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EghtesadOnline: Housing inflation in Iranian metropolises has resulted in an unprecedented rate of suburbanization over the past couple of years.

A total of 90,000 people moved to new towns in the last Iranian year (March 2019-20), which raised their total population by over one million. 

Last year’s population shift from central urban areas into new towns was 2.2 times higher than the annual average of the past two decades. 

Notably, the number of residents in new towns was as low as 58,000 in the year ending March 1997. 

On average, a total of 36,000 were added to the number of new towns’ residents annually from the year ending March 1997 to March 2017. The figure increased to 40,000 between the fiscal 1996-97 and 2018-19, but last year, the average growth in the population of the new town surged by 90,000. 

Such a one-year population growth in new towns was also recorded for the Iranian year ending March 2014. New satellite towns then saw the number of residents rise by 101,000, thanks to the completion of a phase of the so-called "Mehr Housing Project".

The large-scale, still-unfinished construction program was initiated in 2007 by the administration of former president, Mahmoud Ahmadinejad, to provide 2.2 million low-income people with housing units through free land and cheap credits.   

Many of last year’s migrants to the peripheries of metropolises, however, did not move of their own free will but were forced to do so due to the unparalleled increase in home prices and rents in big cities, a report by the Persian-language daily Donya-e-Eqtesad reported.

Over the past one and a half years, the average price of a residential property in Tehran increased twofold. Home price rises in new towns are typically 30% of that of large cities. In other words, home prices and rents are 70% cheaper in new towns compared to those of metropolises.



Deficiencies Under Spotlight

Despite last year’s population growth in new towns, they are still far from having achieved the desired results that prompted their development in the first place.

Unsuitable location, inadequacy of public transport, schools and hospitals, lack of utilities and basic infrastructure, limited private sector investments and shortage of recreational facilities are some of the problems facing new towns. For example, only one new town in the country is connected to the subway network whereas most of the residents have to commute to work or school.

The optimal population of satellite towns is projected to increase to 3.8 million in the coming year. This is unlikely to materialize, given the current level of urban services and their development. 

At present, the population of Parand New Town stands at 160,000, Andisheh 131,000 and the population of Pardis is 106,000. 

According to their vision plan, the population of each of these three towns was set to exceed 400,000 in the near future. 

Habibollah Taherkhani, deputy minister of roads and urban development, has also recently discussed the deficiencies in new towns.

Commenting on lack of infrastructure, he said proper public transportation is among the critical needs of new towns around the world, but when the housing projects were launched in Iran, it simply was not a priority for the government, as the focus then was “build, build, build” and everything else would come afterwards!

"Urban policies in big cities were not in tandem with those of new towns. All big cities have undergone expansion over the years, which was not supposed to be the case because the new towns were being built," he said.

Furthermore, the new towns built in the past are mostly seen as dormitories, meaning there is no sense of community among the inhabitants. This is largely due to topological inefficiency and the inability of the towns to attract businesses, according to Mahmoud Rahimi, a member of the board of directors of the New Towns Development Company.



Vision Plan

With the construction of 13 new towns by New Towns Development Company, the number of Iran's satellite towns will reach 30.

The new satellite towns will be Tis in Sistan-Baluchestan with a capacity of hosting 150,000 residents, Siraf and Pars in Bushehr with 120,000 and 60,000 respectively, Houra in Hamedan with 120,000, Amirkabir in Markazi with 100,000, Kharazmi in Tehran with 35,000, Tabnak in Fars with 60,000, Koushak and Mokran in Hormozgan with 120,000 and 200,000 respectively, Samangan in Kerman with 100,000, Sanandaj in Kurdestan with 50,000, Eyvanaki in Semnan with 50,000 and Shahriyar in East Azarbaijan with 170,000. 

Currently, a total of 17 satellite towns have been established in 11 Iranian provinces. 

“The next generation of new towns will focus on the proportionate growth of infrastructure, superstructure and utilities,” says Zohreh Davoodpour, another member of the NTDC board. 

“The towns will have a different general topography compared to the existing ones, because they will not be built in close proximity to big cities but rather in the coastal areas of southern Iran.”

What is strongly stressed is that the next-generation towns will be safe, eco-friendly and smart, with a focus on providing opportunities for startup businesses. If the vision for the new towns is realized, they will be self-reliant and inculcate a strong sense of community among its residents, something that is conspicuous by its absence in the existing new towns.

Funding for the new projects will be different from the old ones in that the authorities are considering issuing sukuk (Islamic bonds) for securing funds from the private sector rather than begging for money from the government(s) that are almost always burdened by budget deficits. 

"Additionally, BOT [build-operate-transfer] contracts are being considered for a part of the projects in the next-gen new towns. Projects that can create reasonable profit in the foreseeable future can be passed on to investors as BOTs, including projects for building hotels, hospitals and malls, based on feasibility studies," says Sadeq Akbari, another NTWC board member.

The next towns will be resident-oriented, with the government functioning only as the overseer, and the private sector in charge of and responsible for all things related to services, amenities and maintenance.


Iran Inflation housing Population