The housing and construction sectors have been significant for the Iranian economy both in terms of employment as well as capital formation. Contributing to about 5% of the country’s gross domestic product, the health of the construction sector has also been an indicator of the overall economic outlook in the country. However, recent property price developments have caused a slowdown in investments in this important sector, leading to questions on the future of such ventures, especially considering the fact that a comprehensive nuclear deal could pave the way for a new economic momentum in Iran.
Historically, investments in the housing sector had been a safe strategy in the Iranian economy. Due to a growing demand and a tendency to prefer investments in tangible assets, property prices offered a guaranteed profit in Iran until 2012 with very few exceptions of short-term stagnation. Nonetheless, since the summer of 2013, an unprecedented real decline in housing prices has been experienced. According to the Statistical Center of Iran, housing prices have dropped by 14.3% in the 12 months prior to March 20.
