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

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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

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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