IRAN: HOUSING PRICES IN TEHRAN AND OTHER MAIN CITIES

C O N F I D E N T I A L SECTION 01 OF 02 IRAN RPO DUBAI 000024 SIPDIS SIPDIS ECON, PGOV, PREL, SOCI, IR E.O. 12958: DECL: 4/24/2018 TAGS: ECON PGOV PREL SOCI IR SUBJECT: IRAN: HOUSING PRICES IN TEHRAN AND OTHER MAIN CITIES (C-NE7-01996) REF: A. RPO DUBAI 0006; B. RPO DUBAI 0023 RPO DUBAI 00000024 001.2 OF 002 CLASSIFIED BY: Ramin Asgard, Acting Director, Iran Regional Presence Office, Department of State. REASON: 1.4 (b),(d) 1.(C) Summary: Northern Tehran has seen vast development in the past three years and housing prices have almost tripled, according to anecdotal comments from several Iranians passing through Dubai. The northeastern quadrant of Tehran, particularly the northernmost Shemiran district is the most expensive, with prices comparable to prices in Bethesda, Maryland. The provinces have reportedly experienced a more gradual rise in property values, and generally have much lower prices than Tehran. All sources claimed that housing is unaffordable for the average wage earner throughout the country. End summary. Tehran property prices -------------- 2.(C) Real estate in Tehran is generally divided into the affluent northern section and the more modest central and southern parts. According to a Tehran-based construction company owner and several visa applicants, currently the city's highest valued properties are in the northernmost district of the city, district One, also known as Shemiran. And on the whole, districts One to Four in the upper northeast (Shemiran and its three surrounding districts) are highly regarded and have escalated the most in value. This section apparently also has cleaner air as the winds blow the pollution away to the east, according to a visa applicant. 3.(C) Shemiran, at the very north/slightly northeastern edge of the city, contains the most expensive neighborhoods such as Elahieh, Farmanieh, and Mahmoodieh. This is Tehran's most fashionable and vibrant district, and has seen feverish development in the past few years. Its neighborhood of Elahieh is where the newest buildings, top-end shops, trendy cafes, and many fashionable locals can be found. It contains the clubhouses of the German, Swiss, Belgian, and several other embassies and the well-known Fereshteh Avenue. One Iranian contact, however, told IRPOFF that not everybody considers this part of town desirable, since the traffic often gets gridlocked on summer nights and the social atmosphere is "rather snobby." A visa applicant recently reported that a two-bedroom apartment in Elahieah can cost from 600-800 thousand dollars (600-800 dollars per square foot),up from 200-400 thousand dollars 2 years ago. Even renting in Shemiran is challenging; adding that you need connections just to find these apartments and influential references to secure them. Rent for a basic 2 bedroom apartment starts at about 1500 dollars and can much higher, based on the amenities the buildings offers. 4.(C) Prices drop by about 30 percent as you move to districts Two to Four adjacent to Shemiran, (generally 200-300 dollars per square foot). District Two holds the upscale neighborhood of Sa'adatabad, the modern and upscale Shahrak-e gharb, and Gisha. Gisha is where Borj-e Milad, the world's fourth tallest tower now stands, and also where many affluent youth interact, according to a visa applicant. There are also many affluent areas in districts Three and Four such as Vanak, Jordan, and Pasdaran, which used to be prized, but today the majority of these areas have become suburban and less chic. Average property in Vanak now costs about 210 dollars per square foot, according to the Tehran-based construction company owner, and an upscale two bedroom apartment in these nice areas sells for approximately 350 to 450 thousand dollars. Another visa applicant said that districts Five, Six, and Seven are also in the same range as districts Two to Four, and that this entire area is still undergoing rapid development. 5.(C) As you move away from the northeastern quadrant of Tehran property prices drop more - with property prices in the western regions of the city (districts 21, 22) starting at about 200 dollars per square foot and the in the southern part of the city from around 150 dollars per square foot. Housing in the provinces -------------- RPO DUBAI 00000024 002.2 OF 002 6.(C) Desirable real estate in major cities outside Tehran appears to be much less expensive. According to visa applicants from provincial areas, the provinces have experienced gradual property value increases over the past 10 to 15 years, but with steeper increases in the past two years. They shared Tehranis' views that buying property these days is like buying insurance, adding that the wealthy are buying entire apartment buildings or land and build buildings which they then rent out. They portrayed their cities' housing situations: -- Esfahan -- Housing prices have gone up about three times over the past 15 years, but the sharpest rise happened in 2007, when prices rose some 30 percent. A nice property in the outskirts of the Zand-e Rud river south of Darvaze Shiraz would cost about 200 dollars per square foot, but northern Esfahan and the outskirts are cheaper. -- Shiraz -- Prices have doubled in the past two years; according to one visa applicant, a 1000 square foot apartment now costs about 150 thousand dollars to buy and about 600 dollars to rent. -- Mashad -- Property prices are about 200 dollars per square foot in an above average area such as Sajjad Boulevard or Ahmadabad. One visa applicant's apartment that was valued at 100 thousand dollars four years ago is now valued at 500 thousand dollars. -- Tabriz -- Prices have gone up 50 times in the past 10 years. Ten years ago land was practically free in Tabriz, five years ago prices started to increase rapidly, especially in northern Tabriz. -- Kerman -- Real estate prices here are about one fourth of Tehran. -- Kermanshah -- Housing prices are about one-fifth of prices in Tehran. Prices have gone up quickly in the past few years, particularly in 2007, which saw as much as a 30 percent rise. An apartment that rented for 220 dollars in 2006 was 300 dollars at the end of 2007. -- Ahvaz -- Prices are about one-sixth of Tehran prices. Contacts report prices have gone up ten times in the past 3 years. 7.(C) Comment: Iranian contacts involved in building construction and Iranian visa applicants eagerly shared their thoughts on the housing situation. Their comments demonstrate the challenges facing the general population as the privileged few profit. The drastic increases in urban housing costs over the past three years likely reflect increased wealth attributable to high oil prices, as well as much higher investment returns compared to manufacturing and other more productive investments. In addition, heavy Iranian investment in expensive real estate in Dubai and elsewhere in the Persian Gulf region suggest that this phenomenon is not limited to Iranian cities. End comment. ASGARD