of strong growth in the prices of construction materials and land. Costs of construction materials, they say, are now 50% higher compared with the first half of last year (March 21-Sept. 22, 2019). The average price of a square meter of land in the year ending March 2020 increased by more than 90% compared with the year before.
By June 20, land prices rose by 15% in some neighborhoods compared with March.
Exports at $620m in Fiscal 2019-20
A total of $620 million worth of different types of construction materials were exported from Iran during the last fiscal year (March 2019-20), according to the director general of Trade Promotion Organization of Iran's Arab and African Countries Division.
“Our exported products included wires and cables, tiles and ceramics, stone, light switches and sockets, china and ceramics, faucet, bathtub and shower, door and window, and pipe and profiles," Farzad Piltan was also quoted as saying by Fars News Agency.
Iraq, Afghanistan, Turkey, the UAE and Azerbaijan were the main destinations.
100% of Demand for Raw Materials Met Domestically
Iran’s building and construction industry supplies 100% of the raw materials it needs from the local market, according to Jafar Sarqeini, a former caretaker of the Ministry of Industries, Mining and Trade.
“Iran's steel, cement, tile and ceramic industries produce more than twice the country’s domestic demand. Of the $10 billion worth of exports by the mining sector in the last [Iranian] year [March 2019-20], exports of construction materials accounted for $7 billion. Today Iran is one of the major exporters of steel in the region and one of the main exporters of cement in the world,” he said.
The official made the statement at the opening ceremony of the 20th International Exhibition of Building and Construction Industry and the Ninth International Exhibition of Elevator Industry, Escalators, Elevating Conveyors, Spare Parts and Equipment, which opened concurrently at Tehran's International Fairgrounds on Sept. 10.